Rising health care costs? Hooray!
Economics editor Chris Farrell
TEXT OF INTERVIEW
Bill Radke: This week's passage of the healthcare overhaul has inspired celebrations, but also, some warnings. American health care spending has been soaring for years, and even supporters of the new law say it'll probably keep on soaring. Marketplace's economics correspondent Chris Farrell is here to say, Hooray! Good morning, Chris.
Chris Farrell: Good morning, Bill.
Radke: Now I thought most people were agreed that Americans spend too much on health care.
Farrell: Oh, this has been this refrain that we spend 17 percent of our Gross Domestic Product, our GDP, on health care and it's rising to 20 [percent], 25 percent. And I say this is a good thing.
Radke: Good because it makes us healthier?
Farrell: Good because it makes us healthier, makes us more productive, it allows us to enjoy those other things, to enjoy our homes, to enjoy our cars, to enjoy our family and friends. But mostly because it allows us to work longer.
Radke: But doesn't health care spending crowd out better kinds of spending? Like we could be investing in education or green technology.
Farrell: Well, I don't see where it would crowd out. I mean remember, health care is one of the most dynamic aspects of our economy. This is the biotech century, so we're going to have a lot more investment in this area -- artificial hips. If yo'ure going to be working longer, eh, those knees? They're going to need to be replaced.
Radke: You know, some people don't love the idea of spending more so we can work longer. We just want to relax and have cheap fun.
Farrell: Well in our economy, if we do become wealthier, the pie gets bigger, people will have choice -- if they saved when they were younger.
Radke: Have you noticed that we haven't matched our health care spending with taxes to pay for it? Doesn't our deficit health care spending threaten to bankrupt us?
Farrell: All right, now you've hit the real point: How do we pay for it? There's all kinds of things we can do and the health care reform act is trying to create incentives for a more effecient system. But that's a separate issue, from that the benefits of health care are enormous. And if I said to you manufacturing's going from 17 percent of our economy to 30 percent of our economy, you'd cheer. I'm going to tell you this: health care goes from 17 percent of our economy to 30 percent of our economy, that's even better news.
Radke: Marketplace's economics correspondent, Chris Farrell. Thanks.
Farrell: Thanks a lot.