The Cost Disease; Why Computers Get Cheaper and Health Care Doesn't

by William J. Baumol; With Contributions by David de Ferranti, Monte Malach, ArielPablos-Méndez, Hilary Tabish, and Lilian Gomory Wu

• ISBN13: 9780300179286
• ISBN10: 0300179286
• Format: Trade Book
• Copyright: 2012-09-25
• Publisher: Yale University Press

Summary

The exploding cost of health care in the United States is a source of widespread alarm. Similarly, the upward spiral of college tuition fees is cause for serious concern. In this concise and illuminating book, the well-known economist William J. Baumol explores the causes of these seemingly intractable problems and offers a surprisingly simple explanation. Baumol identifies the "cost disease" as a major source of rapidly rising costs in service sectors of the economy. Once we understand that disease, he explains, effective responses become apparent. Baumol presents his analysis with characteristic clarity, tracing the fast-rising prices of health care and education in the United States and other major industrial nations, then examining the underlying causes, which have to do with the nature of providing labor-intensive services. The news is good, Baumol reassures us, because the nature of the disease is such that society will be able to afford the rising costs.

Author Biography

William J. Baumol is professor of economics and academic director of the Berkley Center for Entrepreneurship and Innovation, New York University, and professor emeritus, Princeton University. He is the author of more than forty books, has been awarded a dozen honorary degrees, and is an elected member of the National Academy of Sciences, the American Philosophical Society, Galileo’s Accademia Nazionale dei Lincei in Rome, and the British Academy. He lives in New York City.

Table of Contents

Acknowledgments	p. xi
Introduction	p. xvii
The Survivable Cost Disease
Why Health-Care Costs Keep Rising	p. 3
What Causes the Cost Disease, and Will It Persist?	p. 16
The Future Has Arrived	p. 33
Yes, We Can Afford It	p. 43
Dark Sides of the Disease: Terrorism and Environmental Destruction	p. 69
Common Misunderstandings of the Cost Disease: Cost versus Quality and Financial versus "Physical" Output Measures	p. 77
The Cost Disease and Global Health	p. 94
Technical Aspects of the Cost Disease
Hybrid Industries and the Cost Disease	p. 111
Productivity Growth, Employment Allocation, and the Special Case of Business Services	p. 116
Opportunities for Cutting Health-Care Costs
Business Services in Health Care	p. 141
Yes, We Can Cut Health-Care Costs Even If We Cannot Reduce Their Growth Rate	p. 154
Conclusions: Where Are We Headed and What Should We Do?	p. 180
Notes	p. 183
References	p. 207
About the Authors	p. 237
Index	p. 239
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