More on health care

Mankiw once again finds an interesting story, but gets it all wrong:

This chart from Andrew Biggs "shows spending on veterinary care, which I pulled from the Consumer Expenditure Survey, and national health expenditures (for people) from the National Income and Product Accounts.... the rate of growth of spending from 1984 to 2006 wasn’t all that different—and in both cases, spending
grew faster than the rate of economic growth. As new technologies are developed for humans, we adopt them for Bowser and Fifi—because we can afford to and we think it’s worth it."

So, veterinary care (I feel OK about markets working well here) sees rapidly increasing spending --- starting from a very low level. No doubt marginal benefits are very high because we didn't do much beyond vaccinations and palliative care in the past.

Human health care sees the same spending escalation. But here marginal benefits (normalized for spending) have to be much lower because we started (1984!) from a relatively high standard of care already.

So either we're spending too little on pets, or too much on people. And messed up markets somewhere would be the explanation. Care to guess where?

Oh yes ... the Mankiw thinks an explanation for the 250% increase is "growing incomes." Except median household incomes haven't grown.