We all know Obama’s Affordable Care Act (ACA) and the costs associated with this program are causing health care rates to increase.  The question is how much?  Well, I’m not here to forecast or give numbers for something that hasn’t fully been implemented.  I will, however, look at past numbers and use those as a base for my conclusion that the future of health care is going to be more expensive than our country has ever seen.

In 1960, the nation’s health care expenditures as a percent of GDP was 5.2%, in 1980 it was 9.2%, 2000 it was 13.8% and in 2011 it was 17.9%.  Over the last 50 years the percentage has grown 12.7%, and that is without overreaching legislation similar to the Affordable Care Act.  So let’s use these numbers and make some comparisons.

In the last eleven years (2000-11) the average growth in national health expenditures has been 6% and the growth of the nation’s GDP has only been 4%.  So if this rate continued, which it won’t with the ACA implementation, our health care costs would grow, and eventually total 20% or more of total GDP before 2020.  So what does this all mean?  HHS is already the largest portion of the national budget, and without the ACA health care costs continue to rise and grow faster than our GDP.  This means with the full implementation of the ACA, we can expect health care costs to grow at a higher rate, making our GDP growth that much less able to afford the health care sector.

The chart below show the percentage change in the health care sector and GDP since 1985.  Notice the changes in the last three recession.  In 1990 health care expenditures dropped along with GDP, a normal phenomenon; less money to spend leads to less expenditures.  In the 2001 recession health care expenditures increased while GDP decreased; a signal that problems were starting to occur.  In the most recent recession, health care expenditures declined slightly and then leveled off while GDP dropped considerably.  While this is better than expenditures increasing, there is no forecast I know of that tells us what the next recession will do to health care expenditures with the legislative mandates of the Affordable Care Act.  How comical – the Affordable Care Act isn’t affordable at all, it’s quite the opposite.

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