Robert Fogel on Health Care Costs
By Arnold Kling
His article would be self-recommending, except that Tyler uses that expression to mean something that he has not yet read. I have read Fogel’s piece. He writes about rising health care expenditures,
The main factor is that the long-term income elasticity of the demand for healthcare is 1.6–for every 1 percent increase in a family’s income, the family wants to increase its expenditures on healthcare by 1.6 percent. This is not a new trend.
The article is much richer and much deeper than that. In fact, my guess is that the Congressional Budget Office will want to put a couple of economists to work on some of the issues Fogel raises.
I just want to raise a Stein’s Law point. Once health care gets to 70 percent of GDP, then it is going to get rather difficult to increase spending on health care by 1.6 percent for every 1 percent increase in GDP.