The Cost of an Extra 10 Years

Oct 3, 2022 | Macro Insights, No Bull Economics

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Americans have increased their spending on healthcare by 3.6x in percentage terms from 1959 to 2021. It used to be that health care expenditures were under 5% of total consumption expenditures and now it is closer to 17%.

Over the same period, the average life expectancy has grown from 70 to 77. Notably, there was a slight -2% dip in 2020 during covid, bringing the average age back to 2003 levels.

Would life expectancy descend to 70 if healthcare spending was reduced to 1959 levels? Is it possible there has been significant healthcare cost inflation which has not contributed to an increased life expectancy?

Perhaps people who retire earlier without financial concerns because of savings, pension & social security benefits are living longer. How about the contribution to life expectancy provided by improved living conditions? Notably, the Housing Act of 1959 helped expand the supply of affordable housing with supportive services for older adults. It is certainly worth considering whether these stress reducers may ultimately prove more beneficial to a long life relative to expensive med tech treatments which are still not able to cure ailments like cancer.

The Cost an Extra 10 Years Graph
Life Expectancy & Health Care Expenditures/Total Consumption Expenditures

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