NCPA - National Center for Policy Analysis

More Health Care Is Better

December 16, 1999

Within the next 25 years or so, according to recent estimates, health care could account for as much as 25 percent of spending in the United States. Spending trends in almost all other developed countries are headed in the same direction, although with a time lag. Author Charles R. Morris asks, what is so bad about that?

Morris argues that health care is becoming a high-productivity, high-technology industry where each dollar buys more. Thus, although health spending is increasing, most health care costs are going down. And as the personal computer industry shows, falling costs and improved performance usually induces more spending, not less. For example,

  • Cataract surgery used to be a dangerous operation, requiring up to a week's hospitalization for marginal improvement in vision -- now it's an hour-long outpatient procedure that usually restores near-normal sight and the long-term, per-unit cost of treatment is falling about one percent a year.
  • The cost of treating heart attack patients actually fell by about one percent a year from 1983 to 1994, after adjusting for improved mortality, according to a study by David Cutler of Harvard University.
  • The cost of treating depression fell at an annual rate of more than 5 percent before inflation during the early 1990s, due to the use of antidepressants.
  • Prices of artificial joint implants have fallen about 25 percent over the past five years, according to Ned Lipes of the Howmedica Osteonics, a major manufacturer, and hospital stays for implants have been cut in half.
  • Through the use of laparascopic surgery, fees for gall bladder surgery are about half what they used to be, and inpatient hospital stays have been virtually eliminated.

The share of national income devoted to food and health care combined hasn't changed in 50 years, says Columbia University economist Sherry Glied. We just spend a lot less on food, and a lot more on health care.

Source: Charles R. Morris, "The Health-Care Economy Is Nothing to Fear," Atlantic Monthly, December 1999.

 

Browse more articles on Health Issues