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


"*Anarcissie*" <anarcissie@xxxxxxxxx> wrote in message
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On Aug 26, 10:34 pm, "Peter Olcott" <NoS...@xxxxxxxxxxxxx>
wrote:
"*Anarcissie*" <anarcis...@xxxxxxxxx> wrote in message

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On Aug 26, 5:51 pm, "Peter Olcott"
<NoS...@xxxxxxxxxxxxx>
wrote:
"*Anarcissie*" <anarcis...@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.

I agree that decreased sensitivity to price is likely
to
result in increased prices, but I don't know about
"drastically". One of the major complaints which is
making Single-Payer attractive to workers, at least
according to what they say, is the combined cost of
insurance and co-payments (and the surly attitude of
insurance companies). Simple-minded as they may
seem to be, many employees are conscious of the
fact that insurance which their company pays for on
their behalf is ultimately paid for by them.

If there are no immediate and direct consequences then it
is
comparable to no consequences. For example, I buy Nexium
because it is cheaper than Prilosec. There is no sense on
me
to choose Prilosec when everyone else will choose Nexium
because (with health insurance subsidies) it is cheaper.

If what you are saying were correct, we would not be
seeing any concern about medical care expenses,
including the cost of insurance, among middle-class
people, but in fact we do.


What I am saying is that the incentives for the health care
consumer to economize on health care choices are frequently
backwards. This frequently backwards incentive system drives
up the cost of health care.

Another thing to notice in this regard is that medical
care is not a free-market system; it is authoritarian.
Any old person cannot practice medicine, and those
who are empowered to practice often do so under
considerable regulation. Likewise, any old insurance
company is not empowered to compete for business
in medical insurance, nor is there usually a free
market choice for employees. (The self-employed-
have it a little better, but their choices are still
fairly limited.)

Mysteriously, there are few consumers' cooperatives
for medical insurance or medical care. I suspect
they are forbidden _de_facto_ if not _de_jure_ in
most American jurisdictions.

So you have a market with very limited freedom
whose governance is mostly in the hands of the
money-makers. A formula for pretty high prices, I
would say.

The root cause of the problem is that most of the
incentives
for the health care consumer to economize are
insufficient
because of subsidies or are in some cases (such as my
price
for Nexium being cheaper than Prilosec) completely
backwards.

You keep asserting that; how about some evidence?




.

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