Where Is the Medical Market Headed?

We last looked at the medical industry in June 2016. A lot has happened since then. We had an election where the Affordable Care Act (aka Obamacare) was a significant topic of debate. Should it be modified? If so, then how? Or, should it be scrapped altogether? With Donald Trump winning the election, there has been talk that the Affordable Care Act will be repealed, even if the Trump administration and the Republicans have nothing significant with which to replace it. As a result, there’s an important question mark around the future of medical manufacturing.

With all that as a backdrop, let’s take a look at the data and see what it says about the direction of medical manufacturing. In 2016, real medical-care spending (i.e., adjusted for inflation) continued on its pace of large increases that it had been on since early 2014, which was most probably due to the Affordable Care Act. But after the first quarter and as the election drew near, real medical-care spending flatlined. This showed up in the annual rate of change in medical-care spending (the orange line on the chart). As absolute spending on medical care flatlined, the rate of growth decelerated significantly. While the annual rate of growth remained strong compared with the last decade, it is likely that it will continue to slow in the first half of 2017 as it approaches the historical average growth rate.