Economic Growth Lifts Health Care
As economists argue about trajectory for the U.S. economy, future Federal Reserve policy, rate hikes, and effect of the G20 and China tariff truce, we are missing some big wins. As 2018 comes to a close, some U.S. sectors are doing exceptionally well -- and the credit belongs with the Trump administration.
You have heard it: The U.S. economy is booming, but dragged down by health care inefficiencies. Both facts are true. But look deeper and another reality becomes clear. Republican House and Senate leaders helped roll back ObamaCare’s oppressive mandates, a good start on what remains to be done. As a direct result, some parts of the health-care sector are moving briskly ahead.
In fact, the numbers -- and a few examples -- make the case that even this sector is becoming a beneficiary of recent changes in the regulatory and tax environment. Specifically, as the overall economy has grown, from a rate of 1.5 percent in 2016 to 3.4 percent in 2017, so has small business.
In the health-care sector in particular, small business employment is at 8,687,568, and total private employment is now just under 20 million, with small business employment accounting for 45 percent of the total. The significance of this is high, even if reasons vary.
Health-care services for aging veterans, for an overall aging demographic, and for the country at large have become a more visible priority. At the same time, reduced regulations and lower taxes have spurred hiring, even if wage growth lags. Perhaps more encouraging, innovation by smaller companies has also registered.
If ObamaCare created x-inefficiencies in the U.S. health-care market that did not formerly exist, the “drag” of mandates, higher taxes, higher insurance premiums, less innovation, and more government control has gradually been relieved. The sector, which is important for veterans and older Americans in particular, is picking up steam.
Moving back toward more individual choice and market flexibility appears to have triggered renewed confidence and innovation. As America collectively seeks to reorient back toward patient choice, congressional Republicans reopened the door to greater national predictability that parts of ObamaCare had closed.
Accordingly, in aggregate, the health-care sector is showing signs of renewal, productive risk taking, innovation, and entrepreneurial can-do. Examples are legion, and they suggest a market with more room for growth. U.S. healthcare spending rose at four percent last year, costing Americans more than ten thousand dollars per household, and rising above three trillion dollars. One fifth of the U.S. economy, as measured by Gross Domestic Product (GDP), is tied up in health care.
Yet with regulatory and tax incentives for growth, smaller companies are among the beneficiaries. Signs of recovery are visible in measurably reduced regulations, wider freedom of choice, and ten thousand bottom lines. They are also showing up in medical discovery and innovation. New diagnostic and treatment options are being identified, right and left. Vexing diseases are being tackled by new approaches. As Forbes reported recently,
The pace at which fundamental discoveries of basic science are being uncovered is accelerating, as is the speed at which medical practice is being transformed by these inventions.
For example, testing for pathogens tied to particular diseases, is one obvious area where new ideas, new tools, and new players are proving the U.S. health-care sector’s can-do -- when encouraged by greater freedom and predictability. Companies tied to diagnostic innovation, like Ascenda, which is making forward movement in molecular instrumentation to support pioneering discoveries, speeding up public returns on commonly-used diagnostic tests, such as for the common PCR (Polymerase Chain Reaction) tests, are examples.
Does all this really matter? Yes, the sooner Americans -- especially veterans -- get diagnosis and treatment for common ailments, the better for all Americans. By way of example again, the non-invasive PCR test, which sounds simple, was actually a leap forward -- helping all Americans by discovering aerobic and anaerobic pathogens, and a treatable condition called “H Pylori.” This turned out to be a frequent, painful form of ulceritis of the stomach -- and the innovation tipped the balance in a new and good direction for many Americans.
In the bigger picture, what do such innovations and a more positive economic environment mean? The answer is simple. What the newly encouraging environment means -- and what a more robust economic commitment to the sector means -- is that more Americans will, in years ahead, become beneficiaries. There really is a line that can be drawn from economic growth and the health of Americans. We just do not pause often to see and acknowledge the links.
Kent Johnson, an American veteran, former USAF F-15 and A-10 pilot, and former businessman, writes often on national issues.