Right Data: The Health-Care Thing

FOR MORE than three decades health-care spending has grown faster than national income, rising from 5 per cent of GDP in 1960 to 14 per cent in 1993. Some of this reflects the introduction of Medicaid and Medicare in the mid 1960s. But economist William Baumol points out that all countries, no matter what their system of health care, have experienced rising medical costs over this period. Furthermore, the trend in health-care costs is no different from that of other services:

The CPI, which measures economy-wide inflation, rose about 4.9 per cent per year between 1960 and 1993. The price of medical services rose at 6.9 per cent per year. The difference means that, in dollars of constant purchasing power, the cost of visiting a doctor rose nearly 85 per cent over this period—although that is a narrower margin than in the case of per-pupil education costs.

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Ed Rubenstein

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FOR MORE than three decades health-care spending has grown faster than national income, rising from 5 per cent of GDP in 1960 to 14 per cent in 1993. Some of this reflects the introduction of Medicaid and Medicare in the mid 1960s. But economist William Baumol points out that all countries, no matter what their system of health care, have experienced rising medical costs over this period. Furthermore, the trend in health-care costs is no different from that of other services:

The CPI, which measures economy-wide inflation, rose about 4.9 per cent per year between 1960 and 1993. The price of medical services rose at 6.9 per cent per year. The difference means that, in dollars of constant purchasing power, the cost of visiting a doctor rose nearly 85 per cent over this period—although that is a narrower margin than in the case of per-pupil education costs.