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Health Care and the Economy

Health Care and the Economy - Michael Samuels Wilson Health...

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Michael Samuels 3/3/10 Wilson Health Care’s Effect on the Economy The current economic recession environment swallowing the general public’s interest and focus. People worry day in and day out basis about their personal well being which includes physical health, mental health, and financial health. Poor economic environment can bring about stresses that affect an individual in all 3 facets. Individuals who face extraordinarily high medical bills or who lack health insurance must use income set aside to cover those expenditures. Does this actually help or hinder the overall economy? Will potential legislation reformatting the health care industry improve or hurt the macro economy? Will the system of care increase the spending individuals use on everyday good and help the economy or will the costs of the programs outweigh the benefits? These are just a few of many questions to be answered; along with what direct relationship does the health system have on the United States Economy. There is a severe gap of nearly triple the amount of spending toward the health care system and the average annual economic growth. Health care costs grow annually at 9.3 percent while the economy, on average, grows 3.6%. Health care which is not considered consumer goods eats a vastly high percentage of government spending. According to Health and Human Safety “Some economists believe that rapidly rising health care spending lowers GDP and overall employment, while raising inflation”(HHS). Lowering of the GDP shows slower economic growth so this may point to spending on health care as having a negative effect on the
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macro economy. This seems to coincide with what may be assumed, as costs for inelastic goods increases the demand for elastic goods decreases, and these elastic goods often drive an economy such as the United States. One factor to consider however is discretionary spending on health related issues. Jonathan Salter argues that inefficiencies within the health care system due to medical errors and unnecessary deaths is great enough to potentially have an adverse effect on GDP. Higher spending costs result from these errors and as a result our expenditures don’t match the attended results. With wasted productivity, means wasted potential. Health care takes up nearly 16% of the total GDP, and considering the GDP of the United States is as almost as much as the total European Union combined.
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