ABSTRACT
First, the amount of money that each person is willing to spend on medical costs is a function of how much value he puts on his own life. Once people have enough to eat and drink, they are more willing to spend money on health. Meanwhile, the rate at which they are willing to spend more on health generally goes up faster than the rate at which their income increases. Similarly, the rate at which healthcare budgets of a given nation go up exceeds the rate at which its GDP goes up. In the 1960s, spending on healthcare in the United States came to 5.3 percent of GDP. By the 1980s, that had gone up to 8.9 percent, by 1990 to 12.2 percent, and by 2000 to 13.5 percent. In 1992, people in the United States spent more on medical and healthcare costs than any other item, and for the first time more than food and tobacco. By 1997, 17.4 percent of the average American salary was being spent on medical insurance, 15.1 percent on food and tobacco, and another 15.1 percent on housing. In China, this trend is similar and is unavoidable, as people get beyond mere subsistence and move into a period of “moderate prosperity.”
