Most of the attention commanded by the health care debate over the past several months has rightly centered on the questions of who has access to care and how do they pay for it. Concerns about cost, insurance, subsidies and individual choice have dominated the debate, and all eyes regularly look to the Congressional Budget Office for estimates of how many people will and won’t be covered in the latest proposal. Somewhat lost in this battle over how to divvy up the pie is the fact that the pie itself continues to get larger and larger every year.
According to the most recent state-by-state figures from the Centers for Medicare and Medicaid Services, total personal health care spending in the U.S. totaled nearly $2.6 trillion in 2014. This included spending for doctors, dentists and other health care providers; for hospitals, nursing homes, in-home care, residential mental health and substance abuse facilities; for drugs and health-related supplies and equipment; for ambulance services; and for a variety of clinical services provided in workplaces, community facilities and schools.
Since 1990, this spending has more than quadrupled, far outpacing the mere tripling of our nation’s total gross domestic product. As a result, health care spending now accounts for nearly 15 percent of the nation’s total economic activity.
In Maine, this growing economic dependence on health care is even more exaggerated. In 2014, personal health care spending in Maine amounted to just over $12.3 billion. Personal spending on health care amounted to more than 22 percent of our total state product, ranking us first among the 50 states and District of Columbia. In 2000, by comparison, health care spending in Maine accounted for just under 16 percent of our economy, ranking us third nationally. In 1990, our health care spending share was just over 12 percent, ranking us 13th nationally.
The growing dependence on health care as part of the Maine economy is occurring not because health care spending is growing much faster than the national average – it’s only growing slightly faster – but because the rest of our economy is growing so slowly.
Between 1990 and 2009, Maine’s gross state product grew at only 72 percent of the national average. And between 2009 and 2014 – a period of so-called economic “recovery” – our economic growth fell to just 67 percent of the national average.
And therein lies the danger of this growing economic dependence on health care: It puts not just the physical health of our people in the hands of those deciding the fate of health care reform, but also our economic health. The failure to enact fundamental reform of our health care system puts Maine at substantially greater risk than other states because we are so dependent on that system for our economic well-being. Failure to find a way to provide and pay for health care will endanger both the ill and the healthy in Maine.
It is interesting, in this regard, to compare the fate of manufacturing employment and health care employment in Maine over the past 20 years. Manufacturing employment fell from 93,000 to 56,000 – nearly 40 percent. Over the same period, employment in health care and social assistance rose from 81,000 to 119,000 – a gain of 46 percent. In the rural parts of the state, this comparison was even more stark. Outside of the Portland area (York, Cumberland and Sagadahoc counties), manufacturing employment fell by 46 percent while health care employment rose by 34 percent.
In Maine (as is true for much of rural America), health care facilities have, for all practical purposes, become the new mills – the one reliable source of continuing employment. The nation as a whole depends on health care for 15 percent of total employment. In the Portland area, that share is 16 percent, and in the rest of Maine it is 18 percent. And the health care employment total here does not include the people in grocery stores and pharmacies whose jobs depend on the retailers who sell prescription drug and health care supplies, nor the others whose jobs in actuality depend on indirectly serving health care needs.
Maine Sen. Susan Collins has rightly been praised for her courage in standing up both for the needs of those hurt by hasty “repeal and replace” legislation and for the full and open debate of both parties in any true reform process. She should be equally praised for recognizing that such stands represent not just good politics, but also good economics. And in no state is that more true than in her own home state of Maine.
Charles Lawton, Ph.D., is a consulting economist. He can be contacted at:
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