Health care spending is a measure of consumption, not cost

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Jered
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Health care spending is a measure of consumption, not cost

Postby Jered » Mon Nov 13, 2017 3:31 am

This does not mean that prices play no role whatsoever in international comparisons of NHE. It does not mean, for instance, that if we could somehow force U.S. physicians, nurses, and various other workers in the health care sector to work for the real remuneration paid to their counterparts in, say, Brazil with equal productivity that the price of medical care, especially more labor intensive categories, would not plummet (presumably real NHE could decrease if volume were hold constant…. not a very safe assumption imo). It means that the reason health expenditures have accounted for an increasing share of our consumption (or income) over time has little to do with prices increasing relative to income and a great deal to do with the volume of health goods & services consumed rising at a faster rate than overall consumption (or income) per capita.


This article is interesting.

In no case do I find evidence of a large departure from trend in any broad, highly impactful, index of health price levels that would suggest that high US NHE isn’t overwhelmingly explained by high volumes of (real) health care consumption. More generally, the cross-sectional and time series data are actually quite consistent with each other, i.e., the issues that drive (US) expenditures up in time series are quite consistent with and related to the what we observe in cross sectional analysis between countries.


Essentially his argument is that the US spends a lot of money on health care because people in the US actually use a lot of health care and they have money to spend on health care. It's long an involved, but, it's probably worth a read.
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Re: Health care spending is a measure of consumption, not cost

Postby blackeagle603 » Wed Nov 15, 2017 4:08 pm

Sooo... Macro Econ 101? See figure 1 on page 3, "Supply_Demand Curve."
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Re: Health care spending is a measure of consumption, not cost

Postby Vonz90 » Wed Nov 15, 2017 5:00 pm

This is actually a well known fact, however not too many people want to acknowledge it.

There are both good and bad aspects of it, especially relative to those at the left end of the financial bell curve.

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Re: Health care spending is a measure of consumption, not cost

Postby Greg » Thu Nov 16, 2017 6:39 pm

There are regulatory and compliance issues that drive up costs, we can't ignore those completely.

But yes I can believe it. We use a hell of a lot of health care, and have come to expect it. Which is actually a problem, because anything subsidized you'll get more of and anything 'free' will be wasted.

So our obsession with subsidizing healthcare costs means we use more, and when we go so far as to cover the costs completely, usage becomes abusive and wasteful. (EMTALA horror stories, anyone?)

Any system that hides actual costs, insulates people from the actual costs of their activities, is bound to turn into a nightmare eventually.
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Re: Health care spending is a measure of consumption, not cost

Postby Windy Wilson » Fri Dec 15, 2017 9:16 pm

Greg wrote:Any system that hides actual costs, insulates people from the actual costs of their activities, is bound to turn into a nightmare eventually.


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Re: Health care spending is a measure of consumption, not cost

Postby HTRN » Sun Dec 17, 2017 7:17 am

This is an interesting read
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