The NYT On Healthcare

The New York Times has finally come around to the point that I’ve been making here for some time: that the main problem with the healthcare system in the U. S. is that healthcare costs too much. All of the problems with healthcare are exacerbated by high costs; none of the alleged solutions that have been proposed to solve the problems with our healthcare system do much to solve the problem of rising costs, at least not in a manner consistent with good public health. Here’s the paragraph I liked the most:

This is mostly because we pay hospitals and doctors more than most other countries do. We rely more on costly specialists, who overuse advanced technologies, like CT scans and M.R.I. machines, and who resort to costly surgical or medical procedures a lot more than doctors in other countries do. Perverse insurance incentives entice doctors and patients to use expensive medical services more than is warranted. And our fragmented array of insurers and providers eats up a lot of money in administrative costs, marketing expenses and profits that do not afflict government-run systems abroad.

That’s not the only good paragraph; there are lots of them and I urge you to read this editorial in its entirety.

There are a few points that the NYT leaves out. First, they seem unaware of how costs became so high. The period of greatest inflation in healthcare costs was between 1965 (the enactment of Medicare) and about 1978. During this period physicians’ incomes increased substantially faster than the non-healthcare rate of inflation, the federal government was willing to pay for practically any piece of medical equipment a hospital wanted, and healthcare costs went up commensurately. Why? I believe that the answer is that Congress paid little attention to rising costs, generally just signing the checks, until the sector had risen to a point at which the increases really began to hurt. This created systemic costs in the form of an expectation of rising incomes and rising expenditures.

Second, they devote no time whatever to the relation between costs and distribution of healthcare and the severely constrained supply of healthcare in the U. S. The number of physicians graduated per year from U. S. medical school hasn’t risen much in a generation despite the natural increase in the population of the country. We have significantly fewer physicians per 100,000 than any Western European country (and, particularly, fewer primary care providers). One can only imagine what would have happened to healthcare costs if we hadn’t imported significant numbers of doctors. This, in turn, raises healthcare costs practically everywhere else.

Third, although they mention a future in which every additional dollar of GDP growth is absorbed by healthcare costs they don’t mention the spectre that’s before us right now in which too much available investment is diverted into medical research while other sectors of the economy go wanting, concentrating more and more wealth into fewer and fewer hands.