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The most interesting component of this was the healthcare drag in the revisions taking it down from the initial ones. While a large element of this was the aff

by memossy 12y ago

The most interesting component of this was the healthcare drag in the revisions taking it down from the initial ones. While a large element of this was the affordable care act, it is also notable that healthcare inflation went negative for the first time in 20 odd years last quarter (education did too, but thats another story). Given the US currently spends twice the amount of other countries on its health care as a % of GDP (14%) for similar health outcomes and individuals are being significantly disincented to spend on healthcare via subsidies and high deductibles respectively, I think we will see increasing normalisation of healthcare spend to levels under 10% of GDP, a huge drag on GDP. This will be further accelerated by smartphone and biometric proliferation allowing for easier and more reliable diagnosis and treatment choice. Interesting times.

refurb 12y ago
Unfortunately the ACA doesn't do much to address increasing healthcare costs. There are a few initiatives (comparative medicine funding is one that comes to mind) that are good starts, but the ACA is likely to lead to overall higher GDP expenditures on healthcare in the US, not lower, as more and more uninsured have access to care.
- clavalle 12y ago
  Your analysis assumes healthcare is like any other commodity. While the primary aim of the ACA is not overall cost reduction (but, rather, make it affordable for the uninsured to get insurance), there are several reasons it could go down that path. The marketplaces and minimum standards for insurance plans make it easier to comparison shop. The fact that people will have insurance will lead to earlier and cheaper treatments for potentially serious disease. Businesses can get out of the insurance business altogether. As businesses remove themselves from the equation individuals will be more attuned to the cost of their insurance plans and shop accordingly. There are some direct provisions for paying providers for disease prevention and effective treatments that lead to patients not having to return for the same issue rather than just for treatments reversing that twisted financial incentive. Granted, there are plenty of ways for these potential cost benefits to go sour but there is a good chance that the ACA will actually reduce costs relative to what they would have been without the ACA.
  - refurb 12y ago
    Check out the Oregon Medicaid study and you'll find evidence that counters your claims, namely that access to healthcare improves health outcomes (i.e. early detection and treatment did not lead to measurably better outcomes). [1] It's a pretty impressive study. They took a number of uninsured in Oregon and held a lottery. Half of the people got free access to Medicaid and the other half remained uninsured. The study found that costs go up (because people now have health insurance), but people weren't better off in terms of health (except for those with depression). [1]http://en.m.wikipedia.org/wiki/Oregon_Medicaid_health_experiment http://en.m.wikipedia.org/wiki/Oregon_Medicaid_health_experi...
    - clavalle 12y ago
      Two years of Medicaid expansion in a relatively young city? Seems like the study didn't reach any significant conclusions at all...
rayiner 12y ago
The healthcare example is a very good illustration of why the GDP calculation is susceptible to the broken window fallacy: http://en.wikipedia.org/wiki/Parable_of_the_broken_window http://en.wikipedia.org/wiki/Parable_of_the_broken_window. The root of the problem is that GDP doesn't measure changes in capital stock. For example, after Fukushima, Japan's GDP ticked up slightly because of the expenditures from disaster recovery. Obviously it's absurd to conclude that Fukushima was good for the economy--the loss of capital more than outweighed the money spent fixing things. The same principle has many different implications. For example, if we reduced air pollution, expenditures on treating lung cancer would go down, hurting GDP. Countries that are heavily based on oil or mineral exports have artificially inflated GDP, because the measure excludes the decline in the value of reserves.
- bengali3 12y ago
  Interesting point regarding the parable, thank you for sharing. If GDP does included anything stock, would that really be accurate? Not an expert, but isn't stock priced on the future value of something (ie dependent upon future sales forecasts). since GDP is backward looking, i don't think it should be counted? stock could be used as a predictor of future GDP since the stock is trying to put a value to future sales. Also, wouldnt that also double count certain sales? ie each iPhone sold would increase goods sold as well as the companies stock price?
  - rayiner 12y ago
    In this context, "capital stock" just refers to the accumulated wealth of the country, not shares of a corporation. It's the value of existing bridges, oil reserves, factories, etc. In the sense I'm using it, I'd even include human health (i.e. human capital).
    - harryh 12y ago
      I seem to recall that in most estimates of the total capital of the US that human capital vastly exceeds all physical capital.
merpnderp 12y ago
Similar outcomes? Maybe you should compare cancer and heart disease survival rates (the two biggest killers in the US). The US does an incredible job with a fat, unhealthy, diverse population, even if we pay dearly for it.

by memossy 12y ago

refurb 12y ago

Unfortunately the ACA doesn't do much to address increasing healthcare costs. There are a few initiatives (comparative medicine funding is one that comes to mind) that are good starts, but the ACA is likely to lead to overall higher GDP expenditures on healthcare in the US, not lower, as more and more uninsured have access to care.

clavalle 12y ago
Your analysis assumes healthcare is like any other commodity. While the primary aim of the ACA is not overall cost reduction (but, rather, make it affordable for the uninsured to get insurance), there are several reasons it could go down that path. The marketplaces and minimum standards for insurance plans make it easier to comparison shop. The fact that people will have insurance will lead to earlier and cheaper treatments for potentially serious disease. Businesses can get out of the insurance business altogether. As businesses remove themselves from the equation individuals will be more attuned to the cost of their insurance plans and shop accordingly. There are some direct provisions for paying providers for disease prevention and effective treatments that lead to patients not having to return for the same issue rather than just for treatments reversing that twisted financial incentive. Granted, there are plenty of ways for these potential cost benefits to go sour but there is a good chance that the ACA will actually reduce costs relative to what they would have been without the ACA.
- refurb 12y ago
  Check out the Oregon Medicaid study and you'll find evidence that counters your claims, namely that access to healthcare improves health outcomes (i.e. early detection and treatment did not lead to measurably better outcomes). [1] It's a pretty impressive study. They took a number of uninsured in Oregon and held a lottery. Half of the people got free access to Medicaid and the other half remained uninsured. The study found that costs go up (because people now have health insurance), but people weren't better off in terms of health (except for those with depression). [1]http://en.m.wikipedia.org/wiki/Oregon_Medicaid_health_experiment http://en.m.wikipedia.org/wiki/Oregon_Medicaid_health_experi...
  - clavalle 12y ago
    Two years of Medicaid expansion in a relatively young city? Seems like the study didn't reach any significant conclusions at all...

rayiner 12y ago

The healthcare example is a very good illustration of why the GDP calculation is susceptible to the broken window fallacy: http://en.wikipedia.org/wiki/Parable_of_the_broken_window http://en.wikipedia.org/wiki/Parable_of_the_broken_window. The root of the problem is that GDP doesn't measure changes in capital stock. For example, after Fukushima, Japan's GDP ticked up slightly because of the expenditures from disaster recovery. Obviously it's absurd to conclude that Fukushima was good for the economy--the loss of capital more than outweighed the money spent fixing things. The same principle has many different implications. For example, if we reduced air pollution, expenditures on treating lung cancer would go down, hurting GDP. Countries that are heavily based on oil or mineral exports have artificially inflated GDP, because the measure excludes the decline in the value of reserves.

bengali3 12y ago
Interesting point regarding the parable, thank you for sharing. If GDP does included anything stock, would that really be accurate? Not an expert, but isn't stock priced on the future value of something (ie dependent upon future sales forecasts). since GDP is backward looking, i don't think it should be counted? stock could be used as a predictor of future GDP since the stock is trying to put a value to future sales. Also, wouldnt that also double count certain sales? ie each iPhone sold would increase goods sold as well as the companies stock price?
- rayiner 12y ago
  In this context, "capital stock" just refers to the accumulated wealth of the country, not shares of a corporation. It's the value of existing bridges, oil reserves, factories, etc. In the sense I'm using it, I'd even include human health (i.e. human capital).
  - harryh 12y ago
    I seem to recall that in most estimates of the total capital of the US that human capital vastly exceeds all physical capital.

merpnderp 12y ago

Similar outcomes? Maybe you should compare cancer and heart disease survival rates (the two biggest killers in the US). The US does an incredible job with a fat, unhealthy, diverse population, even if we pay dearly for it.