Normally it's good news when an industry increases its share of the American wallet. It usually means that the industry is producing goods and services that people value. Health care has been a big share gainer. In 1970 the U.S. spent 7 cents of every gross domestic product dollar on health care. Now it's 16 cents. Good news, right? It must mean that people value good health and they're better off investing in it than in other diversions.rnBut this is not good news. It's terrifying, and we've heard many times during this election season what's wrong with this picture. An increasing proportion of Americans cannot afford or access adequate care. Within 20 years Medicare outlays, left unchecked, will crowd out all other federal budget itemsrnexcept defense. Employee-benefit spending makes U.S. companies uncompetitive in world markets. Almost any city or town would be bankrupt if it put on its balance sheet the commitment to provide health care for retired employees.rnThe runaway factor here is the fee-for-service reimbursement system that predominates in private and public insurance plans. French economist Jean-Baptiste Say predicted 200 years ago what would go wrong: When caregivers make more money by providing more care, supply creates its own demand. Half of all care consumed seems to be driven by physician and hospital supply, not patient need or demand.
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