Health and Competing Claims for the Nation's Resources in the 1970's

Abstract

I should first explain what an economist is doing at a gathering of experts on medicine and public health. Health economics is not my specialty at all, and I am not going to tell you about that. It might be particularly useful for this group to hear about the rest of the claims on the nation's resources. I know you are very much concerned with health; you want to have excellent health care for everybody; you think you know how to provide it; and you discover that this is extremely costly. You ask yourself, what could be more important than health, so why doesn't the society spend all the money that is needed? It is my thankless task today to explain to you why we don't spend the money to get the job done. Now, mind you, if we could, we would; but somehow we just can't. The credential that brings me to this podium today is my period of service on the President's Council of Economic Advisers, 1964-1966, a period of much new legislation. If you look at total health expenditures, the federal resources going to health have risen sharply. In 1960 the federal budget for health was $761 million; in 1970, the figure will be $12,958,000,000. Now those extra $12.2 billion, a 17-fold increase, should be buying something in the way of better health. Let me review what the money goes for. Medical research receives $1.1 billion; health facilities, manpower, organization and delivery of medicine cost about $1.1 billion; financing of Medicare, Medicaid and some veterans' programs, $10 billion; prevention, environmental control, chronic diseases and other, less than $1 billion. So the federal government pays for a very large fraction of the research, a significant percentage of delivery costs, pay-