Congressioanl Briefing - August 24, 2009

Health Care Cost Growth and the Economic Performance of U.S. Industries

one hundred-dollar bils and a rising graph line


Neeraj Sood


Monday, August 24, 2009


1:00 p.m. – 2:00 p.m.


210 Cannon House Building

About the Program

For the past two decades, growth in U.S. health care costs has outpaced growth in gross domestic product (GDP). As the House and Senate debate the different health reform proposals, one of the most common questions is how to reign in health care spending and decrease costs. But do we know to what extent sharply rising health care costs affect the U.S. economy?

RAND conducted a first-of-its-kind study that has linked the rapid growth of health care costs to negative economic consequences for several U.S. industries. Increased health care costs can translate into higher labor costs, which might cause firms to hire fewer workers, produce less output, or raise prices. Findings from the study presented at the briefing will include the following:

  • Industries where a larger percentage of workers received employer-sponsored health insurance had significantly lower employment growth, posting job losses and lower output.
  • These industries also showed lower growth in their contribution to the GDP (value added) over time.
  • Among the 38 industries studied, a 10 percent increase in excess health care cost growth would lead to an estimate of 120,800 fewer jobs, $28 billion in lost revenues, and $14 billion in lost value added.

About the Speaker

Neeraj Sood is a senior economist at RAND, a professor at the Pardee RAND Graduate School, and a faculty research fellow at the National Bureau of Economic Research. His previous research focused on the economics of innovation, HIV/AIDS policy, and health care financing. Currently, Sood's work focuses on health economics and health policy research, with an emphasis on the role of price regulation in health and life insurance markets, the effects of provider reimbursement on resource use and outcomes, and the impact of health insurance markets on the HIV and obesity epidemics.

RAND Office of Congressional Relations

For 60 years, RAND has provided policymakers with independent, objective research and analysis on key national security, domestic and international issues. RAND work helps members of Congress and their staffs make better-informed decisions on the nation's pressing challenges. The Office of Congressional Relations offers a number of products and services to educate, inform, and facilitate congressional policymakers' access to RAND work, including coordinating congressional testimony by RAND experts, organizing briefings and meetings, synthesizing RAND work into topical e-newsletters and providing reports and publications to congressional offices. For more information, visit the Office of Congressional Relations webpage, contact or call (703) 413-1100, ext. 5395.

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Further Inquiries

For further information about this event, contact the Office of Congressional Relations at or call (703) 413-1100, ext. 5395.