Health Care Industry Likely to Fuel Next Economic Boom
Analysts predict that the "sprawling" $1.3 trillion health care industry -- including drug companies, medical device manufacturers, hospitals, nursing homes, assisted-living facilities and insurers -- may represent the "only driver" of economic "growth in the near term" and will likely "expand faster than most industries" in the future, the New York Times reports. According to analysts, a "widespread demand" for "more flexible" health programs, a "spate" of hospital mergers and an aging population have increased costs and investments in health care, and as baby boomers begin to retire, they will "further inflate" the number of Americans who "spend heavily" on health care. In Washington, the Bush administration has requested an additional $1.5 billion to fight against bioterrorist attacks, and some lawmakers have proposed as much as $7 billion in new spending. Lawmakers also are considering legislation that would require insurance companies to offer more coverage for mental illness. The Centers for Medicare and Medicaid Services has reported that the health care industry will account for 16% of the nation's economic output by 2010, up from 13% today and 4% 50 years ago. In 2040, analysts predict that the industry could account for 20% to 30%. The New York Times reports that an economic expansion fueled by the health care industry "suggests a mixed prognosis." Analysts warn that the expansion "may not be as robust as the boom of the late 1990s" and would likely do "relatively little" to make the economy "more efficient." Still, analysts said that a health care expansion "can bring benefits" such as reducing the mortality rate from heart disease and extending lives for patients with cancer and other diseases (Leonhardt, New York Times, 11/11).