More On Rising Health Care Spending

I posted the other day that one explanation of rising health care expenditures in the US is rising wealth.  As we are wealthier than other Western nations, doesn't it make sense we would spend more on our health than other nations.

James DeLong adds:

Robert Fogel, in his NBER paper, which has more detail than his American article (and will cost you $5), looks at changes in U.S. consumption patterns from 1875 to the present. A striking number is the reduction in the costs of the basics -- food, shelter, clothing took 74% of income in 1875; 13% in 1995. This has freed up a lot of income, and one of the great gainers has been health. In 1875, it took only 1% of consumption, largely because there was little to be bought, except for patent medicines loaded with alcohol and opiates, or a saw to lop off an injured limb. By 1995, it was 9%.Leisure was another big gainer -- 17% in 1875; 68% in 1995.

So if improvements in medical technology lead people to reallocate money toward health, fine.


  1. Jeffrey Ellis:

    That does make sense, although I have to think that the third party system accounts for the lion's share of health care cost increases over the past ~40 years (as argued by Milton Friedment, see e.g., here:

  2. epobirs:

    We spend a lot on health care because we can and because we generally get results. More so with each generation. Things that cast terror in the hearts of my grandparents when they were raising my parent, are for my generation notable historical matters. One of the greatest consumers of human lives throughout recorded history, small pox, was eliminated from the globe when I was a child. Some of the diseases that were death sentences when I was born now have substantial survival rates. (If you haven't signed up to be a bone marrow donor, look into it. They don't even need to draw blood for the genetic typing anymore and its only a minor medical procedure and easy recovery if you're called upon to save a life.)

    Dean Kamen made a very good point in a recent Popular Mechanics interview. We'd get far more for our money and the benefit would be still paying off a century from now, if instead of throwing tax dollars at funding health care, we instead had Manhattan Project-like program to deal with really expensive diseases like diabetes. If we could actually cure just 5% of diabetics at a cost of $10,000 per patient, it would save an immense sum compared to a lifetime of disease maintenance.

    That would be a far better pursuit at the federal level than encouraging public dependence on a scale to make to make the Great Society debacle look like a minor bit of spending.