The Health Care Trap

The wealthiest countries spend lavishly on health care. The growing expenditures create entrenched health-care systems that provide an increasing share of employment in those nations. Technological innovation – from development of new drugs to life-saving equipment – in the health-care sector, unlike other industries, tends to make prices rise rather than fall, explains Richard Smith in an essay for the Guardian. With extra funds devoted to health care, life-expectancy rates do not increase all that much in the wealthy nations nor do rates of reported illness fall. Instead, the wealthy citizens focus on every ache and pain and fear the typical aging process. Extra spending on health care does not improve overall outcomes as the economic theory of diminishing marginal returns kicks in: Each extra unit spent on health care provides marginally less improvement. Health care is a selfish endeavor, Smith suggests, and governments could gain substantial social improvements by devoting funds to reduce other inequalities. – YaleGlobal