ECONOMIC CONSEQUENCES OF HEALTH CARE EXPENDITURE REDUCTIONS

Purpose: This paper identifies the potential impacts of reductions in health care expenditures on employment and economic activity as measured by Gross Domestic Product (GDP) and identifies strategies for lowering national health expenditures while minimizing the impact on the overall economy.

Design/Methodology: The study design was an analysis and integration of the data from national health care expenditures and health care employment. Data detailing the total amount of national health expenditures was extracted from the Centers for Medicare and Medicaid Services (CMS) data bank. Additionally, data regarding national health employment was extracted from the U.S. Department of Labor. These data sources were then utilized to make assumptions on the negative impacts of employment loss as a result of potential decreases in national health expenditures. The potential impact of these expenditure reductions on GDP were also calculated.

Findings: The paper identifies the potential economic consequences of a reduction in national health care expenditures on employment and GDP and provides recommendations on methods of lowering health care expenditures while minimizing the impacts on employment and GDP.

Originality/Value: While the literature has adequately described the relative position of the health care sector within the overall economy, as well as the desire to reduce health care expenditures, this paper attempts to provide more specific literature on the potential impacts of such reductions on the condition of the U.S. economy.