The president says that his health plan is responsive “to all those families who now spend more on health care than housing or food.” Well. The Hudson Institute’s Betsy McCaughey, writing in the American Spectator, says that in 1960 the average American household spent 53 percent of its disposable income on food, housing, energy and health care. Today the portion of income consumed by those four has barely changed — 55 percent. But the health-care component has increased while the other three combined have decreased. This is partly because as societies become richer, they spend more on health care — and symphonies, universities, museums, etc.
It is also because health care is increasingly competent. When the first baby boomers, whose aging is driving health-care spending, were born in 1946, many American hospitals’ principal expense was clean linen. This was long before MRIs, CAT scans and the rest of the diagnostic and therapeutic arsenal that modern medicine deploys.