In spite of all the debate about health care, few Americans truly understand how important this industry is, not only for maintaining our wellbeing but also its pivotal role in the national economy. It may surprise you to learn that health care is the largest economic engine and jobs creator in the nation. In 2015, the United States spent $3.2 trillion or almost $9,990 per person, comprising almost 17.8 percent of the national Gross Domestic Product.
In 2014, the nation spent almost 16.7 percent of GDP on health care, a significant increase from the 15.0 percent in 2004. Over the next decade, this share of national economic output is expected to steadily rise to 18.0 percent. Not only will we be spending more on medical services and products, but this industry will increasingly become the primary engine of our national economy.
Number One Employer
As the largest industry in the national economy as well as one of the fastest growing, health care is also the leading employer and jobs creator. According to the U.S. Bureau of Labor Statistics, the health care sector created almost 234,600 jobs in just the first six months of 2016, far outpacing the 225,300 jobs created in the first half of 2015. During the early half of 2016, almost a quarter of all jobs created were in health care. For the year, almost 394,000 health care jobs were created.
The most common types of jobs created were found in ambulatory services, hospitals or long term care facilities. Almost 127,000 new ambulatory jobs were created in early 2016, while this period saw the creation of 90,000 hospital jobs as well as 18,200 long term care positions.
There has been slowing of health care job creation in the first half of 2017. Although the industry created 24,300 jobs in May of 2017, the average for the first five months was 22,000, a 10,000 dropoff from the 32,000 per month that occurred in 2016 and 2015. This reduction is largely due to a slowdown in people newly insured as well as growing uncertainty about the industry’s future if health care reform is passed in Congress.
In total, the health care sector employed almost 12.44 million Americans in 2016, or almost 12 percent of the entire American workforce. More importantly, the number of health care jobs is expected to grow by 19 percent between 2014 and 2024, at which point, there should be an additional 2.3 million jobs in health care organizations.
Why Health Care is Growing
There are many reasons why the health care industry is experiencing such rampant growth. Perhaps, the most important is the accelerating rise in the number of elderly Americans. There are currently almost 46 million Americans aged 65 or older residing in the United States, and this demographic is expected to grow to 98 million by 2060.
To further compound the “greying” of the American populace is the increased life expectancy of Americans. The typical life expectancy of an American has steadily risen in the past few decades until it reached its current 79 years.
Although the length of life has been extended, many older Americans continue to struggle with health issues. Almost 90 percent of seniors have at least one chronic health condition like obesity, high blood pressure or diabetes, and 70 percent have multiple health conditions.
Another reason the health care sector is growing so rapidly is the vast increase in the number of insured. Since the passage of the Affordable Care Act in 2010, the number of Americans with health coverage has grown by 22 million. While the number of newly insured each year has declined more recently, especially in light of a possible repeal and replacement by the Trump administration, there is a reasonable expectation that the current figure of 89 percent of Americans with health insurance will remain steady in the coming years.
The rapidly increasing population of Americans in need of medical care combined with a growing number with insurance has produced an unprecedented demand. These strengthening factors is likely to drive the growth of the health care sector for the foreseeable future.
The Future of Health Insurance
Although there is little doubt that the health care industry is destined to become a titanic component of the nation’s economy, what probably matters most to the typical American is how it will improve their life. After all, it makes no difference how large it becomes, if people can’t access it. That leads, ultimately to the question of how a growing health care industry will shape health coverage for Americans.
To understand the future of health insurance, one must first evaluate the current health care business environment. While there is increasing demand for health care products, much of these new services and goods come at a price. Health care companies are well aware that there is an expanding health care market and, so they have been investing in organizational resources like new technologies, larger staff and bigger, more modern facilities.
The way that most companies have paid for these investments has been by borrowing which is costly. Since 2009, the average health care company’s debt has increased by 308 percent. This rising debt is passed on to consumers and their insurers through higher prices. Since 2002, the average annual medical costs for a family of four has increased from $9,000 to $26,000.
The climbing cost of health care is likely to inflate health insurance costs in the near future. Although it may appear that insurers charge too much for insuring consumers, profitability for the industry has ranged from 3 to 7 percent in the past few years, putting it in the mid to lower range among the top 50 U.S. industries. To remain afloat, insurers must raise their prices when health care companies jack up their prices. Unless Congress is able to design a new health care system and implement it in the next few years, it is quite likely that the typical American will see a gradual increase in the cost of health coverage in the coming years.