Healthcare Is the Only Industry (Part 1)

By ANDREW TSANG

Healthcare only industry in the room for your first breath – and it bills you for it.

The only industry in the room for your last one – and its claim outlives you.

The only industry that hires more humans every year to take care of everybody else.

The only industry whose best work is the sickness you never knew was coming.

The only industry that’s left holding the smoker’s lungs, the drinker’s liver, and the soda kid’s blood sugar – long after everyone else has cashed out.

The only industry that still needs a person at the bedside when the machines do the rest.

The only industry that has nearly a fifth of everything we make, and is still growing.

Healthcare should keep growing. It is the only industry whose whole product is human capacity—more years, and more ability to use them. It is the only industry that takes in the damage every other industry leaves behind. I don’t care how big tech, retail, autos or manufacturing get. Past a point we stop wanting more of what they sell, and none of them gets handed the bill for anyone else’s harm. As their machines take over more of the work, healthcare is where our money, our people, and our ambition should go. It will grow into whatever we pay it to do.

We usually treat that growth as evidence of failure when it’s not. I read enough healthcare articles to recite the evidence with my eyes closed: $5.3 Trillion, 18% of GDP, more than $15,000 per person, roughly 24 million jobs in healthcare and social assistance. And yes, the bill is too high, and we’ll get to that later.¹ But plenty is still missing, like cures for diseases we can’t yet treat, appointments people can’t get, and enough nurses for the patients already in the beds. Every one of those would make the industry bigger, and every one of them is worth buying. And who cares if more of our money is going to health – what if the point of getting richer is to buy more life?

That sounds backwards mostly because of one word. Calling healthcare an industry makes people uneasy for good reason. A doctor becomes a provider, a patient becomes a consumer, and someone having a heart attack becomes a market opportunity. But cars take us places, phones let us talk to people, and films give us something to argue about afterward. Healthcare gives us more time and more ability to do any of it. The trouble is deciding how much of its growth buys more life, and how much buys more business.

Five Trillion is Chump Change

Healthcare is oft-cited as a $5.3 Trillion industry – as if that meant anything at all. It might as well be the size of Jupiter; the scale doesn’t even register. So I don’t flinch at 18% either. Healthcare is 18% of the economy. 18% of GDP. 18%, and climbing. Everyone who mentions 18% says it like a diagnosis, and say 18% enough times and it stops meaning anything. I think 18% is too little. What healthcare makes is more years and more ability to use them, and that’s the one thing people keep wanting more of as they get richer.

Getting richer makes people want more healthcare, everywhere. Nobel winner Robert Fogel measured that for every 10 percent richer we get, we spend about 16 percent more on health. So health takes a bigger share of every raise. You can see it across the big economies. The U.S. went from about 5% of GDP in 1960 to 18% in 2024, and the United Kingdom, Germany and Japan climbed too. The UK runs a national health service, Germany uses nonprofit sickness funds, and Japan has thousands of insurers, yet the line goes up anyway. The climb tracks getting richer more than how any one country pays for care.

America has found its own way to make care expensive – but it’s not alone in its demand for healthcare. There’s a wild paper by Stanford economists Hall and Jones explaining why the demand grows. Each extra thing we buy adds a little less, while each extra year of life gives us more time to enjoy everything we already own (by that logic, Amazon should keep us alive to buy more stuff). In their model, the best share for health keeps rising with income and passes 30% by 2050. Even at 30%, healthcare would be nearly the size of today’s whole economy, and everything else would still be twice as big as it is now.² The question is whether we’d gladly spend a third of our economy on more healthy years.

I can run out of things I want to buy long before I run out of things I want to do. Another healthy year gives me time with my kids, time to write, time to use what I already own – and if I’m greedy, buy more stuff. But as we get richer, a third TV adds almost nothing – yet another healthy year adds almost everything. We stop wanting more for our time and start wanting more time for what we have. That is what economic growth is supposed to buy. I care about the work people can do when they’re healthy, and I also care about the days they can spend doing absolutely nothing useful to an employer. The point of another healthy year is that you get to have it.

The money is only half of it. Healthcare is now the country’s biggest employer, ahead of retail, with about one in eight American workers. An economy that needs fewer people making refrigerators can afford more people helping someone get out of bed.

Incredibly Large and Very Short

The obvious objection is that America already spends too much and gets too little for it – which is a fair argument against healthcare growth. We have managed to make a very large industry feel like a shortage. America spends more on healthcare than any country on earth, almost twice as much per person as comparable wealthy countries, while getting about half as many in-person doctor visits. Try finding a primary care doctor taking new patients, or a therapist, or a nurse with time to sit down. No other industry can be the biggest thing in the economy and still leave people waiting in line. But the line isn’t there because we want too much care.

Part of the wait comes from work only a person can do, and a person can’t be sped up or split between two beds. This effect is best demonstrated in the classic (and classical) example of a string quartet: It needs the same four players and the same time to play Mozart’s No. 19 in C as it did 250 years ago, yet it costs far more, because the musicians’ pay has to compete with the modern labor market. A hospital still needs someone to help a patient eat, wash and recover, and that person’s pay has to keep up with the factory down the road, where the same work takes fewer hands every year. This economic effect is widely known as Baumol’s cost disease. In typical healthcare discourse, it usually gets cited as a death sentence—proof that care costs will climb until they eat the whole economy. William Baumol himself wrote a whole book saying that people get it backwards, with a chapter titled “Yes, We Can Afford It” (we should just end the essay here). Care only looks pricier because everything else keeps getting cheaper. A nurse’s hour costs more each year because every other hour got more productive, and that same productivity is what makes us rich enough to pay her.

Now I won’t defend the efficiency of US healthcare spending, because too much of the money never reaches the care. I’ve written plenty about healthcare waste, market power, and the elaborate business of getting someone else to pay. We can cut the work of disputing a bill without cutting the time a nurse spends with a patient. Paying more people to care for us, and paying more to get past the billing department, both show up as healthcare spending. A $5+ Trillion total is impressively large, yet remarkably ambiguous about telling us which kind of healthcare system we bought.

So cut the waste, and spend every dollar it frees up on care. Even at $5+ trillion, healthcare is chump change next to the years it buys when it works, and the people it keeps well enough to use them.

Everything Drops Into Healthcare

Healthcare is also the only industry that takes everyone else’s shit. Every other industry gets to sell its product and walk away. Whatever that product does to the people who bought it—the smoke, the sugar, the pollution, the job that wore out a back—ends up in a clinic or a hospital bed. And whatever healthcare returns—the kid who makes it to school, the parent who makes it to work—gets booked to somebody else. Healthcare carries the expense coming and going. No other industry sits at the bottom of the economy like that, catching what falls and sending people back up.

The Economic Return

Let’s start with what flows out of the system. When my kid is too sick for school, my workday changes too. My insurer can count what it paid for the visit, yet my clients and the school don’t send it a check for the trouble they were spared. Economic studies on vaccination (plz don’t @ me) let us measure the impact. For American kids born from 1994 through 2023, the CDC figures vaccines cost us $268 billion and saved $2.9 trillion. That’s $2.7 Trillion we got to keep, and most of it never touches a medical bill. We pay for the shot and the work of getting it into an arm. The return includes children who never get sick, parents who don’t have to miss work, and lives that aren’t cut short. A healthcare budget pays for benefits that other people’s budgets get to keep.

¹ With apologies to Don Berwick’s Triple Aim, cost is the number one problem in U.S. healthcare. Access and quality are problems too, but cost and affordability are at a boiling point. I’ve written extensively about it here, here and here – so if you’re thinking I’m advocating for more cost growth, consider this essay my devil’s advocate hot take.

² Quick maths: CMS puts 2025 health spending at $5.7 trillion, 18.4% of GDP, so the economy is about $31 trillion (give or take). CBO’s long-term outlook implies an unfathomable $96 trillion of GDP in 2056, so 30% of that is about $29 trillion in healthcare spending. The other 70% is about $67 trillion, more than twice today’s whole economy. The tricky part is that these are nominal dollars, and Hall and Jones measure the health share against consumption plus government spending, a slightly different base from GDP.

Andrew Tsang is a consultant at Longitude Healthcare Partners and writes about healthcare at his blog, Health Is Other People. Part 2 is here.