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Economic dishonesty in Health Care Reform debate
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With the house having passed Cap-and-Trade, they are going to be moving on to the debate on Health Care Reform. This has become one of the biggest issues in politics and will surely become fodder for many office conversations in the coming weeks. Unfortunately, most of those involved will be using dishonest and inaccurate talking points.
Perhaps the biggest of those is the near constant claim that "health care costs have gone up." This is true if you consider the share of overall spending that health care represents for the average American. Most reports have health care being about 16% of all spending today, as opposed to 5% back in 1960.
But that increase in percentage is not because the cost of a doctor's visit has risen faster than inflation. The price we pay for most treatments has not increased dramatically in the last twenty years. What has increased is how comprehensive the treatments we receive are.
There is so much new technology and so many new drugs that most of us forget just how advanced our health care is. And its those advances that have driven the percentage of our incomes we spend on health care up. Its not because doctor's are raising their prices so that a visit that would have cost $100 in 1960 now costs $315 today. (if there was no inflation). Instead, the same doctor now probably gives a patient the standard checkup he did back in 1960, but then uses tools that did not exist then to enhance the checkup. If he finds problems, he has new drugs to offer for diseases, even some that were almost guaranteed to be fatal back in 1960. He even has MRI and CAT scan equipment available should he need a better view of the inside of someone's body. All of these advancements add to the amount we pay, and are a cost, but the increase is not because prices are spinning forever upward. We are paying more because we are receiving more.
Columnist George Will has an article talking about some of the possible consequences of any health care "fix" and in one paragraph displays a great grasp of the issue, using the auto industry as an analogy:
Your next car can cost less if you forgo GPS, satellite radio, antilock brakes, power steering, power windows and air conditioning. You can shop for such a car at your local Studebaker, Hudson, Nash, Packard and DeSoto dealers.
As a society we have lost sight of the market for health care. Most people hear that we as a nation spend 16% of our income on health care, but few truly understand how much that is. George Will's article points this out as he notes: $84 of every $100 spent on health care is spent by someone (an employer, insurance company or government) other than recipients of the care.
But people will continue to claim "health care COSTS are rising." There is no honest discussion about what is really rising, and no talk about what is included in the "costs". Its true that doctors visits have become a bit more expensive, as doctors have learned more and have better equipment. But many who add up health care costs include voluntary treatments like cosmetic surgery and lasix vision corrections. Also often included are fertility treatments, abortions and prescriptions for Viagra. These are important to individuals, but hardly of vital necessity to keep people healthy.
And as some have noted, doctors of today often schedule unnecessary treatments as protection against accusations of malpractice. I have been a personal witness to this when I went to the hospital with a kidney stone. My reasoning had been mostly for pain relief as I was in enough pain that even lying down was impossible. However, once at the hospital and out of it under the effects of painkillers, the doctors demanded two CAT scans in order to insure that the problem was only a single small stone. I was out from the painkillers for about four hours, and during that time the stone passed on, leaving me sore, but recovering. The scans proved to be completely unnecessary, but also very expensive as I did not have health insurance at the time and ended up with a sizable bill.
I won't say I liked the bill, but I did and still do understand the reasoning that went into the extra tests. And I have to be honest that such treatment is not always available. Thomas Sowell, economist, professor and columnist, has written on health care in the past, and in a recent article notes:
A recent report from the Fraser Institute in Canada shows that patients there wait an average of ten weeks to get an MRI, just to find out what is wrong with them.
My entire visit to the hospital totaled no more than six hours, and included the scans. Yes, I paid out of pocket, where a hospital from the UK or Canada would not have issued me a bill, but can either nation promise the same speed of care? They claim their "costs" are lower, but time spent waiting for treatment is a cost. In the US we exchange an increased monetary payment in exchange for reducing the time spent waiting. Can those promising to use government to reduce health care "costs' also guarantee that waiting times won't increase as hospitals and doctors reduce their spending on new equipment and additional nurses and specialists due to reduced payments from those they treat?
Health care is a topic where there is a lot of emotion wrapped up in the many arguments around it. But until we all can agree to use complete arguments where honest assessments of why certain prices are being paid and why the markets are working the way they are, it is unlikely we will get a solution that is better than the current problem. We need to remove the demagoguing and allow a serious consideration of all the issues.
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