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A Long, Long Perspective of Health Care in the US

By February 14, 2019Commentary

I have been around for a long time, but not 200 years!!  A post from an economics think tank examines 200 years of health care in US, trying to identify major trends.   (CEPR Post)   Especially in the 1900s, health took a dramatic leap upward; with life expectancies growing very rapidly, in large part due to drops in infant mortality.  Health care spending has risen along with people’s longevity.  As late as 1960, health spending was only 4% of GDP.  From there it skyrocketed, to over 13% by 1990, with a brief plateauing, likely due to the rise of managed care, followed by another surge to the current 18% of GDP.  Do you think that it is any accident that the enactment of Medicare and Medicaid occurred at the same time as health spending exploded?  The improvements in health, especially in the 1800s and early in the 1900s, were driven by better knowledge and by better public health.  People had clean drinking water, effective disposal of waste, better nutrition; all buttressed by an understanding of disease causes and necessary preventive and treatment measures.  The reduction in mortality and morbidity due to infectious diseases was especially striking.  It was a true knowledge revolution.  By the mid-1900s, the improvement in health and the increase in spending began to be driven more by technology–new procedures, new equipment, new devices and new drugs, a trend that has accelerated since 1960.  It is questionable whether we are getting the same benefits in terms of quality of life from all the additional health spending, but during the 1900s people’s income and wealth also increased radically and along with that came more of a personal interest in health.  In the 1800s and 1900s you were happy to survive, today we demand “well-being” and fight any functional decline.  As demand for health care services and products increased, so did the prices which health care professionals and health care companies charged to meet that demand.  And research fairly consistently shows that it is increasing prices which have contributed most to rising health spending.  Now all our health spending is causing tax and out-of-pocket pain which has led to renewed demands to control prices and cost.  We will see how long that lasts.  We have evolved a complex, concentrated and expensive health system which demands ever more money to be fed.  Government programs and regulation allowed, even encouraged that.  We might be better off now to try to move back to a system more driven by individual financing and purchase decisions.

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