Don't Confuse Money Flows With Real Resources

While it is true that we spend more than other countries [on medical care] in an accounting sense, we actually use fewer real resources: fewer doctors, fewer nurses, fewer hospital beds, shorter lengths of stay, etc. That means that from an economist’s point of view, we aren’t necessarily spending more than other countries.

Fuchs says that with an extra $1 trillion, we could have more bridges, more highways, more teachers, more R&D, etc. But once again, this confuses money flows with real resource use. We can’t devote more real resources to non-health care unless we use fewer real resources in health care. But if we copy other countries, the resource flow will go in the opposite direction. That is, in order to have more doctors, nurses, hospital beds, etc., we will have to have fewer teachers, fewer roads, less R&D!

via A Better Way to Save $1 Trillion | John Goodman's Health Policy Blog |