increase cumulates to 5 or 10 percent of the GNP, would one expect a significant impact on growth rates. (Since 1960, the increase has been almost 10 percent of the GNP.)
If increasing the share of GNP allocated to health care were the outcome of free-market choices, no one should object; people choose to sacrifice other luxuries, conveniences, even necessities for more and better health care. But with the growth in third-party payments, there is no real market, much less a free market--a statement to be examined in succeeding chapters. Consumers are not aware of the price they are paying, and many are persuaded that health care is free or nearly free. Resources devoted to environmental and workplace health are the outcome of political decisions, not market choices. The consumer really feels that clean air is a free good. In the absence of a free market and full information, what happens to health care and economic growth as we measure it is not the outcome of consumer preferences.
If health care expenditures are allowed to reach a third of the GNP, while environmental, work safety, and other "nonproductive" expenditures are also growing, standards of living will fall. Even worse, if research and development and investment are reduced in productive areas, the decline in living standards could be substantial. In the long run, these are needed to counteract rising costs of exhaustible resources, diminishing returns resulting from population growth and its concentration in large cities, the rising costs of congestion and pollution. Spending on health will not lower the cost of energy or food or most other goods and services. The problems of disentangling the effect of increased health care costs from numerous other effects on GNP rates of growth over decades appear all but insurmountable. That they have a significant effect is plausible; and that they do not is implausible. We cannot say more.