One reason I don’t think Baumol’s cost disease explains skyrocketing US healthcare costs is that plastic surgery isn’t behaving the same way. The avg breast augmentation in 1999 was $3.1k — $3.5-3.9k in 2009, $3.5-4k in 2018. Adjust for inflation & the price is actually dropping https://t.co/ryszrQOCqI
— Mason 🏃🏻✂️ (@webdevMason) November 24, 2019
I’d say Baumol’s explains 20% or less of rising medical costs. The rest is that we’ve allowed medical care to organize itself as a de facto criminal enterprise. Turns out you can charge a lot when you’re the only option, you only reveal pricing retroactively, and have state-sanctioned enforcement mechanisms for your criminal activities.
Is it any mystery under those conditions why prices skyrocket?