82 year old Robert Fogel, a Nobel Prize winning economist from the University of Chicago, says rising spending on health care in developed countries reflects rising income of consumers with strong appetites for health care and squelching that demand ought not to be a primary goal of governments.Predicting that health care spending is likely to rise from roughly 15% of gross domestic product today to between 21% and 29%, Fogel argued: “As people get richer, they want to spend a larger share of their income on health. Is that bad? Should such a development be
arrested? Should government seek to thwart consumer demand for health care?” he asked. His answer: No! “Public policy ought not be aimed at depressing demand
He noted that Americans in 1875 spent 74% of the income of food, clothing, shelter and consumer durables. Today, thanks in part to rising incomes and rising productivity in the production of those necessities, such spending accounts for only 13% of American incomes. The result has been a rising share of income devoted to leisure — including working fewer hours than earlier generations did — and to health. Health care spending, which accounted for just 1% of consumers’ incomes in 1875, today accounts for about 9%, he said.
He predicted that developed countries will move to private health-care accounts funded by forced savings, i.e. contributions that workers are required to make.