The Economics of Health Care

A Crisis of Cost.

"You always used to think in this country that there would be bad times followed by good times," said a Chicago housewife. "Now, maybe it's bad times followed by hard times followed by harder times." As the economy of the 1970s declined dollars bought less, and unemployment and inflation reached double digits. Medical care was expensive, and its cost rose at a rate far exceeding the general rise in the cost of living. By 1979 the total cost of medical care reached $212.2 billion or 9.1 percent of the gross national product (GNP), up from $749 billion (7.6 percent of the GNP) in 1970, an increase of nearly 20 percent. For individuals personal income was not adequate for financing medical care, except for those who remained relatively healthy and had enormous wealth. One in five families had no health insurance at all, and almost one in four was not covered for out-of-hospital costs. Many families were ruined by...

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