Health and Percent of GDP

The actual consumption of food at home has gone from 20.3% of income in 1929 to a mere 5.6% today. Factoring in eating out it has gone from 23.4% in 1929 to a staggering 9.6% today. Just reviewing the numbers, and ignoring what we know, it appears Americans are eating much less than they did in 1920's. This is certainly not the case. You could even conclude from the numbers that maybe people don't value food as much and therefore are spending less. Reality is we both eat better and spend less which is great.

Now take medical care, just because we are spending more of GDP then in the past doesn't mean all is bad. We need to look at the value as well. Despite the fact we, as Americans, have some lifestyle improvements to make, get a very strong benefit from what we spend. The reason we know this is because if it didn't work we would not demand more and better health care. Lower demand means lower prices - basic economics.

This evaluation of how much of our GDP goes toward health care is misguided. This is not the metric that should be evaluated. The other thing is everyone loves to do straight line (simplistic) analysis of health care cost growth and how in year X it will consume 50% of GDP. Unlikely.

The focus should be on improving the incentive system in the medical care market. To provide insurance and medical savings plans (currently everyone wants a medical savings plan it seems but with the cost of insurance). To reward providers that have higher output per dollar of input - to establish feedback loops through a cost system. Government mandates will fail, in the sense of even less effectiveness as compared to market feedback and distributed knowledge. Providers should publish prices and keep prices consistent regardless of the payer. We don't need to mot towards nationalization of health care to improve it.