Empirical evidence suggests that both leisure time and medical care are important for maintaining health. We develop a general equilibrium macroeconomic model in which taxation is a key determinant of the composition of these two inputs in the endogenous accumulation of health capital. In our model, higher taxes lead to using relatively more leisure time and less medical care in maintaining health. We find that the difference in taxation can account for a large fraction of the difference in health expenditure-GDP ratio and almost all of the difference in time input for health production between the US and Europe.
Why Do Americans Spend so Much More on Health Care than Europeans? A General Equilibrium Macroeconomic Analysis by Hui He, Kevin Huang :: SSRNMarch 18, 2013
The health spending share of GDP was 18.0% in December 2012, up from 16.4% at the start of the recession in December 2007. This increase is partly attributable to slow GDP growth rather than high health spending growth, as the December 2012 health spending share of potential GDP (PGDP) was 17.0%.
On the Relationship between GDP and Health Care Expenditure: A New Perspective by Santiago Lago-Penas, David Cantarero, Carla Blázquez :: SSRNMay 31, 2012
In this paper we analyze the relationship between income and health expenditure in 31 OECD countries. We focus on the difference between short and long term multipliers and we also check the adjustment process of health care expenditure to changes in per capita GDP and its main components. In both cases we test if results differ in countries with a higher share of private expenditure on total health expenditure. Econometric results show that the long-run multiplier is close to unity, that health expenditure is more sensitive to per capita income cyclical movements than to trend movements, and that those countries with a higher share of private health expenditure fit faster and following a different pattern.
A leading driver of President Obama’s health reform was the conviction that America’s health economy was badly broken. Even critics of Obamacare largely agreed that Americans spend too much on, and get too little from, their health care. The talking points told one story, but the statistics tell another. In this “Health Care 101” guide, Christopher J. Conover, author of the just-released “American Health Economy Illustrated,” distinguishes fact from fiction and answers some of the most fundamental questions about health care and health spending in America.
Rapid advances in medical science and technology, substantial gains in health outcomes attributable to medical care, and budget-busting increases in health care expenditures fueled by private and public insurance have marked the past six decades of health care in the United States. As the country struggles to emerge from a multiyear financial and economic crisis, policymakers and the public have increasingly homed in on those skyrocketing health care expenditures. What lessons can be drawn from the evolution, since 1950, in the sources of payment and objects of expenditures in the health care arena?
This chart comes from the Commonwealth Fund’s annual report, out today, comparing health spending and outcomes in 11 industrialized countries. The United States by far has the highest spending per capita, at $7,960 per person. None of the other ten, industrialized countries in the survey even come close: Norway, which has the next highest spending, hovers around $5,352.
Can the Rapid Growth in the Cost of Employer-Provided Health Benefits Explain the Observed Increase in Earnings Inequality? by Mark Warshawsky :: SSRNOctober 23, 2011
Newly available data on earnings from the Social Security Administration indicates that earnings growth for lower earning workers lagged that of higher earning workers over the period 1999 through 2006. Most of this lag can be attributed, however, to the rapid increase in the cost of health insurance benefits provided to workers by employers, according to calculations using unpublished data provided by the Bureau of Labor Statistics. This finding is broadly supported by other studies in this area covering longer periods. The consistent growth of compensation across earnings percentiles up to the highest fractiles, in contrast to earnings growth, may be a particularly important empirical result for recent policy debates and legislation.