October 03, 2012
It will according to the Congressional Budget Office’s new method of measuring income as discussed in a column by Eduardo Porter. While Porter does present the view of Timothy Smeedling a critic of this new approach, it would have been worth expanding on some of the issues raised. In contrast to items that are directly under consumers’ control, we are measuring what the government pays for health care.
We know that the United States pays more than twice as much per person for care as the average for other wealthy countries with little obvious to show for this spending in terms of outcome. This suggests that the U.S. health care system has an enormous amount of waste. If that waste increases, say by paying specialists higher fees, paying drug companies more money, or paying for more unnecessary procedures, the new method would imply that we have lifted more poor people out of poverty.
Given the difficulty of measuring the benefits of health care it might be useful to have measure that looks at income net of health care spending and then looks at health care outcomes for different groups. Recent evidence suggests that the poor have not benefited much from the big bucks the government has been paying for their health care, since life expectancies have stagnated or even declined.
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