We have a new blog post in IPZine about trying to control healthcare costs by taking a new twist on the linkage in BIG phara to patent protection. Check that out this article on delinkage of intellectual property protection.

In 2017 we talked about scenarios that jump out at you.

Scenarios that Jump Out At You
Scenarios that really stand out, including compounding effects.

One that always is front-and-center is the out-of-control escalation of healthcare costs in the US, now up to 18% of GDP. In an Nov 20 2019 blog over at IPZine there’s discussion of “delinkage” related to pharma patents that has some potential for taming the out-of-control healthcare costs.  Included in that blog post is a discussion of how long it will take before healthcare costs escalate from 18% of GDP (approx. $3.6T of the $20T GDP) to 50% of GDP, and even 100% of GDP?

Here is some of the math. You can do your own figures. Assume that Healthcare costs increase by 10% per year as they have for decades (even though that rate is lower currently). Say that GDP growth is 2.5% and inflation is 2% (real GDP growth is =+0.5%). How many years before all healthcare costs in the US reach 25%, 50%, 75% and even 100% of the US GDP!???

Year Description (+10%) Targe%GDP # of Years
2025 Years til % of GDP 25% 4.5
2034 Years til % of GDP 50% 14.1
2040 Years til % of GDP 75% 19.7
2044 Years til % of GDP 100% 23.7

That’s right, with 4 or 5 years, the total healthcare costs of the US could be 25% of GDP. In 14 years it could be 50%, and in 20 years it could represent 75% of GDP. If this doesn’t scare you into taking some actions, then you obviously don’t understand the magnitude of the problem! This was the problem that we faced for decades when Healthcare costs were increasing at 10% or more each year.

Okay, so healthcare costs are lower now since the Great Recession; let’s say they may have dropped to 5% to 7.5 increase per year (2 to 3 times CPI inflation).

At 5% healthcare inflation:

Year Description (+5%) Targe%GDP # of Years
2033 Years til % of GDP 25% 13.3
2061 Years til % of GDP 50% 41.4
2078 Years til % of GDP 75% 57.8
2089 Years til % of GDP 100% 69.4

Note that it is no longer 4 or 5 years to reach 25% of US GDP, it takes more like 13 years. It takes 40 years to reach about 50% of GDP.

When you consider that the US spends 4 times what the rest of the world spends on healthcare (about $10k) and more than twice what the typical developed country spends… For outcomes that are no better… Some place in here we need to rethink.

Hall and Knab (2012) outlined 10 other items besides healthcare costs that were non-sustainable trends/practices that appeared to have compounding and accelerating forces at play. The (US) Federal deficit is one. Each of those scenarios loom as large or larger today than back in 2012.

#scenario #healthcare #gdp #compounding #ipzine #patents #intellectualproperty

References

Hall, E., & Knab, E.F. (2012, July). Social irresponsibility provides opportunity for the win-win-win of Sustainable Leadership. In C. A. Lentz (Ed.), The Refractive Thinker: Vol. 7. Social responsibility (pp. 197-220). Las Vegas, NV: The Lentz Leadership Institute. (Available from www.RefractiveThinker.com, ISBN: 978-0-9840054-2-0)