Money and Medicine: The Evolution of National Health Expenditures

Description

A unique historical review that traces health spending from ancient times to the present and forecasts 21st century trends. There are many histories of medicine, yet none that assess the dynamics of expenditures over decades and centuries. Economists have not yet addressed the magnitude of the transformation that occurred during the twentieth century as payments shifted from solo physician practices to health systems, nor the legacy effects of social practices accumulated over millennia that will shape health spending in the twenty-first. In Money and Medicine, Thomas E. Getzen provides a unified narrative of medical spending from ancient Egypt and Babylonia to the present day. Drawing on a wealth of historical reports, data, and documents, Getzen concentrates on a single ratio-the share of income devoted to medical care-to frame the evolutionary path of medicine, revealing an S-shaped growth curve that rose rapidly after 1900 as science made therapies more effective and more expensive, inflected as national health systems coalesced and rates of expansion peaked in the 1960s, then decelerated after 1975. International trends in forty-three countries are graphically illustrated with analysis supporting a parsimonious financial model. Significant lags are seen between medical innovation or macroeconomic shocks and the corresponding changes in national health expenditures. Getzen explains inertial responses to the 2008 financial crisis and Covid-19 recession, provides a method for projecting trends over the next fifty years, and suggests why spending is so much higher in the United States than other countries. As rising costs and unequal distribution of medical care have created a sense of crisis in many countries, Money and Medicine shows that we must look beyond the last few years to craft sensible solutions. Cover Money and Medicine Copyright Dedication Contents List of Tables and Figures Preface Acknowledgments 1. Introduction: The Transformation of Medicine 2. Hammurabi to Middlemarch, 1750 bce to 1850 ce Historical Review State Medicine, Hospitals, and Public Health Medical Effectiveness and Expenditures from 1800 bce to the 19th Century ce Early Medicine: 3,000-​Year Generalizations 3. The Rise of Modern Medicine, 1880–​1975 Preconditions Medical Expenditure Trends and Levels Advances in Medical Science Institutional Changes Driven by Technology Financing and Health Insurance Coalescence of National Health Systems and “Postmodern” Medicine After 1975 4. Global and National Market Trends, 1950–​2019 Growth Trends for 21 OECD Countries Trends in Emerging Markets and LDCs Convergence? 5. Scaling Up Medical Science Scales Up Organizational Scale: From Doctors to Hospitals to Networks Financial Scale: From Patient Fees and Charity to Social Insurance From Commodity to Human Right: Ethical and Moral Scales Political Scales: From Neighborhood to Nation Interacting Scales and the Coalescence of National Health Systems Path Dependence and Timing 6. Contracts: Buying and Selling Medical Care What Is a Price? Network Financing and Social Contracts What Makes Medical Transactions Different? “Uncertainty and the Welfare Economics of Medical Care” by K. J. Arrow Evolutionary Perspectives: The Adjustment of Medical Institutions Third-​Party Payment and the Changing Nature of Medical Transactions 7. United States: A Case Study of Leadership and Excess US Data and Literature Review Historical Trends over the Last 200+​ Years Trend Shifts and Regime Changes The Breakdown of Voluntary Financing When and Why Did US National Health Expenditures Become an Outlier? Static Versus Dynamic Efficiency, Global Versus Local Effects 8. Aging Populations Expenditures and Population Aging Across Countries Spending on the Elderly Is a Result of Policy, Not Biology Time-​to-​Death and the Marginal Value of Medical Care 9. Temporary Fluctuations, Trend Shifts, Lags, and Inertia Decomposing Growth: Population, Inflation, Real GDP per Capita, Plus “Excess” Lags Smoothing: Short-​ or Long-​Run? How Many Years? Employment Unemployment, Longevity, and Mortality Rates A Tale of Two Necessities Expectations Specifying Turning Points and Growth Paths 10. Measuring NHE: Accounting, Boundaries, and Budgets Accounting Frameworks for National Health Expenditures Boundaries: Categorical, Temporal, Spatial Scale and Units of Observation Budgets: How Much and Compared to What? What Is “Technological Growth”? Limits to Measurement and Econometric Testing 11. Forecasting National Health Expenditures: 2030 to 2130 NHE Projections for 2025 to the 2030s Short-​Term Nearcasts Are Different from Long-​Run Forecasts Types of Forecast Modeling Accuracy NHE Forecasting for the Very Long Run: 2050 to 2130 Forecasting in the Time of COVID 12. Conclusion: Seeing the Growth Curve Bend Micro to Macro: Seeing the Leaves, the Trees, the Forest, and the Ecosystem Seeing the Curve A Budgetary Perspective National Health Systems Evolution The Nature of Medical Transactions Appendices Appendix A: Data Sources, Documentation, and Extrapolations: International, 1850–​2019 Appendix B: Data Sources, Documentation, and Extrapolations: United States, 1770–​2020 Appendix C: An Economic Exegesis of the Hippocratic Oath Appendix D: Is Sir William Petty’s 1672 Treatise on Taxes the First Health Economics Paper? References Index