Economic & Equity Update

Steven C Wieting, Managing Director US Developing Markets Economics

November 19, 2009

While the present healthcare debate may have been recast as “health insurance reform,” it is the increasingly expensive and common procedures – hospital stays and medicines – that account for the bulk of healthcare outlays.
Roughly 40% of Federal government spending is reclassified as consumption, and that share is set to rise sharply over time. In particular, government transfers for Medicare are classified as consumer outlays and income.
Federal, state and local governments already spend more on health care for the retired than education for the young. This has occurred before a substantial demographic shift that will boost elderly-care spending.
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Morgan Stanley Smith Barney