Source: Bureau of Labor Statistics www'economy'com

1
The price of medical care has increased 350
since 1980 versus 135 for other consumer prices.
Source Bureau of Labor Statistics
(www.economy.com)
2
The major cost drivers have been hospital
services and drugs.
Source Bureau of Labor Statistics
(www.economy.com)
3
The cost of higher education is one of the few
prices that has risen faster than the cost of
health care.
Source Bureau of Labor Statistics
(www.economy.com)
4
But, the cost of health care is only half of the
picture. What has been happening to the quality
of health care?
5

• How do we measure the quality of health care?
• What is quality?
• How do we account for health care that has become
  routine but didnt exist in the past (e.g.,
  pre-natal care)?
• How do we weigh qualities across different types
  of care (e.g., dental vs. catastrophic)?

6
How does one measure the quality of health
care? An easy measure of the effectiveness of
health care is the mortality rate. Some health
care may have little or no impact on the
mortality rate (e.g., orthodonture). But, it is
not unreasonable to assume that the qualities of
other types of health care grow at similar rates.
7
The mortality rate in the U.S. has been steadily
fallen 15 in the past two generations.
Source Statistical Abstract of the United
States, 2008, Table 77.
8
The infant mortality rate in the U.S. has fallen
75 in the past two generations.
Source Statistical Abstract of the United
States, 2008, Table 77.
9
Mortality rates due to influenza and pneumonia
have fallen 70 in the past two generations.
Source Statistical Abstract of the United
States, 2008, Table 110.
10
If we had the same mortality rates today that we
had in 1960, 400,000 more people would die each
year. These 400,000 lives (annually) is what the
higher cost of health care buys.
Source Derived from Statistical Abstract of the
United States, and the Bureau of Economic
Analysis.
11
But, what about the uninsured? They arent
sharing in this increased quality of health care.
11
12
The percentage of the population that is
uninsured has remained stable over time.
Source Income, Poverty, and Health Insurance
Coverage in the U.S. 2006, US Census Bureau.
13
Source Income, Poverty, and Health Insurance
Coverage in the U.S. 2006, US Census Bureau.
14
Pattern of uninsured is commensurate with the
hypothesis that, as the price of health care
rises, the more healthy willingly choose not to
be insured.
Source Income, Poverty, and Health Insurance
Coverage in the U.S. 2006, US Census Bureau.