An Unhealthy America: The Economic Burden of ... - Milken Institute

An Unhealthy AmericaMilken Instituteforce longer. They achieve higher productivity. Their higher household incomes in turn influence educationand health levels of successive generations.(3) Capital StockCapital stock, also known as physical capital (the amount of equipment, machinery, and buildings in theeconomy), is another variable that determines production capacity. This variable captures three majorcomponents: equipment, software, and structures for both privately and publicly owned goods.Investments in capital and the accumulation of capital stock determine to some degree how efficiently thelabor force is utilized. In turn, capital stock productivity is generally affected by how efficiently the humancapital (work force) utilizes it. Remember, higher accumulations of human capital—through education andtraining—increase the productivity of capital, an endogenous relationship that will affect the optimisticprojections of capital stock formation. The baseline historical trends were derived from Census Bureau data onstate and local government expenditures, and the private stock (non-governmental) of non-residential goods,as well as projected trends from Global Insight.(4) Percentage of Population with a Bachelor’s DegreeThis variable is representative of human capital formation and refers to the level of investment in educationand on-the-job training that helps to increase worker productivity or increase a worker’s ability to usesophisticated machinery. Recent literature has strongly differentiated between labor force size and humancapital formation; this study emphasizes the interplay between the two.The next figure illustrates the clear trend toward increased education. This is due in large part to the GI Bill,which has helped finance higher education for millions of Americans and created the world’s most educatedwork force. Despite those successes, the U.S. Census Bureau speculates that changes in the population due torace/ethnicity from 2000 to 2020 will bring about substantial and potentially harmful changes to the work force.Substantial declines at every educationallevel, from high school through graduateBachelor’s Degree and Abovestudy, are forecast. Nearly all states willU.S. Baseline and Optimistic ProjectionsBachelor's Degree and Aboveexperience an increase in the workforceU.S. Baseline and Optimistic Projectionsshare without a high school diploma.Percent of Population45 Expenditures PRC* Expenditures/PRCDisease(Billions) (Millions) (Thousands)But this pessimistic view does not Cancer account 4048.1 10.6 4.5for intergenerational savings for, Breast and Cancer 355.5 1.1 4.8investments in, education. It does Colon not Cancer 3.9 0.3 11.530account for changes to the consumptionLung Cancer 6.3 0.4 Baseline 17.1OptimisticProstate Cancer 254.3 1.0 4.1patterns of education across demographicOther Cancers 28.0 7.7 3.6groups. Nor does it incorporate the 20Pulmonary Conditions 45.2 49.2 0.9effects of better health. At a minimum, Diabetes as 15History27.1Forecast13.7 2.0advances occur in health-care prevention, Hypertension 32.5 36.8 0.910screening, and treatment, employees Heart will Disease 64.7 19.2 3.45retire later, slowing a decline. Stories Stroke of13.6 2.4 5.61970 1980 1990 2000 2010 2020 2030 2040Sources: Census Bureau, Milken Instituteretirees forced back into the laborMentalforce byDisorders 45.8 30.3 1.5Total 277.0 162.2 1.7dire financial conditions are common—PRC: Population Reporting Condition[ 171 ]