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December 13, 2007

Is spending more on health care bad?

Health care and health care spending is already one of the big issues in the runup to the presidential primaries. Our country collectively spends more than $2 trillion on health care each year, and that spending is a higher percentage of our total income than many other countries. Some use these statistics as evidence that major changes are required in our health care system. Is this a valid conclusion? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"This is an enormously complicated issue. I mean, health care is a big, big system; a big, big sector in our economy, as you said, over $2 trillion spent. It's really hard, I think, to distill some of the issues in health care down to a few statistics. Now, the data you cite certainly are correct. But a lot of elements can affect that.

"For example, it may be that U.S. consumers spend more on health care simply due to our characteristics, due to our health status, due to our age, due to the availability of health care. Also, and this is a factor that the economists stress, it may also be due the fact that we want more health care. A study showed that as the standard of living of a country goes up, or as the income of a country goes up, people want to use more health care. And of course, the U.S. is one of the richest countries in the world on a total, or even a per capita basis. So we may expect that as our country has developed and as our incomes have gone up, we have simply wanted to spend more on health care, and that could be a major reason why we do spend more on health care relative to other countries."

Posted by Dave at December 13, 2007 08:00 AM