Arnold Kling  

Health Care Non-reform Watch

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I argue,

The debate we should be having is over whether restraint in our use of medical services should be initiated by government officials or left to consumers. The Democrats want to avoid that debate. Instead, they make it sound as if they can make excess health-care spending disappear by magic. But even if we were to stipulate for the sake of argument that all of the supposed savings from preventive care, electronic medical records, and eliminating the waste and greed supposedly inflicted by insurance companies and doctors will actually materialize, the excessive use of medical procedures would still be the main problem with our health-care system.

This essay, called "The Non-Debate over Non-Reform," spells out a lot of what I've been saying about this year's Health Care fracas.

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COMMENTS (5 to date)
david writes:

A hypothesis:

If you ask: should medical services be rationed by the a government board, or be left to consumer choice? More people will pick the latter.

But if you ask: should medical services be rationed by medical need as judged by a government board, or by the market? More people will pick the former.

These two are for practical purposes identical, of course. It's all in the phrasing. Healthcare is the new abortion.

gnat writes:

…“[W]e have to make more of our health-care system look like …1960, when the share of medical expenses paid for by individuals out of pocket was 50 percent.”

The decline in percent of private out-of-pocket health costs since 1960 appears to reflect fact that the percent of the population with insurance coverage was considerably lower in 1960—e.g., 100% out-of-pocket.

The U.S. does not appear to be a high consumer of hospitalization etc. internationally.

Moreover, as Dr. Kling notes, employees and businesses (indirectly employees) pay the private costs through higher premiums/deductions and rising insurance costs--therefore there is no reason to expect that there is no cost push back from the demand side. The market is skewed toward maximizing health transactions rather than healthcare, and health care costs appear to be proportional to the number of providers per capita in a region (so competition is not the problem).

The problem appears to be more a failure of market coordination—the private market does not effectively aggregate medical activities so that the individual tests and procedures are designed to increase health on a cost effective basis. It is unlikely that turning medical decisions over to the consumer will solve this problem.

Dewey Munson Wallingford CT writes:

Let's say a person born today will die on the table during a bypass at 70 yrs.

Why do economists not discuss the problem of the failure of money earned during life to be a store of value to be used at life's end.

Our present system forces risky investment which is not for everyone.

Les writes:

Arnold's point is well taken. Resource allocation through the free enterprise price system is far more efficient than rationing by the government.

If the market for medical care operated just like the market for soap, shoe polish and shirts our economy would be much more efficient.

john social media guru writes:

It should be the government option that will prevail and let those private insurance health SCARE ones be shut down. If the government is losing money, let's just tap these illegal immigrants on a path to citizenship and let them pay their due fees for the number of years of being illegal. They are now about a million so every penny counts. Let them pay a hefty sum so that we citizens will enjoy prosperity. Then while these illegals are paying their dues, delay the processing until they die out.

Take a look at Canada they are marketing their country for those rich legal immigrants. The truth is they are just after their money. They are a lot of them living in Grand Canada. It is a good business.

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