Best Answer
As health care’s share of gross domestic product (GDP) grows, people are struggling with how to estimate the value of the health care industry in the economy. While it might seem like a straightforward answer, simply looking at the total amount paid for healthcare in proportion to the total GDP, that valuation would be a gross oversimplification. Generally, GDP is viewed as a proxy for standard of living, but in the United States standard of living might actually drop for many people as the percentage of GDP attributable to healthcare grows. It is important to keep in mind that healthcare costs vary tremendously by country. For example, in the United States, one of the few industrialized nations without any type of single-payer socialized medicine for the majority of people, the costs of healthcare are far greater than the costs for similar medical care in other countries. This leads to the question of whether healthcare should be valued at what people are paying for it in a market economy, which is usually referred to as a fair market value, or what similar healthcare would cost in a market economy.
The answer may have to involve an examination of whether healthcare costs can be compared to any other commodity in a free-market system. The answer to that question has to be no. In a true free market, open competition drives costs. Consumers can assess the price of a good or service and compare that good or service to competitors in order to purchase the most affordable one. In today’s healthcare system, it can be impossible for consumers to determine the true cost of medical services prior to using them, and this calculation is only complicated when factoring in the costs of health insurance and what an insured patient pays for certain services. Instead of being determined by the market, healthcare costs are more arbitrary, meaning that it is probably an overvaluation to base their true value on their percentage of GDP.
