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Study finds rapid growth in health costs hurts economic performance of US industries
Date:7/23/2009

A first-of-its-kind RAND Corporation study has linked the rapid growth in health care costs in the United States with job losses and lower output among industries that commonly provide workers with health insurance.

Researchers examined the economic performance of 38 industries from 1987 through 2005 and compared changes in employment, gross economic output and the value added to the gross domestic product for industries where a large number of workers have employer-sponsored health insurance to those industries where few workers have job-based health insurance.

They found that, after adjusting for other factors, industries where a larger percentage of workers received employer-sponsored health insurance had significantly lower employment growth during the study period than industries where health benefits were less common. Industries with a larger percentage of workers receiving employer-sponsored health insurance also showed lower growth in their contribution to the gross domestic product over time.

"This study provides some of the first evidence that the rapid rise in health care costs has negative consequences for several U.S. industries," said Neeraj Sood, the study's lead author and a senior economist at RAND, a nonprofit research organization. "Industries where more workers receive employer-sponsored health insurance are hit the hardest by rising health care costs."

The RAND study, published online by the journal Health Services Research, is the first to attempt to assess the economic impact of "excess" growth in health care costs on U.S. industries. Excess growth is defined as the increase in health care costs that exceeds the overall growth of the nation's gross domestic product.

The rapid growth in health care costs and health insurance premiums in the United States over the past two decades has raised concern that the trend is harmful to the nation's economy. Many observers argue that rapidly ri
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Contact: Warren Robak
robak@rand.org
310-451-6913
RAND Corporation
Source:Eurekalert

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