EBRI Issue Brief

Health Care: What Role in the U.S. Economy?

May 1, 1991 23  pages


  • The increasing ratio of elderly persons to working individuals will contribute to an increase in the proportion of GNP spent on health care. Medicare expenditures alone, estimated at 2.0 percent of GNP in 1990, are projected to increase to 6.8 percent of GNP in the year 2060.
  • Between 1977 and 1987, while wages in most industries grew more slowly than the rate of inflation, the earnings of health services workers outgrew the inflation rate.
  • Health care delivery industries supplied 16 percent of net new jobs between 1980 and 1990.
  • As of January 1991, 8.4 million individuals, or 9.1 percent of total nonagricultural workers in the private sector, were directly employed in health services. In many local areas, the proportion of health care workers is higher. Employment by restaurants, retail stores, and other nonhealth employers in these areas would decline considerably if the health sector were to shrink.
  • Individual health spending as a share of adjusted personal income has increased by only 0.9 percentage points since 1965.
  • Although health care expenditures are the fastest-rising component of employee compensation, they are only one component of total compensation, the measurement that is generally used to determine productivity and competitiveness. Employer spending on wages and salaries is a much more significant component (84 percent) of total compensation than is employer spending on health care (6 percent).