Why is Medical Care Expensive in the U.S.?

7 Pages Posted: 6 Mar 2011

See all articles by Paul H. Rubin

Paul H. Rubin

Emory University - Department of Economics

Kaz Miyagiwa

Emory University - Department of Economics; Osaka University - Institute of Social and Economic Research (ISER); Florida International University (FIU) - Department of Economics

Date Written: March 5, 2011

Abstract

One impetus for reform of the health care system in the United States is that in the U.S. more is spent on medical care than in other countries, with no noticeable difference in results. It is commonly thought that this is a result of a defect in the organization of medicine in the U.S. which can be repaired by “reform.” However, medicine is a labor intensive good and labor is more expensive in the U.S. We show that in a simple general equilibrium model these conditions will invariably lead to a higher price and a higher percentage of GDP spent on the labor intensive good. While reforms may improve the functioning of the health care sector, they are unlikely to have a major effect on spending levels (unless they artificially reduce usage of medical care).

Keywords: Medical Costs, Health Costs, General eEuilibrium

JEL Classification: D58, I11, I18

Suggested Citation

Rubin, Paul H. and Miyagiwa, Kaz, Why is Medical Care Expensive in the U.S.? (March 5, 2011). Available at SSRN: https://ssrn.com/abstract=1778305 or http://dx.doi.org/10.2139/ssrn.1778305

Paul H. Rubin (Contact Author)

Emory University - Department of Economics ( email )

1602 Fishburne Drive
Atlanta, GA 30322
United States
404-931-0493 (Phone)
630-604-9609 (Fax)

HOME PAGE: http://www.economics.emory.edu/Rubi.htm

Kaz Miyagiwa

Emory University - Department of Economics ( email )

1602 Fishburne Drive
Atlanta, GA 30322
United States

Osaka University - Institute of Social and Economic Research (ISER) ( email )

6-1 Mihogaoka
Ibaraki Osaka 567-0047
Japan

Florida International University (FIU) - Department of Economics ( email )

Miami, FL 33199
United States

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