The remarkable observation that medical spending has zero net marginal effect is shocking, but not completely unprecedented.
According to Spiegel in "Too Much of a Good Thing: Choking on Aid Money in Africa", the Washington Center for Global Development calculated that it would require $3,521 of marginal development aid invested, per person, in order to increase per capita yearly income by $3.65 (one penny per day).
The Kenyan economist James Shikwati is even more pessimistic in "For God's Sake, Please Stop the Aid!": The net effect of Western aid to Africa is actively destructive (even when it isn't stolen to prop up corrupt regimes), a chaotic flux of money and goods that destroys local industry.
What does aid to Africa have in common with healthcare spending? Besides, of course, that it's heartbreaking to just say no -
Well the very cynical way to see the aid, is that we are biologically most inclined to help others in such a way that doesn't threaten our own success. Giving away a spare fish, not teaching how to fish - or when the things get tough they'll fish out the fish that you needed to fish for yourself to survive. The optimal level of help is not the most effective help.