The Health Care Industry

Wojtek Sokolowski sokol at jhu.edu
Wed Aug 25 07:48:24 PDT 1999


At 11:38 PM 8/25/99 -0500, Steve Perry wrote:
>
>Here is a central economic question that I've never heard answered
>satisfactorily: *Why* have costs spiralled upward so dramatically in
>the past 20 years?

Cost increase per se is not necessarily a bad thing - for example if it leads to a more effective, but also more expensive, treatment.

The real question is how much of that cost increase is due to treatment effectiveness increase, and how much is due to economic inefficiency (e.g. transaction cost increase due to the multiple payer system, information asymmetry, or preference of treatment over prevention).

wojtek



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