Money and Medicine

AbstractThis book frames the evolutionary path of medical spending and provides a useful forecasting model. Tracing health spending from ancient times to the present with a single ratio, health expenditures as a share of income, reveals an S-shaped growth curve, rising rapidly after science made therapies more effective and more expensive, inflecting as the rate of expansion peaked with the coalescence of national health systems in the 1960s, and decelerating after 1975. Medicine became qualitatively different as it scaled up along therapeutic, organizational, financial, and moral dimensions. The development of health insurance and changes in the flow of funds made macro effects on total spending different from micro determinants of allocation. Institutional inertia and lags require a span of observation long enough to distinguish temporary fluctuations from shifts in trend with careful attention to measurement methods and the dynamics of change over time and space. Archival data for early centuries are provided along with detailed graphical analysis of country trends since 1950 (Chapter 4). A case of the United States suggests when and how it became an outlier among OECD nations (Chapter 7). The contribution of medical expenditures to health and economic development are seen to be both obvious and difficult to measure.