Matt Yglesias provides some nice insight into one of the reasons health care spending grows. The quality (nature of) health care changes. Prices rise, sure. But more than that, we fill our “health care market basket” with different stuff. If we just held the quality of care constant, look what we could do:
Think back to 1911. We had some doctors. They provided some health care. The quality of the care they offered wasn’t very good, but there it was. Since that time, we’ve had a lot of economic growth, a lot of technological improvement, etc. One thing that we could have done during that time span was looked at the 1911 standard of health care and tried to hold that roughly constant over time. If we had done that, we would find that with every passing decade we “need” fewer and fewer doctors per capita to provide the same standard of care. Cheap automobiles would reduce the doctor-density needed to provide a 1911 level of coverage. Then over time we’d move to a system where the vast majority of doctors just sit in a big room and field calls from people with health questions. It’d be like the Butterball Turkey Hotline. They’d guesstimate what medicine you need and you’d get your prescription filled at the pharmacy. Over time, phone calls would get cheaper and then with the Internet you’d be able to get passive diagnosis, public health info, etc. The quality of health care provided by this system would be pretty deplorable, but that’s the point. You’re taking 1911 health care quality and asking how many doctors you “need” to achieve it. And the answer is “not very many.”
We can make health care cheap by just making it worse. In some sense, we may have to do that (or, just not make it better as fast) if we don’t come up with a preferable approach. Is it good enough yet?