Spending on doctors, hospitals, drugs and other medical care climbed at a 2.7% annual rate per person in the first half of 2010, the smallest increase since the Bureau of Economic Analysis began tracking medical care in 1959.
The article goes on to say that adjusted for inflation demand actually declined slightly in the first half of 2010. That's a really big deal. Health care demand has grown thru previous recessions due to an aging population, the growth in new expensive treatments, and rising taxpayer subsidy for health care.
US medical spending hit 17.3% of GDP in 2009. It has been forecasted to hit 20% by 2020. But I do not expect the rate of medical spending to grow as much in the next 10 years as it did in the last few decades, Obama's health care plan notwithstanding. Reason: the American people and companies are going to push back against higher costs and against higher taxes.
It is possible that medical spending as a percentage of GDP could grow if GDP shrinks (as I expect it will due to Peak Oil). Certainly the aging of the US population is increasing the demand for medical care. But if medical spending in inflation-adjusted terms has stopped growing then adjusted for age then medical care per person in each age bracket is declining. That's a huge shift. Also, the US population is growing. Medical spending has to grow 1% each year in inflation-adjusted terms just to stay the same per capita.
In response to a recent FuturePundit post on future demand for anesthesiologists many doctors posted in the comments and disparaged the idea that automation was going to cut demand for them. Well, either automation and other advances have to cut costs or the age-adjusted amount of health care delivered will have to start declining.
|Share |||By Randall Parker at 2010 September 01 09:11 PM Economics Health|