Public health care funding and the Montana economy.

• Author: Davis, Gregg

The Demographic Shift in Health Care Spending

Every eight seconds another baby boomer qualifies for Medicare. This trend will continue until the year 2029, as 78 million boomers become eligible for Medicare, the federal program financing health care for the 65+ population.

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As the population ages, the balance between public and private spending for health care will shift significantly, with the public share of total health care spending increasing from 47 percent in 2008 to more than 50 percent by 2012, and eventually reaching 52 percent by 2019.

An aging population spends more per capita on health care, and finding ways to pay for it will prove to be a challenge. Public spending for health care is expected to accelerate from 5 percent annual growth in 2010 to more than 8 percent annual growth in 2018.

Understanding the role public health care dollars play in a state's economy is important, and particularly so for Montana, which has more baby boomers and veterans per capita than the rest of the nation. And both of these groups rely on public funding for their health care needs. The impact public dollars have on Montana's health care industry, as well as its overall economy, was the focus of a recent BBER study sponsored by the Alliance for a Healthy Montana. Following are some of the study's findings.

Health Care in Montana

This year, Montanans will spend more than $6 billion on health care. Personal health care expenditures include spending on hospital care, professional services (doctors, dentists, and clinical services), nursing home and home health services, and retail sales of prescription drugs and medical products.

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One way to fully understand the importance of all personal health care spending in Montana is to put it in the perspective of the state's gross state product. Personal health care spending represents more than 17 percent of the state's gross product.

Health care is typically defined as ambulatory services, hospitals, nursing and residential services, and social assistance. In Montana, it accounts for 9 percent of the state's gross state product. Only government (federal civilian, federal military, state and local government) and real estate rental and leasing exceed it in terms of gross state product. (Figure 1). Compared to the rest of the nation, only seven states devote more of their gross state products to health care and social assistance.

Public Health Care Spending in Montana

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