Mr. Obama wants to "reform" health care spending in the USA. It looks like that means spending more money. Apparently the USA already spends over $8,000 per person on all things medical (nearly 1/5th of GDP). We believe that long-term, USA GDP will fall much closer to the world mean, about $10,000 per year. Obviously the USA cannot spend 4/5ths of its income on medicine.
This is not good news for the U.S. medical complex. Given that the USA spends about twice as much per capita on medicine as other developed countries, there is plenty of fat to be cut. Some countries go further such as Singapore or Cuba, for example, which have adequate health care systems (certain measures of public health are higher than for the USA), at a small or tiny fraction of the cost per capita (1/5th and 1/25th respectively).
It is apparent that a vast reduction in medical spending need not necessarily yield a vast reduction in medical care. Though, considering the disarray in the U.S. system, a decline of quality is likely. What is certain is that incomes for those who make their living in the industry are bound to fall dramatically or just go away.
Among the many super-sized industries in the USA, medicine is among the most bloated. We expect the Depression will cut it down to a sustainable level dramatically smaller than its current size.
Thursday, February 26, 2009
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1 comment:
I couldn't agree more except for you statement "a vast reduction in medical spending need not necessarily yield a vast reduction in medical care."
I might change it to:... "need not necessarily yield a vast reduction in medical OUTCOMES."
There is more care in America than anywhere else in the world, it is just not clear that the care is necessary.
Think volume: you can have good music, bad music but either can be played louder or softer. We play ALL music LOUDLY in America. In other countries, they play it softer.
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