Can The Health Care Industry Continue To Grow?

Robert Siegel talks with Uwe Reinhardt, a professor of Economics and Public Affairs at Princeton University, about health care innovation and whether it's worth it.

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ROBERT SIEGEL, HOST:

Uwe Reinhardt is a professor of economics and public affairs at Princeton University. He specializes in the economics of health care, and welcome to the program once again.

UWE REINHARDT: My pleasure.

SIEGEL: And, first, a question about a sophisticated technological innovation like that surgical robot that Sarah Varney told us about. When a factory innovates and automates, typically, it reduces the number of manufacturing jobs in a factory and it reduces the cost of manufacturing. Why doesn't or does that happen with a device like the da Vinci robot?

REINHARDT: Well, in a factory, you use a machine to produce the same output you used to produce before, perhaps with slightly better precision and less labor. But, in health care, very often machines of that nature make things possible that previously were not possible. You will see that, for example, in eye surgery, so you get better outcomes previously not attainable.

One way economists think about it is to imagine doing a survey of people and asking if you could get the technology in health care of 30 years ago and the cost, or you could have today's technology at today's cost, which would you prefer? And the answer probably would be overwhelmingly today's technology at today's costs.

That really means that, on average - and I stress the word average - health care today for all the spending is worth it relative to what we spent 30 years ago.

SIEGEL: If, indeed, a lot of us - so long as we have coverage - opt for the high priced version of the procedure and if we continue to stay alive, healthy and mobile longer and longer, can there be an economy in which, say, oh, half of it and a third of its workforce are all engaged in health care and most of us are just working to stay healthier?

REINHARDT: Well, actually, that reminds me - my wife and I, in '92, made a Christmas card where we had projected health spending by 2100 and it was something like 90 percent of GDP. And we said all Americans will be in bed with MD degrees giving each other checkups. And someone in India tabulates all that, sends each other bills and there's our GDP. And I said, you know, depending on who it is, it's a good vision for the future.

Now, I think we will not go this way because, increasingly, we are recognizing that health care has opportunity costs, and given our constrained government budgets, the trade-off really is more health care, less education. More health care, less defense. And I think that battle royale will be fought out in the coming decade.

I think defense will be the one standing in the corner. I think health care will be reeling on the floor and education will be dead. That's my fear of where this country is going because our politicians are irresponsible because the people are irresponsible.

SIEGEL: That there's a refusal to acknowledge some limit to what's happening here.

REINHARDT: Yeah. And I think, at some point, Americans really have to have an adult conversation about this and ask not is health care by itself a great thing? It is. Any economist will tell you that health care is one of the highest value-added sectors in the economy, but building human capital is also important for the future of the country and we are neglecting it.

SIEGEL: Professor Uwe Reinhardt of Princeton University, thank you very much for talking with us today.

REINHARDT: My pleasure.

SIEGEL: Next Monday, arguments begin at the Supreme Court on the constitutionality of the federal health care law. Before then, we want to answer your questions about the law or its potential repeal. Write to us by going to NPR.org, click on Contact Us and put health care question in your subject line. This is NPR News.

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