Healthcare costs over last 50 years

Attention cities and towns. Here is the explanation of why your health costs are destroying your budgets.

In Paul Ryan’s video on his Medicare plan, he graphically illustrates the growth in per household healthcare spending from $540 in 1960 to a projected $25,300 in 2012.

One interesting thing to do if you are aware of what our economy was like with the dollar-gold link, is to compare costs not in terms of dollars but in terms of ounces of gold. At one time, in fact during the history of the world pre-1972, the major currency of the civilized world was denominated in terms of gold. In 1960, one ounce of gold was worth $35. (The Treasury accomplished this essentially not by fixing the price of gold, but by adjusting the money supply so that the price remained fixed.)

In any case here are the comparisons:

1960: $540/$35 = 15.4 ounces of gold

2012: $25300/$1500 = 16.8 ounces of gold.

By this calculation, the per household spending on healthcare has increased since 1960 by 110%. Wouldn’t that be easier to plan for in your municipal budget?

Now to be fair, because gold reflects the new value of the dollar first, we don’t know where we truly are as far as the cost of healthcare and its relationship to the new value of the dollar. Gold goes up or down first, and other goods follow according to their own schedules of supply and demand. But Ryan’s numbers show that the real explosion in the dollar cost of healthcare has come not from some moral collapse into an entitlement mentality, but from a collapse of the value of the dollar. If cities and towns would like to keep this from proceeding apace, I recommend that they urge their federal officials to vote to relink the dollar with gold.



3 Comments . Leave a comment below.
  1. Gold

    Gold is only useful in this way if the economy doesn’t grow at all, ever. If the economy grows, then the gold standard is ipso facto deflationary– a policy I would prefer to see implemented somewhere else where I do not have to be or attempt to conduct business in a profitable manner.

    In any event, the price of gold was relatively stable (other than the mid 70s spike) right up through around 2006. The cost of healthcare was relatively stable until the mid-80s, and then took off.

    So the value of gold, in dollars, doesn’t really correlate with the cost of healthcare at all, which is why this silly example has to use only two data points, as if the years in between are a great mystery.

    It is therefore more fair to say that the cost of healthcare has about as much to do with the value of gold as it does with the crud on the bottom of my shoe. This is sensible because the value of gold has little to no bearing on the proportion of a person’s income they spend on healthcare or anything else, in 1960, 2025, or at any other time.

  2. Grow the economy to pay for health care

    Excluding some dubious statistics we have the best health care in the world (without question in Massachusetts). We need to grow the economy to pay for some pretty amazing medical health care capabilities.

    and experiment at the state level with methods of delivering it.

  3. Health Care Spending has grown from 5% of GDP to almost 20%

    According to this CMS release, US health care spending has rocketed from 5.2% of GDP in 1960 to 17.6% in 2009.

    Every other industrialized country in the world recognizes that health care is a necessary expense that needs to be controlled. As a result, every other industrialized country covers all or almost-all of their citizens, for roughly half of what we pay. And, among these peers, we have almost the lowest life expectancy, worst infant mortality, and many uninsured.

    The problem is not a lack of the gold standard; it is political leadership that can be purchased cheaply, and voters who are ignorant.

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Thu 19 Jan 7:56 AM