[quote author="awgee" date=1253004521]More of
Health Care Mythology
by Clifford S. Asness, Ph.D.
What We Know That Ain?t So
Will Rogers1 famously said, ?It isn't what we don't know that gives us trouble, it's what we know
that ain't so.? So it is with the health care debate in this country. Quite a few ?facts? offered to
the public as truth are simply wrong and often intentionally misleading. It seems clear that no
truly productive solution will emerge when these false facts represent our common starting point.
So, this essay takes on the modest task of simply disabusing its readers of some untrue notions
about health care.
I do not take on the harder task of prescribing how we should (and if we should) reform health
care, though I offer a few thoughts. Important work must be done here by those who understand,
far better than I, the details of health care provision. However, no details are necessary for this
essay, and no animals (though perhaps some egos) were harmed in its creation. The fallacies I
present are basic and it takes only a rational economic framework to expose them
There are large groups of people in this country who want socialized medicine and they sense
that the stars are aligning, and now is their time to succeed. They rarely call it socialized
medicine, but instead ?single payer health care? or ?universal coverage? or something that their
public relations people have told them sounds better. Whatever they call it, they believe (or
pretend to believe) a lot of wrong-headed things, and they must be stopped. Step one is
understanding how and why they are wrong. Step two is kicking their asses back to Cuba where
they can get in line with Michael Moore for their free gastric bypasses.
Finally, please read my standard disclosure (though it?s more designed for something that might
be construed as financial advice, it can?t hurt) and my admission of non-originality.i,ii
Myth #1 Health Care Costs are Soaring
No, they are not. The amount we spend on health care has indeed risen, in absolute terms, after
inflation, and as a percentage of our incomes and GDP. That does not mean costs are soaring.
You cannot judge the ?cost? of something by simply what you spend. You must also judge what
you get. I?m reasonably certain the cost of 1950?s level health care has dropped in real terms
over the last 60 years (and you can probably have a barber from the year 1500 bleed you for
almost nothing nowadays). Of course, with 1950?s health care, lots of things will kill you that
2009 health care would prevent. Also, your quality of life, in many instances, would be far
worse, but you will have a little bit more change in your pocket as the price will be lower. Want
to take the deal? In fact, nobody in the US really wants 1950?s health care (or even 1990?s
health care). They just want to pay 1950 prices for 2009 health care. They want the latest pills,
techniques, therapies, general genius discoveries, and highly skilled labor that would make
today?s health care seem like science fiction a few years ago. But alas, successful science fiction
is expensive.
In the case of health care, the fact that we spend so much more on it now is largely a positive.
The negative part is if some, or a lot, of that spending is wasteful. Of course, that is mostly the
government?s fault and is not what advocates of government control want you to focus upon.
We spend so much more on health care, even relative to other advances, mostly because it is
worth so much more to us. Similarly, we spend so much more on computers, compact discs,
HDTV, and those wonderful one shot espresso makers that make it like having a barista in your
own home. Interestingly, we also spend a ton more on these other items now than we did in
1950 because none of these existed in 1950 (well, you could have hired a skilled Italian man to
live with you and make you coffee twice a day, so I guess that existed and the price has in fact
come down; my bad, analogy shot). OK, you get the point. Health care today is a combination
of stuff that has existed for a while and a set of entirely new things that look like (and really are)
miracles from the lens of even a few years ago. We spend more on health care because it?s
better. Say it with me again, slowly ? this is a good thing, not a bad thing.
By the way, I do not mean that the amount we spend on health care in this country isn?t higher
than it needs to be. Myth #4 covers that.
In summary, if one more person cites soaring health care costs as an indictment of the free
market, when it is in fact a staggering achievement of the free market, I?m going to rupture their
appendix and send them to a queue in the UK to get it fixed. Last we?ll see of them.2</blockquote>
I am sorry..this article has such nonsensical circular arguments. We spend so much more on healthcare "mostly because it is worth so much more to us." Really, people in UK, Japan, Germany, France, Taiwan, and Switzerland enjoy being sick and dying so much more than we do? The fact that our healthcare costs takes up twice much in GDP (percentage) wise as those other nations is only because we care more?
The analogies are so flawed because the costs of gadgets (i.e. computers, TV, CD players) have significantly decreased as time has gone by while giving us significantly better products. Seriously, a $2,000 computer 20 years ago is at least 100 times less powerful than what is on an $100 ipod or cell phone today. On the contrary, healthcare costs have sky rocketed (go read the budget or talk to an employer) while millions of people do not have no access to care.
Explain to me why an uninsured American has to pay more for his prescription than an uninsured European? Is this a part of the 1950s costs he talks about?
Waste in the medical insurance system is the government's fault? Really, then why is the overhead at a private insurance significantly higher than Medicaid or the VA?
The last part about the queue in UK is the most ridiculous considering the last time I was involved in the hospital, I had to lay on a gurney in a neck brace for two hours to be seen in an ER. And I was brought in on an ambulance!