Industrial Insight

richer people spend extra money on themselves and as US gets richer, healthcare costs go up…. | June 11, 2011

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

As for health expenditures, I wonder about the extent to which this reflects the relative affluence of Americans at P90 and P50. We certainly have a dysfunctional health system, yet as David Cutler argued in Your Money or Your Life and elsewere, it’s a safe bet that more affluent people will spend more on health because

[M]edical spending isn’t increasing because of inflation so much as because of people consuming more ‘’good stuff.’’ This view is beginning to course through the health-care world. Scanning the literature, you now happen upon sentences like, ‘’We believe that some of the concern about the growth in spending may be misplaced’’ (Health Affairs) and ‘’On average . . . society is better off exchanging more money for better health’’ (The Journal of Economic Perspectives). No one disputes that spending will continue to increase; limiting the rate of growth is the most we can hope for……

However, health-care costs in Canada have increased at nearly the same rate as in the United States. In fact, spending growth in most developed nations — regardless of how they finance and organize care — has been moving ahead at similar rates. Since 1960, costs in six of the G-7 countries have risen, on average, by 4.9 percent a year. The rise in costs in the United States, at 5.1 percent annually, is close to the middle of the pack. Sherry Glied, of Columbia’s School of Public Health, concludes that ‘’no particular characteristic of any health-care regime is the main determinant of growth in costs.’’



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I'm the executive vice president for a steel casting trade association, the Steel Founders' Society of America. I've got a crazy wife, five crazy children, three crazy people that married into the family, and two crazy fun little grandsons.







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