More on Health Care Costs

Mother Jones has a graph illustrating comparative health care costs, from which it concludes the conventional "the U.S. spends too much."

Coyote blog raises the eternal question about such data: "Is this a bug or a feature?"

My guess is that you could draw the same chart in the same shape with the US on the far left for consumption of items as diverse as “big screen TVs” and “pro sports tickets.”  We would chalk up spending in any other area as simply a result of wealth.  Why not on health care?  Why is it so bad that we spend more money on something like health care which is arguably less frivolous and more critical than TV’s or baseball games?

(There's more -- RTWT).

Coyote is right. In fact, 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.

But it goes beyond technology. I am an acolyte of the benefits of massage therapy for many ills, including post-operative recovery. Indeed, my neurosurgeon brother tells me that massage was once a crucial part of orthopedic practice, but was dropped out because it is labor intensive. So if rising incomes enable people to afford such a useful but low tech service, also fine. (Do not be deceived by the term "low-tech" -- the tech component is small but the skill level is high and the training required is extensive.)  

Acupuncture is good, too; also low-tech, high skill, high pay-off.

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