According to the US Department of Health and Human Services (HHS), national health expenditures were $2.5 trillion in 2009, or $8,086 per person. The usual critique of US healthcare discusses how the money is spent and argues that it could be better spent in other ways.

I will not discuss how the money is spent, because value is subjective. Instead, I will show that the United States cannot afford what it spends, and, as a result, the US healthcare system is a credit-induced bubble.

HHS estimated that national health expenditures per individual were $7,845 in 2008 — over $31,000 for a family of four. That is the minimal cost of a fully homogenized national health-insurance policy where everything is covered, everyone is covered, and there are no preexisting conditions. That figure is fairly close to what an individual pays for very good commercial insurance if one does not belong to a large insurance pool. The average American family is not going to pay that much for health insurance willingly.

The Census Bureau claimed that the average household size was 2.63 in 2008. The average household share of national health expenditure was therefore $20,632. The census estimated that 18.6 percent of households had an income less than $20,000 in 2008. So, almost one-fifth of US households earn less income than their share of national health expenditure.

What about the average household? According to the Bureau of Labor Statistics (BLS), a typical US consumer unit in 2008 of 2.5 persons made $63,563 pretax income, and paid $13,077 in taxes, $6,443 for food expenses, $17,109 for housing expenses, $1,801 for clothing expenses, and $8,604 for transportation expenses, with $16,529 left over.

Their "share" of national health expenditure was $19,612. The typical US household cannot possibly afford a healthcare product targeted to the entire US population. No amount of redistribution will solve this shortfall. The shortfall is being financed, at least prior to September 2008, by foreign credit.....