Understanding the Economic Consequences of Shifting Trends in Population Health

TitleUnderstanding the Economic Consequences of Shifting Trends in Population Health
Publication TypeReport
Year of Publication2009
AuthorsGoldman, DP, Lakdawalla, D, Michaud, P-C, Zheng, Y, Gailey, A
Series TitleNBER Working Paper
Document Number15231
InstitutionNational Bureau of Economic Research
CityCambridge, MA
KeywordsEmployment and Labor Force, Expectations, Health Conditions and Status, Healthcare, Methodology, Public Policy

The public economic burden of shifting trends in population health remains uncertain. Sustained increases in obesity, diabetes, and other diseases could reduce life expectancy - with a concomitant decrease in the public-sector's annuity burden - but these savings may be offset by worsening functional status, which increases health care spending, reduces labor supply, and increases public assistance. Using a microsimulation approach, we quantify the competing public-finance consequences of shifting trends in population health for medical care costs, labor supply, earnings, wealth, tax revenues, and government expenditures (including Social Security and income assistance). Together, the reduction in smoking and the rise in obesity have increased net public-sector liabilities by $430bn, or approximately 4% of the current debt burden. Larger effects are observed for specific public programs: annual spending is 10% higher in the Medicaid program, and 7% higher for Medicare.

Endnote Keywords

Cross Cultural Comparison/life Expectancy/Functional Status/health care spending/public assistance/labor Supply/government expenditures

Endnote ID


Citation Key5727