Yesterday, Nicki highlighted Newt Gingrich’s WSJ piece on how Obamacare could stunt the best aspect of the U.S. medical system:  our leadership in medical innovation.  There’s another point that I think is worth exploring further. 


Gingrinch writes that it is arbitrary when Adminstration officials suggest that spending 17% of GDP on health care is “too much” and that private individuals should be free to spend whatever they want on health care.


I remember having a conversation about this topic when I was a grad student at Harvard’s Kennedy School of Government.  In an econ class, we were discussing entitlement reform and I was making the case that we need to do something to arrest runaway entitlement spending, such as Medicare, which was threatening to gobble up a growing portion of our GDP.  My professor asked what exactly I thought was a better use of GDP than spending on health care? 


It’s an important point:  as our economy grows and we have more and more money and resources, it is perfectly sensible that we would spend a larger share of that wealth on health.  After all, people can only consume so much stuff — at some point, many are going to decide that they have big enough houses, don’t need another car or more clothes, and will spend more on health and things like education.  That’s a perfectly sensible calculation.


Of course, that doesn’t mean that we shouldn’t be concerned about government’s budget, our deficits, and the inefficiencies and waste in programs like Medicare and Medicaid.  Indeed, it’s a problem to think of having half of the federal government’s budget on autopilot, going directly to support a few entitlement programs.  After all, the federal government has actual responsibilities, like providing for the national defense.  We need the government to have the flexbility to respond to an unforseen future crisis, and entitlement programs and other spending can tie policymakers’ hands. 


But we shouldn’t assume that a chart projecting that, during this century, a growing potion of GDP will go to health care is necessarily a bad thing.