Health care is a luxury so of course Americans spend more upon it

Health care is a luxury - a luxury good that is. No, not something only the rich can have, rather just something that we appear to spend larger portions of our incomes on as we become richer. So, a richer country like the US should be spending a higher portion of income on health care. Just as it does on other luxury goods.

Now, the claim here is a little rich even for us, that this is the entire and only explanation necessary for US health care spending levels. But we certainly agree with the underlying idea, it’s going to be part of it. And the way to work it out is too see how much of a luxury good health care is, how much would we expect a richer nation to be spending and see if that’s what the US is.

And the U.S., as the country which converts our GDP per capita most efficiently into higher household expenditures is the 4 points on the right of the graph. Do note that U.S. healthcare is there, but it’s under the gray explanatory label.

Here’s the thing: all the models show that U.S. households spend a little more than predicted on everything. Further, we’re probably a bit worse on entertainment than we are on healthcare (both luxuries).

Except the models fit really well, so we’re not talking about big discrepancies here: individual spending on healthcare appears to be too high by about … wait for it … $400 per year.

We’d not say we’re entirely and wholly convinced as yet. Even if we agree the underlying method of analysis is correct. Richer people spend more on luxury goods, health care is a luxury good, the US is richer.

Upon how true this is rather a lot depends. For example, if it’s just this explanation alone then no reform of the system is needed, is it?