Thursday, September 29, 2011

"Trickle Down" Healthcare Costs

Click to enlarge.

I have adjusted the medical care price index by the consumer price index to show how much medical care prices have increased in real inflation adjusted terms since 1947. This doesn't even count the increased costs as we age.

These exponential trends are clearly not sustainable over the long-term.

As seen in the chart, the most egregious increases were between 1980 and 1994. I therefore offer an especially sarcastic thank you to Ronald Reagan and George H. W. Bush.

Ronald Reagan UCLA Medical Center

The new 1,050,000-square-foot (98,000 m2) hospital is named after the late President of the United States and Governor of California Ronald Reagan.

The hospital will contain fewer patient beds (525) than the one it replaces.

That works out to exactly 2,000 square feet per bed. When we've got prosperity to burn, stick with nice round numbers apparently. Further, 2,001 square feet would have seemed extravagant.

This post inspired by AllanF who thought I might want to do a preemptive post on the eventual failure of the exponential healthcare spending curve.

Source Data:


Troy said...

whenever someone sez "medical costs" I correct them to "medical profits" cuz that's what they are.

Every nurse a millionaire and every doctor a billionaire ahoy!

1 in 14 employees in 1990 to 1 in 9 now . . .


AllanF said...

Thanks Mark.

I reckon it might have another 5-8 yrs in it. Eventually the Boomers, while still a voting bloc to be reckoned with, won't be directly running things. So, while they'll vote for politicians that promise more Medicare, the politicians won't quite have the same skin in the game to actually want to deliver said more Medicare.

Of course, millionaire & billionaire health insurance company exec's aren't going to go quietly into the night -- they have a standard of living to which they've grown accustom. That was what ticked me off in the Obamacare debates. Everyone kept talking about health insurance. Insurance, my butt. Insurance is a necessary evil at best. It's health _care_ we have an interest in. But all the debate was ever about was making sure Big HMO had a steady supply of customers from which to extract wealth.

In Hell's Kitchen (NYC) said...

wasn't it Reagan who taxed the not-for-profit health insurances to extinction in favor of for profit health insurance ?

It sure seems St. Ronnie's puppet-masters did a very thorough number in this country.

Stagflationary Mark said...


It's grown from 3.2% of the population to 4.5%.

To infinity and beyond!

I say this somewhat tongue-in-cheek because my girlfriend is studying to become a nurse.

Stagflationary Mark said...


I reckon it might have another 5-8 yrs in it.

Murphy's Law of the Unsustainable clearly states that it takes twice as long as is humanly possible. If you factor that in then it takes 4x as long, lol.

Stagflationary Mark said...

In Hell's Kitchen,

I had not heard that song! Thanks for sharing that.

Troy said...

I say this somewhat tongue-in-cheek because my girlfriend is studying to become a nurse.

read it and . . . weep?

Stagflationary Mark said...


read it and . . . weep?

Nah. She's 41. In 2050 she'll be 80.

Troy said...

yeah I sorta surmised that but they didn't have a 2030 diagram.

the 2020 one didn't really capture the full oomph of the demographic tsunami coming.

One thing about our baby boom, it was deep and wide.

Curiously, Japan's is more of a single 5-year deme peak:

But they don't have a Generation Z after the baby boom echo (Gen Y).

I intend to retire to Japan maybe so this interests me.

Stagflationary Mark said...


In any event, there will be a lot of people older than her and older people need more healthcare.

My bigger concern is based on how many nurses and doctors the colleges are cranking out. What's the alternative for her though? There's a worker glut* and she needs to compete with it. Sigh.

* Horses were workers before the advanced technology automobile became popular. I sense the same thing is happening to human workers (as is evidenced by our structural unemployment rate).

In Hell's Kitchen (NYC) said...

Well Mark, summer came rollin' around and we weren't lucky to get out of town !

Troy said...

(as is evidenced by our structural unemployment rate)

I think our "structural" problem is just having too much wealth being sucked out of the paycheck economy.

~$2T/yr in land (ground) rents. $1T/yr in health care (economic) rents. $500B/yr on gasoline alone. $300B/yr trade deficit with China & Mexico.

That's a $4T/yr flow right there. Some of it comes back to the working class eventually, but not enough.

Nobody is modeling the flows, and I find that highly annoying.