Medical Mystery: Something Happened to U.S. Health Spending After 1980

May 17, 2018

The United States devotes a lot more of its economic resources to health care than any other nation, and yet its health care outcomes aren’t better for it.

That hasn’t always been the case. America was in the realm of other countries in per-capita health spending through about 1980. Then it diverged.

It’s the same story with health spending as a fraction of gross domestic product. Likewise, life expectancy. In 1980, the U.S. was right in the middle of the pack of peer nations in life expectancy at birth. But by the mid-2000s, we were at the bottom of the pack.

via Medical Mystery: Something Happened to U.S. Health Spending After 1980 – The New York Times

The Rate of Return on Everything, 1870-2015

May 14, 2018

This paper answers fundamental questions that have preoccupied modern economic thought since the 18th century. What is the aggregate real rate of return in the economy? Is it higher than the growth rate of the economy and, if so, by how much? Is there a tendency for returns to fall in the long-run? Which particular assets have the highest long-run returns? We answer these questions on the basis of a new and comprehensive dataset for all major asset classes, including — for the first time — total returns to the largest, but oft ignored, component of household wealth, housing. The annual data on total returns for equity, housing, bonds, and bills cover 16 advanced economies from 1870 to 2015, and our new evidence reveals many new insights and puzzles.

via The Rate of Return on Everything, 1870-2015 by Òscar Jordà, Katharina Knoll, Dmitry Kuvshinov, Moritz Schularick, Alan M. Taylor :: SSRN

R&D-Driven Medical Progress, Health Care Costs, and the Future of Human Longevity

May 14, 2018

In this paper we set up an overlapping generations model of gerontological founded human aging that takes the interaction between R&D-driven medical progress and access to health care into account. We use the model to explore potential futures of human health and longevity. For the baseline policy scenario of health care access, the calibrated model predicts substantial future increases in health and life expectancy, associated with rising shares of health expenditure in GDP. Freezing the expenditure share at the 2020 level by rationing access to health care severely reduces potential gains in health, longevity and welfare. These losses are greatest in the long run due to reduced incentives for medical R&D. For example, rationing is predicted to reduce potential gains of life-expectancy at age 65 by about 4 years in the year 2050. Generally, and perhaps surprisingly, young individuals (i.e. those who save the most health care contributions through rationing) are predicted to suffer the greatest losses in terms of life expectancy and welfare.

via R&D-Driven Medical Progress, Health Care Costs, and the Future of Human Longevity by Sebastian Böhm, Volker Grossmann, Holger Strulik :: SSRN

U.S. 2050 Project

December 12, 2017

What will America look like at mid-century? US 2050 is an initiative of the Peter G. Peterson Foundation and the Ford Foundation to examine and analyze the multiple demographic, socioeconomic, and fiscal trends that will shape the nation in the decades ahead. Engaging leading scholars in multiple disciplines including demographics, poverty studies, labor economics, macroeconomics, political science, and sociology, US 2050 will create a comprehensive view of our economic and fiscal future – and the implications for the social and financial well-being of Americans.

via US 2050

No ‘Honeymoon Phase’ – Whose Health Benefits from Retirement and When

December 9, 2017

I use a fixed effects instrumental variable approach to determine the effect retirement has on health. The exogenous variation in the probability to retire at the normal and early retirement age thresholds is exploited to instrument for the otherwise endogenous retirement decision. Six health aspects are considered: self-assessed health, depression, limitations in (instrumental) activities of daily living, mobility limitations, grip strength and number of words recalled. Using data for 10 countries from the Survey of Health, Retirement and Ageing in Europe (SHARE), I find that retiring both at the normal and early retirement eligibility ages significantly improves all health aspects, including the objective measure grip strength. Results do not generally support the theory that previous research was biased towards zero due to behavioral changes during the anticipation phase prior to retirement. Results also do not show the presence of a honeymoon phase directly following the start of retirement, in which individuals are believed to experience a euphoric state leading health improvements. It appears that individuals, especially blue collar workers, go through an adjustment period after retirement in which they experience more health problems, before stabilizing and improving. Overall, retirement has a health preserving effect for both genders and all occupations in the long term. Neither blue collar workers nor workers with physically or psychologically demanding jobs benefit more from retirement than others.

via No ‘Honeymoon Phase’ – Whose Health Benefits from Retirement and When by Birgit Leimer :: SSRN

The Demographic Deficit

December 9, 2017

There has been a slowdown in growth in the world’s most advanced economies. In this paper we argue that changing demographics, in particular aging populations combined with increased life expectancy, may be part of the explanation for why we observe slower growth, falling interest rates and falling productivity growth. Using Japan and the U.S. in the years prior to the financial crises as a case study, we provide estimates of the growth deficit that arises from an aging cohort structure and increasing life expectancy. We also provide projections of the impact of predictable demographic changes on future growth in the U.S. and Japan.

via The Demographic Deficit by Espen Henriksen, Thomas Cooley :: SSRN

Compare Medical and College Inflation with Services, not Goods | Cato @ Liberty

July 28, 2017

Have Medical Care prices risen faster than Services prices in general? Yes, but the difference in annualized price increases was typically smaller than one percentage point except in 2002 and 2010, when recession’s aftermath depressed other services prices more than (heavily-subsidized) medical care prices. Recessions’ impact on commodity prices pushed the year-to-year overall CPI below zero at times, which underscores the inaptness of comparing prices of medical or educational services to any price index such as the CPI which is heavily weighted by goods.

Source: Compare Medical and College Inflation with Services, not Goods | Cato @ Liberty