Arnold Kling  

Health Care Economics

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Some recent articles on the economics of health care:

Helen Levy and Thomas Deleire compare the expenditure patterns of people who have health insurance to those of people without health insurance.

I think that this is a useful reminder that many people are uninsured by choice. We may believe that they ought to have health insurance, but they have other priorities.

Robert Fogel says that much of the improvement in health is due to what he calls "physiological capital," meaning better nutrition and reduced exposure to environmental hazards. Health care per se has been less important.

Gary S. Becker, Tomas J. Philipson, Rodrigo R. Soares argue that using per capital GDP to measure well-being does not take into account increases in longevity. They say that one result of this oversight is that economists under-estimate the extent to which underdeveloped countries are gaining relative to developed countries.

For Discussion. GDP measures expenditures on health care, but it does not measure health. Is this important?

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The author at Educated Guesswork in a related article titled Health insurance purchasing decisions writes:
    Arnold Kling points points to an interesting article by Helen Levy and Thomas DeLeire on the spending habits of people who don't buy health insurance. Here's the abstract: Using data from the 1994 through 1998 Consumer Expenditure Surveys, we compare... [Tracked on July 10, 2003 10:09 AM]
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Eric Krieg writes:

>>much of the improvement in health is due to what he calls "physiological capital," meaning better nutrition and reduced exposure to environmental hazards

David Thomson writes:

“GDP measures expenditures on health care, but it does not measure health. Is this important?”

Heck yes, this is of utmost importance. It is foolish to discuss cost while ignoring what you are getting in return! Also, Eric presents a strong argument that engineers might deserve more credit than the medical profession. A number of us may never have heart trouble, but everyone suffers from polluted drinking water. Why are the health measurements downplayed? My cynical gut feeling is that the ideologues prefer that we believe the sky is falling in order to increase government spending.

And yes, overeating and other self destructive behaviors probably pose our greatest health threats. Please note that in the recent past I’ve emphasized the need for guilt tripping. After all, those who refuse to prudently take care of themselves invariably increase the costs for the rest of us.

Eric Krieg writes:

Probably about three weeks ago their was a front page article in the Journal about one small company and its health insurance program. There was tension among the employees because the majority of the premiums were due to a few people with lifestyle caused health problems, mostly smoking and type II diabetes related.

rvman writes:

Assuming a present value deflator of 2%, the difference of expected lifetime GDP received between a lifespan of 50 years and 70 years is roughly the same as the difference between a GDP of 5000 and 6000, at someone starting at a 5000 GDP and 50 years lifespan. If life is onerous to begin with, then you would have to start that at GDP =5000+"cost of life" for the same result to hold. And if life has inherent value, then GDP = 5000-"inherent value of one's own life". (This implies that 20% increases in GDP are the same as 40% increases in lifespan, from the perspective of birth.)

If the deflator is higher, then longevity is less valuable. if the deflator is zero, then we have parity - a 20% increase in lifespan, GDP constant is the same as a 20% increase in GDP, lifespan constant.

Roughly, a thirty year increase in lifespan means that kids born today would be about 20% better off than kids when the lifespan was 30 years less, holding GDP constant. Considering what real GDP has done in a century, this is a significant increase, but a rather small one. (And this assumes that the increases in GDP have not directly caused the increase in lifespan. If that is true, then any policy decision which is made on the basis of "GDP or longevity?" would need to judge whether the expected increase in longevity a change (say Castro's health care) would cause would be partly reduced by the lost GDP reducing longevity. (My guess is that longevity rises fairly quickly over lower levels of GDP, and levels off up high. GDP differences between developed countries are irrelevant to longevity, while GDP differences among undeveloped are relevant, ceteris paribus.)

Eric Krieg writes:

>>Castro's health care

rvman writes:

Just a swipe at the old liberal claims about how, maybe GDP has lagged in places like Cuba, but health care and education are great. Not that they are, actually, but I'm used to arguing on other people's terms. Harder to do, more likely to convince. (I prefer to try to argue with fundamentalists using Biblical arguments, as well. It's about convincing people, not winning points for logic or style.)

I agree about the engineers, btw. I'd toss in vaccination and antibiotics in the developed world, but water sanitation is the one big thing.

Eric Krieg writes:

I thought that's what you were getting at.

A recent article I read on Cuba reported that European pedophiles have replaced the Soviets as the sugar daddy that allows Castro to stay in power. Child prostitution is at epidemic levels.

To which I thought, yeah, but at least the kids have 100% literacy and universal health care.

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