From an NYT article on Obamacare,
“I’m always curious when I read this ‘good news’ that health costs are moderating, because my health care costs go up significantly each year, and I think that’s a common experience,” said Mark Rukavina, president of Community Health Advisors in Massachusetts.
While much of the focus in the past has been on keeping premiums manageable, “premiums now tell only a part of the story,” Mr. Rukavina said, adding: “A big part of the way they’ve kept premiums down is to shift costs to patients in the form of co-pays and deductibles and other types of out-of-pocket expenses. And that can leave patients very vulnerable.”
Pointer from Tyler Cowen.
I find that the simplest way to explain health care policy is to say that as individuals what we want is unlimited access to medical services without having to pay for them. To the extent that we have our way, the overall spending on health care in the economy will be very high. To limit overall spending, either (a) we have to pay more as individuals, so that we ration ourselves, or (b) our access to services must be rationed by others (insurance companies or the government).
The article consists of people complaining about either being limited in terms of access or having to pay more out of pocket. But that is not news. Again, we know that as individuals we want unlimited access without having to pay for services. You could easily have an improvement in health care policy that is experienced negatively by individuals.
Closer to the truth I think is the health care industry would like to provide unlimited services and have someone else pay for it and we are the sheep and our only alternative is limiting costs to actual benefits. Attempting to limit costs by limiting those that can afford it, will only result in Bill Gates sized bills on the off chance Bill Gates will eventually show up to pay for it, though this would shift it largely back to philanthropy.
But what they are
…doing is funneling earmarked in-kind dollars into an oligopoly and mislabeling that as “access.” We still get the low supply with Bill Gates bills because it all has to be spent. But great news. We are going to increase queue lines and reduce quality and innovation!
Or, it spurs innovation that eventually produces options for everyone, as is the case with all markets less encumbered by politics.
“To limit overall spending, either (a) we have to pay more as individuals, so that we ration ourselves, or (b) our access to services must be rationed by others (insurance companies or the government).”
There’s a 3rd option which is (c) pay less for the same services. How might that be achieved? Eliminate rent-seeking by reducing barriers to entry. Pass a law allowing foreign-trained MDs to practice immediately in the US without having to repeat residency. Continue to expand the independent scope of practice of paraprofessionals. (My most radical thought experiment is this — what would it do to medical costs if vets were allows to treat human patients?) Make many more drugs available over the counter (as antibiotics are in many countries). Get rid of the absurd ‘certificate of need’ laws that restrict hospital competition.
I can imagine some problems with expanded supply at the same reimbursement schedule rates, but yeah we should fix both.
In fact, have we hit on something here? The Cartel Both Keeps Supply Artificially Low (Wtf Is My Auto Correct doing?) And enforces price controls. Is that a source of the spending increase ratchet effect?