Working Paper No. 1: THE BIG COST OF BIG MEDICINE: Calculating the Rent in Private Health Care
As a country, the United States spends significantly more on health care than other advanced industrialized count-ries, and Americans have comparably worse health out-comes. Both are developments of the last four decades. In this paper, we present a marco, long term explanation of these adverse changes by looking at the evolution of antitrust and patent laws in the United States, surveying the literature on how change in concentration and patent laws have led to increased prices, and constructing a counter-factual national health expenditure series for 1980 through 2006. We find that the cumulative excess cost of private health care spending on hospitals, physician groups, pres-cription drugs, and net insurance from 1980 until 2006 is between $3 and $6 trillion.
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