A few good reads on health care matters this morning. In National Review, Cato’s Michael Cannon exposes some of the pro-government fallacies underlying the flaws in the current health care reform proposals. And in the American Nobelist Robert Vogel discusses the factors of increasing health care costs. An excerpt:
Why is it that although the average age of onset of disabilities has been delayed by ten years, and that these disabilities have become milder than they used to be, the share of GDP spent on health is rising? […]
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. Between 1875 and 1995, the share of family income spent on food, clothing, and shelter declined from 87 percent to just 30 percent, despite the fact that we eat more food, own more clothes, and have better and larger homes today than we had in 1875. […]
Consequently, there is no need to suppress the demand for healthcare. Expenditures on healthcare are driven by demand, which is spurred by income and by advances in biotechnology that make health interventions increasingly effective.
And also from the American, James DeLong explains why we should spend more on health care, not less.