In a typically short post (which is good; you can read it quickly and should) Tyler Cowen reminds us that diminishing marginal returns apply to health care too.
Here is one bit from a very good Robert Gordon essay (which I will cover again in a while):
…if one starts down the road of comparing changes in life expectancy, the yearly rate of increase in life expectancy at birth during 1900–50, resulting in substantial part from the inventions of the Second Industrial Revolution, was 0.72 percent per year, the 0.24 percent annual rate during 1950–95.
James Le Fanu, in his 2000 history of modern medicine, lists definitive moments of modern medicine. In the 1940s there are six such moments, seven moments in the 1950s, six moments in the 1960s, a moment in 1970 and 1971 each, and from 1973-1998, a twenty-five year period, there are only seven moments in total. […]
As an aside, this has a number of political economy implications for health care reform, none of them cheery. In both Washington and in the blogosphere, we’re very focused on insurance and coverage issues, but is not the innovation pipeline more important? Does it receive one-tenth the discussion? One-fiftieth? Does a slow pipeline mean that health care policy is doomed to be unpopular?
About that aside, a relevant issue is how the benefits of improvements in medicine are distributed. That’s the question of access, which is mostly what health reform has been about. That does not diminish the import of continued innovation or the cost thereof.
One could say that the implications for health reform are, actually, cheery. If the benefits of health care are more widely enjoyed (and in particular by addressing some failures of the market to make them so), isn’t that slightly cheerful?