Over at Outside the Beltway Doug Mataconis has begun what he promises will be a series of posts on the debate over healthcare:
Initially, the inspiration for what follows here started in a discussion in the comment thread on a friend’s Facebook wall but it quickly became far too detailed for social media, so I decided to put everything into a blog post. I quickly found, though, that one post was far too insufficient to address the issues I wanted to touch on. As it stands now addressing all of the points I wanted to make would result in an unreasonably long post. As a result, what follows is the first part of what will be a multi-part series addressing just a few points I think are important in this debate.
Honestly, I have reservations about all three of his bullet points:
- The health insurance system became unwieldy and unsustainable when it went from being something that people expected would only cover “major medical” expenses to one that covered everything.
I think the health insurance system became unwieldy and unsustainable long before that and that the handwriting was on the wall when Medicare was enacted back in 1965.
- Health care costs expanded rapidly due to new technology and new drugs.
The evidence for that is weak. It just doesn’t show up on hospitals’ balance sheets. What does show up are enormous payrolls that are rising rapidly.
- People are living longer and surviving things that used to kill people like cancer, heart attacks, and strokes.
I’d be interesting in seeing that quantified. How big a factor is the effectiveness of care in the increasing cost of care? I don’t believe it’s quite as large a factor as Doug apparently does.
I commend Doug for reopening old wounds and entering into the discussion again.
My bullet points would be different:
• No country can afford a healthcare system that’s 17% of the economy, in which prices are increasing three times as fast as in the rest of the economy, and in which 50-75% of costs are paid for out of tax dollars in one form or another.
Not Germany (11%), not France (11%), not the United Kingdom (9%), not Switzerland (12%)—the country with the second highest rate of health care spending per capita to the United States. That’s not a matter of politics. It’s a matter of mathematics.
• We reached the point of diminishing returns to scale in healthcare a long time ago.
|Year||Life expectancy at birth||% increase||Real per capita spending (2010 dollars)||% increase|
Antibiotics, obviously, gave us the biggest bang for the buck. I’m a bit surprised that the adoption of Medicare and Medicaid didn’t have a more pronounced effect on life expectancy at birth. How should we interpret that?
• A lot of the demand for care is physician-generated.
I don’t prescribe my tests or my course of treatments. Physicians do.
• How much healthcare spending should be socialized?
I think it makes reasonable sense to socialize some healthcare spending but not 100% of it. We can’t afford to give everybody all of the care that he or she might want. How do we decide what we’ll pay for?
Here are some resources you might be interested in reading:
Growth in Health Care Costs, Congressional Budget Office, 2008
This report makes a number of valuable points. For example, according to its findings the most important factors in increasing healthcare costs are prices (11-22%), growth of personal income, i.e. what the market will bear (11-18%), and changes in third party payment excluding administrative costs (10%).
History of Health Spending in the United States 1960-2013, Centers for Medicare and Medicaid Services, 2015
This paper divides the history of health spending since 1960 into the following “eras”:
- Pre-Medicare and Medicaid 1961-1965
- Coverage Expansion and Rapid Price Growth 1966-1982
- Payment Change and Moderate Price Growth 1983-1992
- Cost Containment and Backlash 1993-2002
- Recent Slower Growth 2003-2013
which may look familiar since I’ve posted to the same effect myself. In other words I’m not making it up. There really was a sharp run-up in the prices of care in the 1970s.
I’ve posted a lot on healthcare over the years. Here are a curated selection of some of my more notable posts:
A short history of medical education in the United States
Making plans, health care costs, and bureaucracies
How to create a health care cartel
Baffled about health care policy
10 Points on Health Care Reform
Issues 2008: Health Care
Reforming Health Care: Okay, What Then?