Drivers of Health Care Expenditure: Does Baumol's Cost Disease Loom Large?

  title={Drivers of Health Care Expenditure: Does Baumol's Cost Disease Loom Large?},
  author={Carsten Colombier},
  journal={Comparative Political Economy: Social Welfare Policy eJournal},
  • C. Colombier
  • Published 1 December 2012
  • Medicine
  • Comparative Political Economy: Social Welfare Policy eJournal
According to Baumol (1993) health care epitomises Baumol's cost disease. Sectors that suffer from Baumol's cost disease are characterised by slow productivity growth due to a high labour coefficient. As a result, unit costs of these sectors rise inexorably if the respective wages increase with productivity growth of the progressive industries such as manufacturing. Thus, according to Baumol (1993) the secular rise in health-care expenditure has been unavoidable. This present paper demonstrates… 

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