source: August 26th American
Think of it this way: From 1990 to 2006, GDP expanded by $7 trillion. If healthcare had retained its 1990 share of 12.1 percent of GDP, it would have grown by $847 billion, leaving an extra $6.153 trillion to be spent on houses, food, video games, etc. Instead, healthcare grew by $1.4 trillion, leaving only an extra $5.6 trillion for other purposes.See also Robert Fogel concluding "the long-term income elasticity of the demand for healthcare is 1.6--for every 1 percent increase in a family’s income, the family wants to increase its expenditures on healthcare by 1.6 percent."
From this perspective, during this 16-year period from 1990 to 2006, the nation shifted its collective preferences a bit, deciding to allocate an extra 7 percent of its $7 trillion increase in GDP into health and away from other sectors.
Such a change seems rather minor in the great scheme of things, and indicative not of a crisis but of an assessment that the state of healthcare technology has improved to the point where it is delivering steadily increasing value for the money, and that as people meet more basic wants of food and shelter they move up the chain of desires and spend more on other things.
(via Greg Mankiw)