By: Tim Coan, Founder, Chief Executive Officer, ALN Medical Management

December 07, 2015 8:31 pm EST
uncut sheet of one hundred dollar bills

Well, we’re now officially in the $3 trillion dollar club. It is a small gathering.

We’ve been rounding up to 3T for a few years now because saying ‘two trillion, eight hundred seventy three billion’ just doesn’t flow right off the tongue, but now it is official.

If this were sports, we’d stop the game and have a little ceremony. We’d give someone a game ball as the announcers gushed and the graphics of greatness scrolled across the bottom of the screen. We did that recently here in Denver, which proved to be a curse, because our injured quarterback then proceeded to throw four interceptions. Not that I am still bitter.

Last week, the government released its report on 2014 healthcare spending and we’re going to spend this week unpacking the report. We’ll do our best to take a report chock full of numbers and turn it into something more valuable than just three articles chock full of numbers.

Today, let’s just marvel at the size of the behemoth. Later in the week we’ll go under the hood.

In an attempt to put three trillion in perspective, I busted out an Excel spreadsheet, stuck in some numbers and counted the commas. It would take more than 95,000 years to get to three trillion seconds. That’s big…a Stephen Hawking type number.

Healthcare spending now accounts for 17.5% of GDP. That is more than all government spending, though there is some double counting because half of healthcare funding comes from one government source or another.   That is bigger than all manufacturing or all retail. Only the financial services industry is bigger.

OK, we’re big. So what? Isn’t it better to spend on healthcare instead of Candy Crush or bad action figure movie sequels? Well, if given only that choice, yes.

There are two economic issues that are having increasingly negative impacts.

As mentioned above, half of healthcare funding comes from public sources. In the short term, funding for Medicare and Medicaid gobbles up cash needed for things like education and infrastructure. In the long term, since we are putting a lot of this on the country’s MasterCard, healthcare spending and national debt are inseparable.

The other half comes from individuals and companies. Again, the gluttonous beast is gobbling cash that is needed elsewhere. Healthcare costs put a damper on the ability of businesses to invest and grow and create jobs. As that cost gets increasingly shifted to the employees, the issue just gets transferred to the family budget meeting. We are on our way toward healthcare costs consuming 10% or more of family income, even for people who have the employer provided insurance, the gold standard. Consumer spending, which is the primary driver of our economy overall, gets impacted.

Three trillion is a big round number, but one with implications. Next, we’ll look at the rate of growth in spending to see if the trend provides good news or bad.

The views and opinions expressed herein are those of the author(s). Core Compass’s Terms Of Use applies.

About the author

Tim Coan is one of the founders of ALN Medical Management, a company that provides outsourced revenue cycle management and information technology services to physicians. He has served as Chief Executive Officer since inception in 2000.  Tim can be contacted through his website form or by phone at 866-611-5132.

healthcare sectorhealthcare spending
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