Re: What is the root cause of the rising cost of health care ?


"*Anarcissie*" <anarcissie@xxxxxxxxx> wrote in message
news:1188163058.024456.68020@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
On Aug 26, 9:22 am, Gordon Sande
<g.sa...@xxxxxxxxxxxxxxxx> wrote:
On 2007-08-25 22:34:13 -0300, *Anarcissie*
<anarcis...@xxxxxxxxx> said:



On Aug 25, 12:34 pm, Gordon Sande
<g.sa...@xxxxxxxxxxxxxxxx> wrote:
On 2007-08-25 12:33:48 -0300, "Peter Olcott"
<NoS...@xxxxxxxxxxxxx> said:

Why is the price of health care rising much faster
than the
price of other goods and services?
(See below)

It is purely a service. Like teachers, personal
trainers, etc
the cost remains "constant" while the cost of
manufactured
goods "falls". So the costs of pure services go up
while the
costs of goods go down. To become more "good"-like
health
care will need more streaming, specialization,
technical
aids and other forms of management, just like various
other
pure services. Think ATM machines instead of bank
tellers.
Automatic elevators with no operators. Direct dialing
rather
than telephone operators.

If your theory were correct, then the same amount
of labor ought to buy the same amount of medical
care even if the nominal price in monetary units
changes.

However, it is my impression that the cost of
medical care is rising considerably faster than
the average wage.

The second order effects are things like quality and
scarsity.
Compare health care and university instruction to public
education
and trainers to find some groups are above average, and
others below
average, within the pure services.

Don't compare doctors to televisions as that is services
with goods.
But do compare doctors to professors as that is services
with services.

You said the rising cost of medical care was due
to the service being labor-intensive. Now you are
bringing in different factors. I guess we are making
progress. I have already taken care to compare
medical care (not doctors' fees or wages, which are
something else) to professors' services, as well as
those of auto mechanics, plumbers, computer
programmers, and other skilled workers. As I
said, it is my belief that medical care costs have
been rising faster than wages in those fields.

I agree that medical care (and the attentions of
professors) are "scarce" in the sense that the
entry to their labor markets are constrained. But
other things like goods can be constrained, for
instance, pharmaceuticals under patent. I
suggest following the constraint in this case,
which I think is probably artificial.


Within the free enterprise economic system, greatly reduced
price sensitivity always tends to drastically increase
prices.

The problem is that the health care consumer does not have a
dollar for dollar vested interest in the price paid for
health care goods and services. The typical health care
consumer pays at most 20 cents on the dollar, The subsidy
the health insurance provides make the health care consumer
much less sensitive to price.




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