Rising U.S. Healthcare Costs Could Hit Other Sectors of the Economy

September 25, 2018

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Source: Fierce Healthcare

The double whammy of rising healthcare costs and an aging population could cause a ripple of negative impacts across the U.S. economy.

That’s according to a report from Moody’s Investors Services which warns about widening U.S. fiscal deficits and a weakening of the sovereign’s fiscal outlook as federal programs like Medicare and Medicaid, which account for 25% of federal spending, take up larger amounts of the budget.

Those rising costs are “pressuring public sector budgets, straining household finances and weighing on business competitiveness,” the report said.

Among the specific problems? Moody’s authors raised concern that U.S. growth potential could be constrained as rising costs crowd out other areas of discretionary spending, such as education and infrastructure.

In businesses, healthcare costs could hurt competitiveness as it affects their profits and hiring decisions. In households, healthcare costs could reduce purchasing power and make individuals less resilient to financial stress.

This report comes on the heels of another healthcare-focused report from Moody’s that raised concerns about the financial stability of many nonprofit hospitals around the country. In particular, that report showed the growth of expenses at a fairly large number of hospitals is outpacing the growth of their revenue.

 

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