The Cost Disease
Why Computers Get Cheaper and Health Care Doesn't
William J. Baumol; With Contributions by David de Ferranti, Monte Malach, Ariel Pablos-Méndez, Hilary Tabish, and Lilian Gomory Wu
September 24, 2013
272 pages, 5 1/2 x 8 1/4
20 b/w illus.
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.
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 lives in New York City.
"The central message of this important and lucid book is at once sobering and optimistic. Sobering in its explanation of why the relative cost of health care, education, and many other activities that define a civilized society will continue to increase. Optimistic in its demonstration of why societies can nonetheless continue to afford these crucial activities. The causes and consequences of the 'cost disease' have never been explained more clearly or with more attention to the future economic choices the disease offers societies." —Robert J. Flanagan, author, The Perilous Life of Symphony Orchestras