November 30, 2006
Arnold Kling
He writes,
Economists Clair Brown, John Haltiwanger and Julia Lane...note [that] job turnover and firm disappearance have positive effects, in the aggregate...As workers lose jobs in one niche or sector, they gain in another, moving on to better jobs and higher pay.
As usual, he has many interesting things to say about the state of American workers. And as usual, I have a quibble. He writes,
measured value of benefits has risen in lieu of real wage increases, because of more expensive health-care premiums. People are paying more for insurance without getting better treatment.
Most people will read this as saying that the health insurance companies have become an economic sinkhole, and that is where all of the money is going. If that is what Tyler intends to say, then I disagree. I think that the sinkhole, such as it is, is the increased usage of specialists and high-tech medicine for services that have very little average benefit.
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That does indeed appear to be an unfortunate choice of words on his part.
The reason why healthcare premiums are going up is because of the increased cost and quantity of healthcare services being consumed. Testing for rule-out diagnoses. Laparoscopic procedures that improve safety and decrease costs-per-surgery, but therefore increase utilization and reduce the value of the marginal surgery. Miracle treatments for wet macular degeneration. Vaccines to eliminate HPV among the next generation. Etc., etc.
Healthcare insurance purchases a wider range of coverage than it ever has before. That is to say that an individual's expected medical and pharmacy costs have increased, even after rising member cost sharing provisions. And these rising insured costs cover an ever-growing array of physically available and utilized services. It is difficult to translate that reality into a normative statement about "better" treatment.
This is not to say that we, our insurance companies, and our government are appropriately or efficiently incentivizing a complex healthcare delivery system, as you discuss in CoA. But by framing this issue in terms of healthcare premiums, Tyler does seem to elide the fundamental resource allocation problem.
Nothing fundamentally new in my thoughts here, I know, but your point deserved reinforcement.
