GDP Growth, Not Spending Restraint, Is Key to Moderating Health’s Share of the Economy

Aaron Carroll delivers on my suspicion that the flatlining of health care spending as a percent of GDP in the 1990s is mostly about rapid GDP growth during that decade:

There was a moderation of the rate of increase in the nineties, but clearly growth as such is playing a big role here. This is sort of an obvious point, but the implication is that the debate over “health care costs” is a little bit misguided. Making it easier for English-speaking college graduates to move to the United States would reduce health spending as a share of GDP, but it’s not something a blue-ribbon commission on health care costs is going to come up with.


Kevin Drum says he looked at this by superimposing recessions and that makes it look like underlying growth isn’t the key. So maybe I’m wrong. I’ll revisit this subject next week.