Analyst Insight by Mark Strobel - Consumer Health Analyst
Ballooning health care expenditure is an increasingly large burden for economies around the world. The problem is especially worrisome in the US, in part due to the high price of health goods and medical services. As a result, the US governing agencies are enacting policies that attempt to reign in health care spend and reduce costs. This objective is a cornerstone of the Affordable Care Act (AFA), as the name implies, which was signed into law in March 2010. However, under the AFA, the vast majority of over-the-counter remedies (OTCs) are no longer eligible for purchase with tax exempt health spending accounts. This effectively raises the price of these products, which is a direct contradiction of one of the primary goals of the AFA. Restoring OTC coverage is a key legislative goal for several organizations and political representatives, and while it will correct an inconsistent approach to the health care policy, its overall impact on the US OTC market will likely be limited.
A Growing Hardship
Burgeoning health care expenditure is a growing issue worldwide. Consumers spent US$3.9 trillion globally on health goods and medical services in 2013, which is up 3% year-on-year and more than double from just 20 years ago (using constant terms to discount inflation). The US is particularly afflicted by this hardship, accounting for 60% of the global health care expenditure or US$2.4 trillion. According to the World Bank, health expenditure derives 17.9% of the US gross domestic product, which is most of all countries tracked. On a per capita basis, consumers in the US spent on average US$7,491 on health goods and medical services in 2013, or thirteen times more than the global average. This number, already up nearly US$700 from 2008, is only expected to grow with the aging population and the increased prevalence of non-communicable chronic diseases.