[rcafdm]

> We spend 17.4% of GDP on healthcare. The OECD average is 9.5%

Health spending is almost entirley explained by income levels, especially in the long-run. The US spends much more because the US is much richer than most and because health spending is highly elastic at a national level.

# TL;DR https://i0.wp.com/randomcriticalanalysis.com/wp-content/uplo...

# Long explanation

https://randomcriticalanalysis.com/2018/11/19/why-everything...

> and we don't have better outcomes to show for it

Norway and Luxembourg also spend 2x Spain and Italy and don't have more to show for it either despite the fact that they're also much richer, have larger welfare states, etc.

https://i1.wp.com/randomcriticalanalysis.com/wp-content/uplo...

Countries increase health spending because they can, not necessarily because they need to. Evidence strongly suggests returns to health spending are falling everywhere and the US isn't particularly unique in this regard.

https://randomcriticalanalysis.com/2019/11/07/a-tale-of-two-...

[keenmaster]

Your findings are not mutually exclusive with other theories about the underlying causes of high U.S. healthcare expenditure, such as a chronic lack of price transparency. The more money is in the pot, the greater the incentives to pilfer it, and, in lieu of adequate controls, the more it will be pilfered. The way I see it, your linear regression is between income and aggregate pilferage across all layers of the healthcare establishment (Kafka baklava :) ). I surmise that the accelerating nature of health expenditures (1.8% increase for every 1% increase in income) is due to the rapid inflation of disposable income relative to overall income at the higher levels. Disposable income and the saved wealth accrued from higher disposable income over time are more readily pilfered. I should say “otherwise disposable,” because the healthcare industry takes a progressively larger chunk of that and makes it de facto indisposable. I say this with no irony: a linear regression between income and amounts extorted during kidnapping, controlling for other variables, would show similar results.

[rcafdm]

> Your findings are not mutually exclusive with other theories about the underlying causes of high U.S. healthcare expenditure, such as a chronic lack of price transparency.

My findings strongly agitate against the notion that high US health spending is a product of idiosyncratic features of our system. Presumably most of these critics believe we'd spend much less if only our system looked more like other countries, but my evidence indicates we'd spend very similar amounts in the long run regardless. Further, we'd likely have similar outcomes and many other similar healthcare attributes (prices, intensity, health worker density, etc). Most of the things about US healthcare people believe to be important and unique (i.e., not explained by income) just aren't.

> The more money is in the pot, the greater the incentives to pilfer it, and, in lieu of adequate controls, the more it will be pilfered

I wouldn't argue there's no "pilfering" or that more money doesn't create more opportunity for this, but the high income elasticity likely has little to do with pilfering. Where are these ill-gotten gains going? I certainly don't think you'd have much success in showing this if you look at, say, the growth in physician incomes, pharma/biotech industry profits, and so on. The data are much more consistent with mundane explanations like rising technological sophistication, higher intensity, and so on (ultimately much of this being driven by some combination of patient/family demand and providers' "spare no expense" approach to caring). I mean, if you look at the economic data it's quite obvious most of the increase can be arithmetically attributed to a swelling of health workers (density or share of workforce) and that most of these workers have lower-to-middle income levels (especially on the margin).

https://twitter.com/RCAFDM/status/1193949748841111552

> I surmise that the accelerating nature of health expenditures... is due to the rapid inflation of disposable income relative to overall income at the higher levels.

I'm not sure what you mean by this exactly, but a better, more parsimonous way to understand high income elasticity is that higher income countries are usually inherently more productive countries. We can spend substantially smaller shares of our income on food, clothing, shelter, and other "necessities" because we are able to produce these things so much more efficiently (or otherwise procure on the market) than we did decades earlier or than OECD countries of more significantly more modest income levels while still consuming more of these things in real terms. This frees up resources to be spent on higher order wants like health, education, recreation, culture, and so on. Many of these growth areas, meanwhile, are inherently subject to less productivity growth, meaning prices tend not to fall relative to incomes nearly as quickly as we observe in other sectors.

https://randomcriticalanalysis.com/2019/12/03/no-means-no-th...

> I say this with no irony: a linear regression between income and amounts extorted during kidnapping, controlling for other variables, would show similar results.

I doubt that's true, though we're talking about the total spending (kidnapping ransom) per capita here. It's pretty clear the price per transaction (as in, health inflation) explains very little in US time series or cross-sectionally. Now maybe if kidnapping started to become a high amenity affair in developed countries (presuming this sort of thing happened with measurable frequency here) and 25% of the population worked delivering these services.....