Health Care ATE America

In 1960, six years before the start of Medicare and Medicaid, America spent about $27 billion on health care.

- Peter Suderman

That figure represented just under 5 percent of an economy that was about $543 billion in total. By 2016, combined public and private spending on health care had reached more than $3.3 trillion, or nearly 18 percent of the total economy, with almost half the bill paid by government. Now, thanks to factors such as increased drug prices and an aging population, official projections have health care spending increasing indefinitely.

In the five decades after the passage of America’s two largest health care entitlements, that sector has become a maw, eating everything in its path. Health spending has reshaped the nation’s job market, its household finances, and its public budgeting. Between January 2007 and November 2017, nearly a third of all jobs created in the United States were healthcare jobs. On average, American households spend 22 percent of their income on health care, up from 10 percent in the ’70s. Large employers spend an average of more than $14,000 per employee on health insurance and the like each year. Medicaid, which is jointly administered and financed by state and federal governments, is one of the largest line items in every state budget. Health care entitlements are the biggest drivers of the long-term federal debt and a fixture of America’s most consequential public policy debates.