Friday, July 17, 2009

Health care for pets and humans, and what it reveals

With thanks to a heads-up post on Greg Mankiw's blog, here's a posting on the AEI blog that discusses levels and rates of growth of U.S. health care spending --- on pets and on humans.

It's a brilliant comparison. There's health insurance for pets too, but I don't think there's any government insurance. And there's definitely no tax break for employer-subsidized health insurance for pets! At first brush at least, you would expect the market for health care for pets to be fairly free functioning, with prices more reflective of marginal utilities or marginal productivities of health care than in the case of human health care.

What you see is, if anything, more rapid growth in health care spending on pets than on people, but the level is significantly lower. Andrew Biggs thinks this might be a reason to focus on the level of U.S. (human) health care and not care so much about the growth rate. A rationale might be that the latter seems to be more a product of underlying forces like the growth in incomes and health technology.