The US spends way more on healthcare
Matthew Martin 3/17/2014 03:04:00 PM
However, as an econometrician, while I don't particularly doubt the central claim that private insurance is the most expensive way to organize a healthcare system, this is clearly not a valid regression line. If you treat the US as an outlier, which it clearly is, then observed the correlation between private funding and health expenditure pretty much disappears. Just look at how the error terms change as we move up the regression line in the graph--even heteroskedasticity assumes that the distribution of the error terms is symmetric about the trend line, whereas here we can clearly see that the errors above trend get smaller as you move up the trend-line, while errors below get bigger. This is not how you do OLS.