Paul Krugman, one of my favorite economists, wrote on his blog the other day (here) that “if excess cost growth in health care can be brought under control, the entitlement problem is manageable.”
Excess cost growth in healthcare refers to how much faster healthcare costs are increasing compared to the overall economy.
According to projections released yesterday (here) by the U.S. Dept. of Health and Human Services, national healthcare expenditures are expected to increase an average of 6.2% annually through 2018, compared to 4.1% growth in gross domestic product (GDP). That’s a 200 basis point spread, or two percentage points of excess cost growth in healthcare.
According to my own back-of-the-envelope analysis, healthcare costs have risen at a compounded annual rate of about 6.4% since 1970. GDP, meanwhile, has risen about 3% annually over the same time frame. That would be 300 basis points of excess cost growth in healthcare.
I say all this not to imply that we can’t bring excess cost growth in healthcare under control. Rather I’m suggesting that under the current system we never have, at least averaged out over the past 40 years.
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if i wanted to know something about international economics i might ask krugman. this is the subject he was honored for. he has no experience in health care economics and all you get from him are his personal feelings on this subject. i suggest you look elsewhere if you want to learn about data and studies on this topic.