Make no mistake: total U. S. healthcare spending bears no resemblance to that of any other country in the world. Consider the chart above. Do you see that bar sticking way above the others on the far left side of the chart? That’s U. S. healthcare spending as a proportion of GDP. We spend more as a proportion of GDP, overall, and per capita than any other country in the world and by a substantial margin. And it’s growing fast.
The obvious retort to that is that, as people grow wealthier, since healthcare is a superior good they will, naturally, spend more money on healthcare. Unfortunately, income hasn’t grown for a decade but healthcare costs keep growing up.
My main gripe about the rapid growth of healthcare spending is that it’s underwritten by tax dollars with 3/5s or more of healthcare spending is from tax dollars. I believe that attracts investment into healthcare and away from other sectors of the economy.
Why is healthcare spending rising so fast? As has been the case at several points in the past, e.g. 1976-1980, costs are rising because providers are charging more. It’s not technology or utilization or improved quality. As Uwe Reinhardt put it, it’s the prices stupid.
Vampire squid is the evocative description Matt Tabibi gave to Goldman Sachs. Others have since applied it to the whole banking system. This should give you the general idea:
It ain’t just the banks. Healthcare spending accounted for 12% of GDP in 1992 and 8.8%R of GDP in 1980. Growing by 10% a year in 1980 was one thing. In 2011 it’s something entirely different and it’s sucking the life out of the economy.