is health care infected by baumols cost disease test of a new model rising health care costs are a policy concern across the organisation for economic cooperation and development and relatively little consensus exists concerning their causes one explanation that has received revived attention is baumols cost disease bcd however developing a theoretically appropriate test of bcd has been a challenge in this paper we construct a 2sector model firmly based on baumols axioms we then derive several testable propositions in particular the model predicts that a the share of total labor employed in the health care sector and b the relative price index of the health and nonhealth care sectors should both be positively related to economywide productivity the model also predicts that c the share of labor in the health sector will be negatively related and d the ratio of prices in the health and nonhealth sectors unrelated to the demand for nonhealth services using annual data from 28 organisation for economic cooperation and development countries over the years 19952016 and from 14 us industry groups over the years 19472015 we find little evidence to support the predictions of bcd once we address spurious correlation due to coincident trending and other econometric issues