Public Healthcare Expenditures and Increases in the Cost of Healthcare

As a little bonus addition to my previous post on healthcare costs….

Looking at the period after LBJ (i.e., after the expenses for the Great Society were incurred), here are some correlations:

Annual % change in federal gov’t expenditures on health as a share of total expenditures on health and the annual % change in real health expenditures per capita: correlation = -0.19 (negative 19)

Annual % change in total gov’t expenditures on health as a share of total expenditures on health and the annual % change in real health expenditures per capita: correlation = -0.36 (negative 36)

Average % change over four years in federal gov’t expenditures on health as a share of total expenditures on health and the annual % change in real health expenditures per capita: correlation = -0.16 (negative 16)

Average % change over four years in total gov’t expenditures on health as a share of total expenditures on health and the annual % change in real health expenditures per capita: correlation = -0.17 (negative 17)

Conclusion: The correlation between the government’s share of the nation’s healthcare expenses and the rate at which these expenses rise is negative. In plain English – the more involved the government gets in healthcare, the slower the healthcare costs rise. Sure, correlation is not causality, but if private health insurance was the panacea the president makes it out to be, the correlation between government involvement in healthcare and the rate at which healthcare costs increase should be positive. Whatever GW is doing, if it increases the private share of the healthcare dollar, it will probably benefit private providers of healthcare or insurance at the expense of the rest of us.

Data (same as earlier post):
Cost of healthcare
CPI
Population (NIPA Table 7.1)