9 ms·

A tale of two covariates: Why OWID and company are wrong about US healthcare

72 points by jedharris 7y ago

jedharris 7y ago
Very long and well argued review of sources of excess mortality in developed countries. Bottom line: Obesity! and other non-medical factors like automobiles. Big implications about how we should spend money to increase life expectancy.
- hdlothia 7y ago
  Can you explain the conclusion of this article to me? I don't fully understand what he is trying to say.what are the implications? That the only improvement we can make on the american healthcare system is to fight obesity better?
  - whatshisface 7y ago
    By far the biggest health improvements that could be made in America would be reductions in obesity and reductions in vehicle fatalities. Whether that's the best area of focus depends on the relative difficulty of the improvements - if one second and one penny could save one person, that would be a higher priority than spending a million dollars and one year to save a thousand (even though both would be on the list for doing some time.)
    - allovernow 7y ago
      Honestly, if our biggest barrier to healthy longevity has been reduced to automobile accidents, society is in pretty damn good shape considering how safe modern vehiclular travel is.
      - s1artibartfast 7y ago
        >society is in pretty damn good shape considering how safe modern vehiclular travel is While driving at large is safe, there are a few high risk subsets of driving: speeding, drunk driving, and inclimate weather.
  - rayiner 7y ago
    There are two points to the article. 1) Healthcare spending has rapidly diminishing returns, not only comparing the US to Europe, but comparing countries within Europe (such as the Netherlands versus Spain). 2) The lower life expectancy in the US can be explained mostly by higher obesity. US states with similar obesity to European countries have similar life expectancy.
    - hackeraccount 7y ago
      I haven't looked at the numbers. Barely read the article. I bet he's wrong though. I would think it'd be a love affair with firearms (Fuck Yeah. ) and a lot of driving. Every time I read about weight the dangers of an extra 10 lbs. seem to be pretty ambiguous. Though I'm totally going to drop that 10 lbs. I only had 2 donuts today.
      - nradov 7y ago
        An extra 10 lbs isn't the issue here. The average American man is now 23 lbs overweight.
        s1artibartfast 7y ago
        It is much worse than that. 40% of american men are obese, which,for the average body type, is ~50 lbs above normal. From wikipedia: >The National Center for Health Statistics at the CDC showed that 39.6% of US adults age 20 and older were obese as of 2015-2016 (37.9% for men and 41.1% for women).[1] Obesity in an adult is defined as a BMI of 30 and above. The Average american male is 5'10. A "normal healthy" BMI of 22 is 153 lbs. A BMI of 30 is 209 lbs. [2] [1] https://en.wikipedia.org/wiki/Obesity_in_the_United_States https://en.wikipedia.org/wiki/Obesity_in_the_United_States [2] https://www.nhlbi.nih.gov/health/educational/lose_wt/BMI/bmi_tbl.htm https://www.nhlbi.nih.gov/health/educational/lose_wt/BMI/bmi...
    - smt88 7y ago
      Re: #2, my understanding from friends at the CDC is that lower life expectancy is due to lower incomes (meaning food, medicine, and doctor visits are unaffordable even with health insurance), suicides, and the opioid crisis. Suicides and obesity can also be caused by low income and drug abuse, so it sounds like the author may be seeing causation where correlation is more accurate.
  - hackeraccount 7y ago
    So I just skimmed but I think the point he's making is that Public Health and Healthcare are 2 different things. Public Health is - get some exercise. Don't drink. Keep a reasonable weight. Don't do drugs. Avoid getting shot. Get vaccinated. Don't drive a lot. Almost all of these things aren't really "Healthcare". I don't need to go to a Dr. to know I should lose 10 lbs. Maybe - maybe, maybe - a Dr. can help me quit heroin (frankly I doubt it) and certainly a Dr. can give me a flu shot. Most of "healthcare" money has nothing to do with longevity. If my buddy had a heart attach you can spend $500,000 on treatment. Heck, you can give him a new heart. It's all great. Who would say no? Not me. (He's my buddy after all). At population scale though that does nothing for longevity. At population scale you'd be better off setting the speed limit to 40mph. Taxing alcohol to high heaven. Playing tons of old Erol Flynn movies (To encourage people to get into sword fights instead of gun fights.) None of that stuff is sexy though. Even the non-crazy version of that list is un-sexy. It probably doesn't cost a lot of money but it royally pisses off people. People also vote. They don't like it if you try to run their lives for them - even if you would technically do a better job then those idiots do. Except for me. And I'm going to lose that 10 lbs. really soon.
    - Angostura 7y ago
      In the UK now, if you go to the GP with an ailmentr, you are quite likely to be prescribed joining the local Parkrun group, or other 'public health' measures.
      - s1artibartfast 7y ago
        GPs in the US also tell people to exercise and lose weight.
  - analog31 7y ago
    I'm not sure the article addressed it, but it appears that we could improve the US healthcare system by making it cheaper without losing quality, simply by letting another country run it for us. If there's no gain from spending more, then there should be no loss from spending less, assuming that we get to restructure the system accordingly.
- jorblumesea 7y ago
  > Obesity! and other non-medical factors like automobiles Socialized medicine and other forms of "planned state healthcare" seem to do a better job promoting lifestyle changes and preventative medicine, which reduces the costs of these externalities.
  - jedharris 7y ago
    Makes sense to me, but I would like to have specific data that would help me understand: - How much money work needs to be invested for what incremental effect? - What kinds of investments are most effective? - How much does effectiveness depend on specific cultural factors, vs. being culture independent? And many more similar questions.
  - virmundi 7y ago
    Could it be that the socialized medical systems of which you speak are Western? Many of the European systems exist within a realm where people ate and continue to eat relatively healthy food due to historical circumstances. Further, they had and continue to have economies based around the idea of walkable cities. These two factors reduce the chances of obesity and the risk of death due to cars. The only way for America to approach either of these is to have everyone one to move into planned mega-cities.
  - xyzzyz 7y ago
    The socialized medicine in my home country does pretty much nothing to promote healthy lifestyle. People generally are healthy and not obese, but socialized medicine have nothing to do with it, it’s rather the culture at large that’s responsible.
- nradov 7y ago
  Yes we are well into diminishing returns for medical interventions. Many of us are digging our graves with our teeth. While the USA seems particularly bad in that regard other wealthy, industrialized countries are on the same general trend line and will eventually face similar problems.
Ididntdothis 7y ago
This starts with saying that there is a popular telling that the more money a country spends the better life expectancy will be. Especially looking at the US I thought most people know that US doesn't get much value compared to the money spent. Was that really controversial?
- deleted 7y ago
  [deleted]
- rcafdm 7y ago
  My point is that there's very little to suggest US healthcare is uniquely ineffective. There rapidly diminishing returns to health spending and US outcomes are badly handicapped by factors like obesity and homicide. Maybe try actually reading it though?
  - urbanjunkie 7y ago
    Oh fuck off, you condescending cunt. By the way, your site is shit and this article dull and unreadable.
  - oezi 7y ago
    (I think you get downvoted here, because it is a long read and while extremely well argued on data, it could benefit from more of a narrative at times. I often felt a tad lost even though it was a great read) The question that arises for me from the article is: what should society shift spending towards/away from healthcare to receive the most life expectancy gains? Fight obesity, transport safety, drugs? Is any areas of those amicable to be solved by spending?
    - virmundi 7y ago
      Why optimize for life expectancy? Why not remove the social stigma from suicide? Let people live as they want and drop out whenever.
  - shkkmo 7y ago
    I followedany of your arguments, but I definitely started skimming at times to gather the main points. It would have been nice to have you main points with the most informative charts that illustrate your conclusions in the article, with links to sub-articles on each particular step of your argument that contain the additional analysis to support your conclusions. Donu you also suggest that high levels of health care spending are more effective than we might expect since the wealth that allows more spending also come with higher obesity and larger overdose risks? Is there one of your charts that indicates which countries have seen the best returns from higher levels of health care spending?
hdlothia 7y ago
Australia has similar rates of obesity and better health outcomes don't they?.
- rcafdm 7y ago
  No, but this is addressed in my post. Australia's obesity rate is substantially lower, plus they suffer from lower homicide, drug abuse, and the like. More generally, the diminishing returns to health spending imply there's very little to believe the higher expenditure the US makes is likely to purchase appreciably better outcomes (even with different healthcare regimes).
  - hdlothia 7y ago
    34% to 28% is substantially lower?
    - rcafdm 7y ago
      The exact numbers depend on the source/methodology, but all credible estimates show large differences and these differences imply large effects for mortality rates [in the broader population](https://randomcriticalanalysis.com/2019/11/07/a-tale-of-two-covariates-why-owid-and-company-are-wrong-about-us-healthcare/#rcatoc-these-risks-can-evolve-differently https://randomcriticalanalysis.com/2019/11/07/a-tale-of-two-...).
  - hdlothia 7y ago
    Are you the original author? Have you done an evaluation on the financial consequences of both healthcare systems as well? Do people suffer medical bankruptcies at similar levels in our peer nations?
    - rcafdm 7y ago
      Yes, I'm the author of the blog (RCA). No, I haven't studied this narrow question, though it's somewhat tangential to the arguments I've advanced (outcomes; prices; aggregate costs; etc). I have, however, seen several studies that suggest "medical bankruptcies" have very little to do with medical debt and much to do with the effects of their health on their employment/earned income (also similar patterns in Canada and some other comps in the available data...) https://www.nejm.org/doi/pdf/10.1056/NEJMp1716604 https://www.nejm.org/doi/pdf/10.1056/NEJMp1716604
deleted 7y ago
[deleted]
xixixao 7y ago
I feel like this is a great article, but is very hard to digest for someone without statistical background and working knowledge of its jargon. Pretty sure it could be amended only slightly, using common language terms, for larger audience to appreciate it.
maxerickson 7y ago
Does the article address quality of life? No one particularly thinks that artificial knees are life extending.
atomic_rabbit 7y ago
The blog Random Critical Analysis has made a good argument that Americans spend so much on healthcare simply because Americans spend so much on everything. Healthcare isn't exceptional in this regard. If you replace the usual GDP per capita measure of income by a measure of actual individual consumption, the US lies right on the trend line, just with higher healthcare spending and higher overall consumption than everyone else. https://randomcriticalanalysis.com/2018/11/19/why-everything-you-know-about-healthcare-is-wrong-in-one-million-charts-a-response-to-noah-smith/ https://randomcriticalanalysis.com/2018/11/19/why-everything...
- jk27277 7y ago
  You can't spend more on everything, not on a percent of GDP basis. This is a stupid idea since every GDP is limited to 100%. If you spend more you have to take debt and spend future GDP
  - rcafdm 7y ago
    You absolutely can in real terms. https://randomcriticalanalysis.com/2019/12/03/no-means-no-the-high-income-elasticity-of-health-expenditure-does-not-mean-we-are-going-to-starve/ https://randomcriticalanalysis.com/2019/12/03/no-means-no-th... Also while I agree that 100% of a GDP is a reasonable approximation of an upper limit in practice, that's not necessarily strictly true either. GDP measures domestic production, not the income available to residents. The income available to residents can certainly be much less than GDP (e.g., Ireland, Luxembourg, etc), so the reverse can be true in principle too.
    - cma 7y ago
      Since healthcare is priced into every salary, I'd expect at least some big portion to come through on non-imported goods (though if it was 2X it wouldn't on its own bring every other thing to 2X).
      - rcafdm 7y ago
        I’m not sure what you’re getting at. Obviously, healthcare must be paid for somehow and it’s a fair assumption workers bear most of the incidence. However, the role of real incomes and relative prices are generally under appreciated here.ie. It’s not so much that health benefits are something extra as part of total remuneration (ultimately a reflection of rising productivity elsewhere which frees up spending to be allocated to health and other services)
williesleg 7y ago
I always shop for the lowest car price. I never shop for the lowest health care price. In fact, if it's more expensive I love it. I'm not paying for it.
alexlikeits1999 7y ago
The best thing I've read about cross-country longevity, and I don't even care about its main point (ie USA healthcare spending). If you have a Patreon account or something similar please post it. I want more of this.
- rcafdm 7y ago
  Thanks. I haven't seriously considered that before, but I may put one up!
pjc50 7y ago
> The problem is GDP is not even particularly a good proxy for the income of households (individuals). GDP is designed to measure how much value add is produced within domestic (territorial) boundaries. It usually does a fairly decent job of this, but it does not directly tell us about the household perspective, as in, the average level of real incomes or real consumption enjoyed residents of a country (a.k.a. “material living conditions“). Most importantly, it is an increasingly unreliable proxy for this concept. Would someone care to explain how this works? What's the factor causing divergence between the two? Is it the proportion of GDP being returned to overseas investors? Or a mis-counting which includes GDP of US multinationals produced by workers overseas?
- PunchTornado 7y ago
  one example that I often heard being made is that natural disasters have a positive outcome to the GDP. Houses and communities get destroyed, people are objectively much worse off, but due to the money pumped in reconstruction the GDP grows more than if no disaster had happened.
- rcafdm 7y ago
  I (RCA) have been meaning to dedicate a blog post to this topic exclusively and quantify the root causes in considerable detail. In short, yes, I believe globalization and, specifically, multinational corporations (affiliates of foreign owned corporations) are the primary cause. However, in regression terms, this has less to do with net income flows into the US than net income flows out of several small high GDP/person countries. The US is a very large, very rich country whereas many of these countries are much smaller so it doesn't take much to have outsize affects on them. Even if 100% of this ultimately accrues to the benefit of US households, (which I don't think is quite accurate) the effect in % terms is vastly different. Although some of this can be directly observed as primary income flows in the current year national accounts (dividends, rent, etc), some of it shows up as gross savings or disposable income in the foreign affliates, i.e., it's equivalent to retained earnings. Over the past decade or two non-financial corporate savings have increased massively and these savings are largely uncorrelated with domestic (capital) investment, i.e., it's almost entirely financial and it's largely leaving these countries in the form of net lending. These things also influence the calculation of (GDP) PPPs and cause other headaches. Of course, there are also other reasons why GDP misleads. For example, Luxembourg has a very large non-resident workforce. Something like 50% of their workers live in neighboring countries (varies year to year), meaning ~50% of aggregate employee compensation goes home (cross border) to Germany and the like. Then there are petro-states like Norway whose income flows are inherently temporary (finite amount of natural resources to extract) and highly volatile, meaning they can't consume out of their measured GDP like most other countries. They need to practice massive consumption smoothing if they don't want their standard of living to crash in the not too distant future. Long story short, GDP was never intended to be an indicator of material wellbeing and the household perspective (consumption, disposable income) are better measured and more reliable. One might try to throw a bunch of variables in to counteract the many issues imposed by GDP as a proxy for the household perspective, but why bother? ~ RCA (sorry for typos, grammatical errors, etc... limited time to comment and would rather focus more effort on blog)

72 points by jedharris 7y ago

Very long and well argued review of sources of excess mortality in developed countries. Bottom line: Obesity! and other non-medical factors like automobiles. Big implications about how we should spend money to increase life expectancy.

hdlothia 7y ago
Can you explain the conclusion of this article to me? I don't fully understand what he is trying to say.what are the implications? That the only improvement we can make on the american healthcare system is to fight obesity better?
- whatshisface 7y ago
  By far the biggest health improvements that could be made in America would be reductions in obesity and reductions in vehicle fatalities. Whether that's the best area of focus depends on the relative difficulty of the improvements - if one second and one penny could save one person, that would be a higher priority than spending a million dollars and one year to save a thousand (even though both would be on the list for doing some time.)
  - allovernow 7y ago
    Honestly, if our biggest barrier to healthy longevity has been reduced to automobile accidents, society is in pretty damn good shape considering how safe modern vehiclular travel is.
    - s1artibartfast 7y ago
      >society is in pretty damn good shape considering how safe modern vehiclular travel is While driving at large is safe, there are a few high risk subsets of driving: speeding, drunk driving, and inclimate weather.
- rayiner 7y ago
  There are two points to the article. 1) Healthcare spending has rapidly diminishing returns, not only comparing the US to Europe, but comparing countries within Europe (such as the Netherlands versus Spain). 2) The lower life expectancy in the US can be explained mostly by higher obesity. US states with similar obesity to European countries have similar life expectancy.
  - hackeraccount 7y ago
    I haven't looked at the numbers. Barely read the article. I bet he's wrong though. I would think it'd be a love affair with firearms (Fuck Yeah. ) and a lot of driving. Every time I read about weight the dangers of an extra 10 lbs. seem to be pretty ambiguous. Though I'm totally going to drop that 10 lbs. I only had 2 donuts today.
    - nradov 7y ago
      An extra 10 lbs isn't the issue here. The average American man is now 23 lbs overweight.
      - s1artibartfast 7y ago
        It is much worse than that. 40% of american men are obese, which,for the average body type, is ~50 lbs above normal. From wikipedia: >The National Center for Health Statistics at the CDC showed that 39.6% of US adults age 20 and older were obese as of 2015-2016 (37.9% for men and 41.1% for women).[1] Obesity in an adult is defined as a BMI of 30 and above. The Average american male is 5'10. A "normal healthy" BMI of 22 is 153 lbs. A BMI of 30 is 209 lbs. [2] [1] https://en.wikipedia.org/wiki/Obesity_in_the_United_States https://en.wikipedia.org/wiki/Obesity_in_the_United_States [2] https://www.nhlbi.nih.gov/health/educational/lose_wt/BMI/bmi_tbl.htm https://www.nhlbi.nih.gov/health/educational/lose_wt/BMI/bmi...
  - smt88 7y ago
    Re: #2, my understanding from friends at the CDC is that lower life expectancy is due to lower incomes (meaning food, medicine, and doctor visits are unaffordable even with health insurance), suicides, and the opioid crisis. Suicides and obesity can also be caused by low income and drug abuse, so it sounds like the author may be seeing causation where correlation is more accurate.
- hackeraccount 7y ago
  So I just skimmed but I think the point he's making is that Public Health and Healthcare are 2 different things. Public Health is - get some exercise. Don't drink. Keep a reasonable weight. Don't do drugs. Avoid getting shot. Get vaccinated. Don't drive a lot. Almost all of these things aren't really "Healthcare". I don't need to go to a Dr. to know I should lose 10 lbs. Maybe - maybe, maybe - a Dr. can help me quit heroin (frankly I doubt it) and certainly a Dr. can give me a flu shot. Most of "healthcare" money has nothing to do with longevity. If my buddy had a heart attach you can spend $500,000 on treatment. Heck, you can give him a new heart. It's all great. Who would say no? Not me. (He's my buddy after all). At population scale though that does nothing for longevity. At population scale you'd be better off setting the speed limit to 40mph. Taxing alcohol to high heaven. Playing tons of old Erol Flynn movies (To encourage people to get into sword fights instead of gun fights.) None of that stuff is sexy though. Even the non-crazy version of that list is un-sexy. It probably doesn't cost a lot of money but it royally pisses off people. People also vote. They don't like it if you try to run their lives for them - even if you would technically do a better job then those idiots do. Except for me. And I'm going to lose that 10 lbs. really soon.
  - Angostura 7y ago
    In the UK now, if you go to the GP with an ailmentr, you are quite likely to be prescribed joining the local Parkrun group, or other 'public health' measures.
    - s1artibartfast 7y ago
      GPs in the US also tell people to exercise and lose weight.
- analog31 7y ago
  I'm not sure the article addressed it, but it appears that we could improve the US healthcare system by making it cheaper without losing quality, simply by letting another country run it for us. If there's no gain from spending more, then there should be no loss from spending less, assuming that we get to restructure the system accordingly.
jorblumesea 7y ago
> Obesity! and other non-medical factors like automobiles Socialized medicine and other forms of "planned state healthcare" seem to do a better job promoting lifestyle changes and preventative medicine, which reduces the costs of these externalities.
- jedharris 7y ago
  Makes sense to me, but I would like to have specific data that would help me understand: - How much money work needs to be invested for what incremental effect? - What kinds of investments are most effective? - How much does effectiveness depend on specific cultural factors, vs. being culture independent? And many more similar questions.
- virmundi 7y ago
  Could it be that the socialized medical systems of which you speak are Western? Many of the European systems exist within a realm where people ate and continue to eat relatively healthy food due to historical circumstances. Further, they had and continue to have economies based around the idea of walkable cities. These two factors reduce the chances of obesity and the risk of death due to cars. The only way for America to approach either of these is to have everyone one to move into planned mega-cities.
- xyzzyz 7y ago
  The socialized medicine in my home country does pretty much nothing to promote healthy lifestyle. People generally are healthy and not obese, but socialized medicine have nothing to do with it, it’s rather the culture at large that’s responsible.
nradov 7y ago
Yes we are well into diminishing returns for medical interventions. Many of us are digging our graves with our teeth. While the USA seems particularly bad in that regard other wealthy, industrialized countries are on the same general trend line and will eventually face similar problems.

Ididntdothis 7y ago

This starts with saying that there is a popular telling that the more money a country spends the better life expectancy will be. Especially looking at the US I thought most people know that US doesn't get much value compared to the money spent. Was that really controversial?

deleted 7y ago
[deleted]
rcafdm 7y ago
My point is that there's very little to suggest US healthcare is uniquely ineffective. There rapidly diminishing returns to health spending and US outcomes are badly handicapped by factors like obesity and homicide. Maybe try actually reading it though?
- urbanjunkie 7y ago
  Oh fuck off, you condescending cunt. By the way, your site is shit and this article dull and unreadable.
- oezi 7y ago
  (I think you get downvoted here, because it is a long read and while extremely well argued on data, it could benefit from more of a narrative at times. I often felt a tad lost even though it was a great read) The question that arises for me from the article is: what should society shift spending towards/away from healthcare to receive the most life expectancy gains? Fight obesity, transport safety, drugs? Is any areas of those amicable to be solved by spending?
  - virmundi 7y ago
    Why optimize for life expectancy? Why not remove the social stigma from suicide? Let people live as they want and drop out whenever.
- shkkmo 7y ago
  I followedany of your arguments, but I definitely started skimming at times to gather the main points. It would have been nice to have you main points with the most informative charts that illustrate your conclusions in the article, with links to sub-articles on each particular step of your argument that contain the additional analysis to support your conclusions. Donu you also suggest that high levels of health care spending are more effective than we might expect since the wealth that allows more spending also come with higher obesity and larger overdose risks? Is there one of your charts that indicates which countries have seen the best returns from higher levels of health care spending?

hdlothia 7y ago

Australia has similar rates of obesity and better health outcomes don't they?.

rcafdm 7y ago
No, but this is addressed in my post. Australia's obesity rate is substantially lower, plus they suffer from lower homicide, drug abuse, and the like. More generally, the diminishing returns to health spending imply there's very little to believe the higher expenditure the US makes is likely to purchase appreciably better outcomes (even with different healthcare regimes).
- hdlothia 7y ago
  34% to 28% is substantially lower?
  - rcafdm 7y ago
    The exact numbers depend on the source/methodology, but all credible estimates show large differences and these differences imply large effects for mortality rates [in the broader population](https://randomcriticalanalysis.com/2019/11/07/a-tale-of-two-covariates-why-owid-and-company-are-wrong-about-us-healthcare/#rcatoc-these-risks-can-evolve-differently https://randomcriticalanalysis.com/2019/11/07/a-tale-of-two-...).
- hdlothia 7y ago
  Are you the original author? Have you done an evaluation on the financial consequences of both healthcare systems as well? Do people suffer medical bankruptcies at similar levels in our peer nations?
  - rcafdm 7y ago
    Yes, I'm the author of the blog (RCA). No, I haven't studied this narrow question, though it's somewhat tangential to the arguments I've advanced (outcomes; prices; aggregate costs; etc). I have, however, seen several studies that suggest "medical bankruptcies" have very little to do with medical debt and much to do with the effects of their health on their employment/earned income (also similar patterns in Canada and some other comps in the available data...) https://www.nejm.org/doi/pdf/10.1056/NEJMp1716604 https://www.nejm.org/doi/pdf/10.1056/NEJMp1716604

deleted 7y ago

[deleted]

xixixao 7y ago

I feel like this is a great article, but is very hard to digest for someone without statistical background and working knowledge of its jargon. Pretty sure it could be amended only slightly, using common language terms, for larger audience to appreciate it.

maxerickson 7y ago

Does the article address quality of life? No one particularly thinks that artificial knees are life extending.

atomic_rabbit 7y ago

The blog Random Critical Analysis has made a good argument that Americans spend so much on healthcare simply because Americans spend so much on everything. Healthcare isn't exceptional in this regard. If you replace the usual GDP per capita measure of income by a measure of actual individual consumption, the US lies right on the trend line, just with higher healthcare spending and higher overall consumption than everyone else. https://randomcriticalanalysis.com/2018/11/19/why-everything-you-know-about-healthcare-is-wrong-in-one-million-charts-a-response-to-noah-smith/ https://randomcriticalanalysis.com/2018/11/19/why-everything...

jk27277 7y ago
You can't spend more on everything, not on a percent of GDP basis. This is a stupid idea since every GDP is limited to 100%. If you spend more you have to take debt and spend future GDP
- rcafdm 7y ago
  You absolutely can in real terms. https://randomcriticalanalysis.com/2019/12/03/no-means-no-the-high-income-elasticity-of-health-expenditure-does-not-mean-we-are-going-to-starve/ https://randomcriticalanalysis.com/2019/12/03/no-means-no-th... Also while I agree that 100% of a GDP is a reasonable approximation of an upper limit in practice, that's not necessarily strictly true either. GDP measures domestic production, not the income available to residents. The income available to residents can certainly be much less than GDP (e.g., Ireland, Luxembourg, etc), so the reverse can be true in principle too.
  - cma 7y ago
    Since healthcare is priced into every salary, I'd expect at least some big portion to come through on non-imported goods (though if it was 2X it wouldn't on its own bring every other thing to 2X).
    - rcafdm 7y ago
      I’m not sure what you’re getting at. Obviously, healthcare must be paid for somehow and it’s a fair assumption workers bear most of the incidence. However, the role of real incomes and relative prices are generally under appreciated here.ie. It’s not so much that health benefits are something extra as part of total remuneration (ultimately a reflection of rising productivity elsewhere which frees up spending to be allocated to health and other services)

williesleg 7y ago

I always shop for the lowest car price. I never shop for the lowest health care price. In fact, if it's more expensive I love it. I'm not paying for it.

alexlikeits1999 7y ago

The best thing I've read about cross-country longevity, and I don't even care about its main point (ie USA healthcare spending). If you have a Patreon account or something similar please post it. I want more of this.

rcafdm 7y ago
Thanks. I haven't seriously considered that before, but I may put one up!

pjc50 7y ago

> The problem is GDP is not even particularly a good proxy for the income of households (individuals). GDP is designed to measure how much value add is produced within domestic (territorial) boundaries. It usually does a fairly decent job of this, but it does not directly tell us about the household perspective, as in, the average level of real incomes or real consumption enjoyed residents of a country (a.k.a. “material living conditions“). Most importantly, it is an increasingly unreliable proxy for this concept. Would someone care to explain how this works? What's the factor causing divergence between the two? Is it the proportion of GDP being returned to overseas investors? Or a mis-counting which includes GDP of US multinationals produced by workers overseas?

PunchTornado 7y ago
one example that I often heard being made is that natural disasters have a positive outcome to the GDP. Houses and communities get destroyed, people are objectively much worse off, but due to the money pumped in reconstruction the GDP grows more than if no disaster had happened.
rcafdm 7y ago
I (RCA) have been meaning to dedicate a blog post to this topic exclusively and quantify the root causes in considerable detail. In short, yes, I believe globalization and, specifically, multinational corporations (affiliates of foreign owned corporations) are the primary cause. However, in regression terms, this has less to do with net income flows into the US than net income flows out of several small high GDP/person countries. The US is a very large, very rich country whereas many of these countries are much smaller so it doesn't take much to have outsize affects on them. Even if 100% of this ultimately accrues to the benefit of US households, (which I don't think is quite accurate) the effect in % terms is vastly different. Although some of this can be directly observed as primary income flows in the current year national accounts (dividends, rent, etc), some of it shows up as gross savings or disposable income in the foreign affliates, i.e., it's equivalent to retained earnings. Over the past decade or two non-financial corporate savings have increased massively and these savings are largely uncorrelated with domestic (capital) investment, i.e., it's almost entirely financial and it's largely leaving these countries in the form of net lending. These things also influence the calculation of (GDP) PPPs and cause other headaches. Of course, there are also other reasons why GDP misleads. For example, Luxembourg has a very large non-resident workforce. Something like 50% of their workers live in neighboring countries (varies year to year), meaning ~50% of aggregate employee compensation goes home (cross border) to Germany and the like. Then there are petro-states like Norway whose income flows are inherently temporary (finite amount of natural resources to extract) and highly volatile, meaning they can't consume out of their measured GDP like most other countries. They need to practice massive consumption smoothing if they don't want their standard of living to crash in the not too distant future. Long story short, GDP was never intended to be an indicator of material wellbeing and the household perspective (consumption, disposable income) are better measured and more reliable. One might try to throw a bunch of variables in to counteract the many issues imposed by GDP as a proxy for the household perspective, but why bother? ~ RCA (sorry for typos, grammatical errors, etc... limited time to comment and would rather focus more effort on blog)