It was in 1974 that medical care costs went off the rails. It’s plain as day when, just like a doctor or nurse, you look at the chart.
The chart, in this case, shows the relationship between health spending and life expectancy over the period 1970 to 2016. It is part of a set in the current issue of Fortune that describes health care as an “Underperforming Asset.”
The chart shows the data for seven countries, including the U.S., and for the first few years all of them are chugging along together. In 1974, though, the U.S. suddenly veers off by itself and starts spending more and more — with less and less effect on life expectancy.
Close to the end year, 2016, U.S. health care spending seems to have had a negative effect on life expectancy. It’s hard to think of an explanation for that, but, of course, it isn’t easy to explain why we veered off from the pattern of other countries in the first place.
It is tempting to find a single source for medical care’s course change. After all, 1974 was a year of national drama peaking in the mid-year resignation of President Richard Nixon. Our economy was still trying to absorb the fourfold increase in crude oil prices caused by the OPEC embargo. And the automobile industry seemed to be faltering; producing poorly made car models that no one seemed to want and losing ground to the Japanese imports it had once mocked.
Still, it is difficult to link these events and trends directly to medical care spending.
When we look at the principal changes in health care structure in the early 1970s that do have a direct link to medical spending, they don’t look very promising as reasons, either. The big changes were the expansion of Medicare benefits to people with long-term illnesses and the introduction of Health Maintenance Organizations. Neither of these changes, though, seems radical enough to explain the derailment that took place. And if HMOs were the cause of the radical course change, we would expect to see a reverse effect when they receded from the scene. No such reversal is apparent in the data, though, so HMO have to be taken off our prime suspect list.
The introduction of Magnetic Resonance Imaging scanning technology in 1974, which is now used extensively, and expensively, in the U.S. more than any other country, took years to be widely adopted by the medical industry. Such a gradual process seems unlikely, though to have caused the sudden shift in our health care spending.
It is tempting to believe that somehow a hex had been put on America in the 1970s. Certainly, the decade was something of a downer. To many people, the end of the Vietnam War was as unsatisfying as the war itself had been. Our cities seemed to be decaying as the twin pressures of drugs and crime made urban life a challenge.
With all that, though, when it comes to the cause of health care expenditures going off the rails, we still face a mystery.
Is it important that we solve it and soon? There is already talk in the House of Representatives of a single-payer system that would make the federal government responsible for our health care. To adopt such a system when we don’t know what the controlling factors of health expenditures are, would seem to be folly of the first order.
Our current path of medical expenditures is unsustainable and will lead us only to the unhappiness of bankruptcy.
But our proposed solutions suffer from overspecialization.
We are more likely to find a solution by an effort along the lines of the Master of Arts in Liberal Studies programs, now at more than 100 colleges and universities. These programs are aimed at taking higher education beyond the overspecialization that limits so much of today’s thinking.
It is possible that using the same principle we need a “dream team” of skilled practitioners – and thinkers – in different disciplines – medicine, economics, psychology, insurance, data analysis and pharmaceutical research, for example – in a “leave your egos at the door” environment to come up with the best solution. It’s worth a try.