CAMBRIDGE, Mass. — Will the inexorable rise in medical costs around the world someday pose a major challenge to contemporary capitalism? I submit that in the not-so-distant future, moral, social and political support for capitalism will be severely tested as would-be egalitarian health systems face ever-rising costs.
Rising incomes, population aging and new technologies for extending and enhancing life, have caused health costs to rise 3.5 percent faster than overall income for many decades now in the United States. Some leading economists project that health expenditures, which already constitute 16 percent of the U.S. economy, will rise to 30 percent of GDP by 2030, and perhaps approach 50 percent later in the century. Other rich and middle-income countries, although typically spending only half of what the U.S. does today, won't lag far behind.
Countries in Europe and elsewhere have shielded their citizens from a part of this rise by piggybacking on U.S. technological advances. Ultimately, though, they face the same upward cost pressures.
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