Aaron Carol, at The Incidental Economist, has a post showing that disease prevalence (including obesity) in the United States is a very, very small portion of what is driving health care costs:
Before you start in on me about how obesity is linked to other things and such, you should know that the overall McKinsey & Company analysis showed that the prevalences of disease in the US could account for perhaps an extra $25 billion in health care spending. Let me make a new chart for you:
Yes, obesity is more prevalent in the US, and yes, caring for it costs real money. But even if we get obesity down to the levels in other countries, it’s not going to magically erase the problem. We are spending two to three times per person what they are. There is no simple fix here. There is no one, and no thing, we can easily blame.
Everyone, always will look for a scapegoat. It is in our genes. The good vs. evil story is the oldest trope in existence. Look at the current outcry against “evil speculators” in oil markets (I wonder why Krugman doesn’t make a post about that?). Humans live through stories, humans respond strongly to in-group loyalty, humans have value preferences that lead them to view the world radically differently. I’ve often stated in debate that those who think that a single-payer health care system would somehow reduce our expenditures to a level consistent with other OECD countries are dreaming, at best, or delusional, at worst. And every single data point that passes by in the health care debate does nothing but strengthen the position that Robin Hanson articulated: health care altruism is a permutation of our evolutionary drive to “show we care”; or rather, make infrequent, and very large expenditures to show our loyalty to an alliance. The frequency has gotten greater as our society has gotten richer, but the underlying motive is still linked to our evolutionary roots.
Against this strain of thinking is the hypothesis that Matthew Yglesias articulated in his Bloggingheads diavlog with Karl, that people are stingy in the voting booth, but acquiescent in the doctor’s office. So separating payment and service would act as a brake on health care expenditure. I’m very skeptical of this argument. After all, health care expenditures have risen at a higher rate than GDP/per capita in many countries around the world.
A more interesting question, though, is why is the US different? My crude outline of a hypothesis is that people in the US have only recently come to “share a heritage” that is the United States. It’s only been around 100-ish years that people have really come to view themselves as “Americans”. In the absence of a shared heritage (which provides a built-in in-group), it has been especially important to engage in acts that show inter-tribal loyalty. The US spent a greater amount of money/life/time ending slavery, securing women’s right to vote, and ending segregation than a lot of other countries. We’ve also spent more money/ink/time securing a the minimal welfare state that we have, that is exceedingly expensive (relatively speaking). Not surprisingly, we also spend a ton of money/ink/time on health care that is of extremely dubious effectiveness. A cynic might say that this represents the greater wealth of the United States…but that doesn’t really provide an satisfactory explanation. We have low taxes, so we get away with a lot of inefficiency, but I don’t think that is the underlying driver of our proclivity to expend a lot of resources doing different things.
I think that history will show that Robin Hanson is right, and that whatever health care arrangement we devise, it will continue to be significantly more expensive than the world norm. That it has relatively little to do with the structure of the market (though I stand firmly behind a completely free market in primary care/pharmaceuticals [except antibiotics/microbials]), and a lot to do with our evolutionary drive as a “multi-tribal” society.


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Thursday ~ May 12th, 2011 at 10:30 am
Eric
Out of curiosity, does your vision of a completely free market in pharmaceuticals include government-granted and -enforced patents?
Thursday ~ May 12th, 2011 at 12:17 pm
Lord
Krugman has had many posts that the rise in oil prices is real and not speculators. It is not surprising healthcare costs are rising faster than gdp per capita in other countries since they spend so much less and have more room to grow. Healthcare will never be as inexpensive here as elsewhere but that isn’t really the question but whether the growth rate here can be trimmed and that does not seem unlikely. Does that free market include freedom to import or freedom from patents?
Thursday ~ May 12th, 2011 at 1:18 pm
Niklas Blanchard
@Eric and Lord:
Indeed, my free market radicalism does extend to imports and patents. I’m a vocal proponent (in real life, but haven’t written much about the subject) of intellectual property futures markets.
Thursday ~ May 12th, 2011 at 1:46 pm
True Cost of Health Care…It’s not Obesity! | PoliTYCs Blog
[...] Carol, at the Incidental Economist, presents some nice tables looking at Heath care costs in the United [...]
Thursday ~ May 12th, 2011 at 5:36 pm
Patrick
I had a real long comment about the scientific inadequacies of sociobiological explanations of behaviors like those Hanson is looking at, but Lewontin and Gould already said most of what needs to be said.
Friday ~ May 13th, 2011 at 8:05 am
Browsing Catharsis – 05.13.11 « Increasing Marginal Utility
[...] Obesity isn’t causing the surge in US health care spending. [...]
Friday ~ May 13th, 2011 at 9:11 am
Th
We will have less expensive health care when we do to doctors and hospital administrators what we have done to many other occupations and cut their pay substantially. Unless Americans are having many more procedures performed than in other countries, the main drivers of extra cost are administration and pay. A single payer system greatly reduces administration by eliminating many functions of the insurance companies and that leaves what doctors make versus their income in other countries. Good luck with that one. I support free flow of foreign doctors into the US until pay is equal across OECD borders, but that will never happen.
Monday ~ November 7th, 2011 at 11:57 pm
Links for 2011-05-11 « Den's Random Ramblings of Rude Reality
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Wednesday ~ May 30th, 2012 at 4:21 pm
What love for freedom? » TVHE
[...] but it does make me immediately think of Robin Hanson’s ideas about signalling status. Take a description of his position on health care and substitute in ‘democracy’ for ‘health [...]