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.
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.
