In our justified pride for extending life, we should remember the other side of the wealth-health equation. Nearly as important as the extra life gained from spending innovation dollars may be the enormous increase in wealth that resulted from living longer. With the exception of Bill Gates, Mark Zuckerberg, LaBron James and a few European soccer stars, most wealth is owned by old people and for one very practical reason: compound interest and ROI (rate of return on investment). It takes a long time for a $100 sitting in an index fund or savings account to grow to $1B but because we are living to archeological ages, we can be patient. Average life expectancy for males in the US in 1900 was about 47 years (1). That’s not much time to build a fortune considering we don’t walk for a full year and grad school can eat up 10% of the total. We now have almost too many billionaires to count and not just in China.
Back to healthcare, people are beginning to complain that hospital and CVS bills now consume 18% of GDP. America’s health bill in 2018 was $3T (yes, trillion) (3). Even if that seems like a lot, imagine a country being able to fork over that amount and still be under 20% of GDP. The US can and does spend more each year on healthcare than the total GDP of Great Britain, France, Italy or Brazil. (4)
Let’s raise our glass to the capital appreciation Americans will enjoy in 2020 just by making it to the end of the year. It’s nice to know that almost a fifth of the total will support continued exploration, validation and adoption of new cures and therapies, and contribute to a virtuous wealth and health cycle. Space prevents examining the “America spends the most for only average health outcomes” red herring which always seems to follow conversations about healthcare costs.
Bruce Gingles is vice-president of Healthcare Policy and a 40 year employee of Cook Medical.