The Gun Counter

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.

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.

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.