I argue here why at least a portion of medical spending should count as investment and savings in the national income accounts. In particular, spending on prenatal health, childhood health, and public health have long-run payoffs that are big enough to easily qualify them as investment.
I welcome comments, especially from those "status quo" types who are prepared to defend the current silly system, where a new 20-room mansion counts as investment but spending on public health does not.
Added. See Mark Thoma's post on fixing health care. It would be a lot easier having a reasonable discussion about health care if we talked about it as investment rather than consumption (at least in part). Right now it all falls on the consumption side of the ledger.