How much health care spending is discretionary?

Some things you just have to have. You must have food. You must have a place to live, even if that place is under a bridge.

Other things are discretionary. You can choose the first class meal, or the mansion on a hill, assuming you can afford it.

As you see from the last two paragraphs the line between discretionary and non-discretionary spending is blurry. And no where is this more true than when it comes to health care.

The American system defines most health care spending as discretionary. Companies can choose whether to cover employees. Individuals have the power to make choices in the market.

But we also know that some health care spending is not discretionary. If you are badly injured driving home from work, the emergency room will have "intravenous permission" to sell you blood, medicine, maybe an expensive operation. Same if your child gets cancer.

As we enter a recession defined by the explosion in financial markets it's important to keep these distinctions in mind, whether you're working on a family budget, looking for good investments, or listening to politicians.

• Are check-ups discretionary?
• How about the shots a doctor recommends during the check-up?
• How about the drugs a doctor may want to put you on to prevent a heart attack tomorrow?
• And the drugs the doctor may want you on to prevent a heart attack 20 years from now?
• When is an x-ray or an MRI discretionary? When does it become essential?
• If you take drugs for diabetes, is that discretionary? What if you're diabetic because you're 100 pounds overweight?

A recent report on the Nigerian pharmaceutical market puts it bluntly. "Given that most of the population remain excluded from the genuine market due to low incomes, a wealthy elite should continue to account for most demand."

Given the realities of our declining life spans and the rising numbers of underinsured this might define the American market as well. That is, if you're looking to invest here depend only on those who can afford service.

Real, meaningful health reform, whether done on the terms of doctors, liberals, insurers or conservatives, has this fundamental question at its heart. Whether by cutting costs or increasing coverage, make some health coverage non-discretionary.

It's that borderline between discretion and non-discretion, combined with the curve of income, that will define the coming debate. And define its outcome for you. [poll id=25]