| >That isn't a thing. You can argue this specification minimizes the residuals at the high end if you want, No, but yes. >> So if you have data about healthcare prices not being out of order, that seems a lot more relevant > https://randomcriticalanalysis.com/2018/01/06/its-not-the-pr.... > It is the consensus view amongst researchers that have published long-run analyses: >https://www.cms.gov/research-statistics-data-and-systems/sta... So I think it's interesting here that you make no mention of the explanation for HCE increases provided in the "consensus view" link. >In health care research, the impact of medical technology on health care cost increases has always been a great unknown. Yet 81 percent of the leading health economists agreed with the statement, “The primary reason for the increase in the health sector’s share of GDP over the past 30 years is technological change in medicine”.1Growing attention to the role of technological change in driving growth in health spending, and to the costs and benefits associated with new medical innovation reflects an acknowledgement of the long-term dilemma posed by historically unsustainable rates of growth in medical costs, combined with an increasing consensus that technological advance is a major factor in driving this growth. The current acceleration in health spending growth - following the quiescent period accompanying the spread of managed care - brings troubling implications for the long-term viability of our current system of financing and provision of health services. Understanding the magnitude of technology’s historical contribution to growth in costs is vital to the analysis of the future path of medical spending. Of course, in most areas of the economy a rapid pace of technological advance is regarded as a good thing. That this is not the case for medical care reflects a second point of consensus. Throughout much of history, imperfections in medical care markets have failed to provide incentives for the cost-effective provision of medical services, encouraging the development and diffusion of innovations beyond the point that would prevail under competitive market conditions. Low out-of-pocket costs for medical care due to insurance coverage, combined with patients’ lack of full information on the services they consume encourage the provision of medical care to a point where the marginal benefit of treatment to the patient is small relative to its marginal cost. You can hand-wave this as "increased consumption", if you want, but it is: - recognized as an anomaly - considered a point of concern - likely to lead to cost reductions if fixed In other words, this is precisely the sort of phenomenon you are arguing does not exist in US healthcare! |
I've highlighted the role of technological change on my blog before, but technological change is a major proximate cause. The root cause is income growth. Countries are chasing these technological advancements in direct proportion to their income and the degree to which they can afford them (as prices fall, countries with lower real incomes are more able to afford technologies the US and other rich countries had long before, but the frontier has long since moved on....). If you throw year fixed-effects or a time trend into analysis the coefficient on time (a proxy for tech chg) is very modest and the income effects are virtually identical.