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Healthcare expenditure, it’s actually more like 100% of the economy

An interesting topic that has come up in my med school classes on health policy and health economics is the increasing expenditures on healthcare.  Just defining what that means is a bit of challenge, as you have to take into account things like inflation, the overall expansion of the economy, and so forth, but many people have settled on percent of GDP as a decent way to measure healthcare expenditure.  A fraction is a nice dimensionless number, which should be comparable across time.  I took the figure below from Wikipedia, looking at US healthcare expenditure over nearly half a century.  It does indeed look like it is increasing staggeringly.


However, we have to pause for a money to think about what we mean by healthcare expenditure, and usually we think of it as being paying for things like doctors visits, medicines, time spent in the hospital, and medical devices including everything from pacemakers to wheelchairs.   What is the rest of the economic expenditure then?  Things like food, housing/construction, household goods, entertainment, etc.


Why do people pay for these other things?  I would contend that almost all of them are related to healthcare.


Historically, individuals put a lot of effort into securing food, maintaining stable access to food.  Why do we pay for food?  Although we can get a lot of enjoyment from food, gong to restaurants with friends, and other reasons, we fundamentally eat to keep ourselves healthy.  The same is true of the construction industry, we construct buildings to protect us from the elements, keep us warm, dry, and safe from harm.  We put in plumbing with clean water and hot showers so we can reduce infection.  We have things like shoes and clothing to protect us from injury to our feet, sunburn, frostbite, ticks, and other things that can hurt us.  As we expand our conception of how our expenditures promote our health, we have police and military to keep us safe from the physical harm of people who might want to hurt us, firemen to keep ourselves safe from fire.  We have an entertainment industry to keep us happy.


What has happened over the past millennia is that, as a society, we have gotten very efficient at many of these aspects.  We can produce food, shelter, clothing, clean water, etc. with a much lower expenditure of total human effort.  At the same time, we have dramatically reduced the morbidity and mortality associated with starvation, malnutrition, exposure, infection, and even attacks from wild animals.  These things still happen, and indeed in many areas in the industrialized world have people who experience food insecurity and malnourishment.  However, broadly speaking, in the industrialized world we have massively reduced the illnesses caused by a lack of food and shelter.  We have introduced health problems now due to access to cheap cigarettes and high calorie cheap food, but we are working as a society to reduce these threats to health as well.


This then shifts the health concerns to a moreexotic and diverse range of illnesses which demand greater and greater technical skill in addressing.   Cancer is not a substantial healthcare burden on a society, until they have addressed access to food, shelter, and sanitation.  We can view the increasing expenditure on that part of the economy we call healthcare as a great success.  We have been able to become very efficient at the other areas of production and we are now as a society lucky enough to have substantial numbers of people to live long enough to suffer illnesses like Alzheimer’s and Parkinson’s Disease.  Those are new challenges which we can work to overcome to improve the health of our society.  A society with a larger and larger fraction of its economy dedicated to healthcare means that it is becoming very efficient at producing the other aspects it needs and can dedicate itself to improving the lives of its sickest members.



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