By 2030, predicts Robert W. Fogel, a Nobel laureate at the University of Chicago Graduate School of Business, about 25 percent of the G.D.P. will be spent on health care, making it the driving force in the economy, just as railroads drove the economy at the start of the 20th century.
Unless the current system is changed, most health care costs will continue to be paid by insurance, especially Medicare, which means that the taxpayers will foot the bill. But Dr. Fogel says he is not alarmed. Americans can afford it, he says, because the nation is so rich. "It takes so little of household income to satisfy expenditures on food, clothing and shelter," he explains. "At the end of the 19th century, food, clothing and shelter accounted for 80 percent of the family budget. Today it's about a third."
Still, Victor R. Fuchs, also an economist at Stanford, notes that buying health care is fundamentally different from buying a television or a car. “Most of it involves transfers from the young to the old,” he said. “Down the road, most medical care will be for people over age 65, and most of the payments will be from taxes on younger people.” Dr. Fuchs calls it the restaurant check problem. “You go out to a restaurant with a bunch of friends and you sort of understand that you will split the check,” he said. “The waiter comes along and says, ‘The lobster looks very good, and how about a soufflé for dessert?’ The restaurant check balloons, but you are not so careful because you figure everyone is splitting it. “That’s the way medical care gets paid for,” he said.
To me, this is interesting stuff, but the more important question has to do with efficiency. How much of the money we spend buying health care is wasted? In our current system, there are commercial interests influencing spending. What additional value do we get from our market-centric approach?