Always August, pt 3: To Bend The Curve

It is fundamental to progressive health care reform that health care spending is taking up an ever-increasing percentage of GDP at the macro level, and family budgets at the micro level, and we need to "bend the cost curve" so that medical spending does not become a drag on the economy and on wages. I hate it when progressives launch into their green eye-shade act, especially when their proposed solutions are so complex that the increase of costs, not their containment, are the inevitable result.

This is not to say that health care and health insurance are not expensive. They are! But the expense is not something that you can lay at the feet of Greedy Doctors, Evil Insurance Companies, Big Pharma, Radical Republicans, Heartless Conservatives, and other media villains. For one thing, the treatments, diagnostic tools, and health care infrastructure available to modern patients are light years beyond what was available 20 or 30 years ago. That stuff didn't just appear in doctors' offices by magic. Someone developed them, manufactured them, sold them, bought them, etc. Sorry to spell it out like this, but it after hearing the president lecture us about red pills and blue pills, it is clear that the people criticizing health care costs don't have a clue where those costs come from.

Is there waste, fraud and abuse in health care? Of course! You can also find waste, fraud and abuse in any large, expensive endeavor. If the gov't really does take over the health care system, it can join the Post Office, the Pentagon, HUD, Medicare, Medicaid, CA's worker's comp system, the IRS, the DMV, NASA, Homeland Security, etc. Join the club, health care system! I guess you could pass a law against waste, fraud, and abuse; but, such laws already exist. Passing more laws would only complicate matters; increase compliance costs for the non-fraudulent, non-abusive, non-wasterful majority; and result in more waste, fraud and abuse as people learn to game the gaps in the new system. WaFrA is not a problem unique to the American health care system, it is an element of human nature.

There are plenty of other reasons for rising costs in health care that lie outside the greedy deprevations of the free market. There are the famous jackpot jury awards that hit insurance companies hard and result in higher malpractice premiums that are inevitably passed on to patients. There is the phenomenon of uninsured people getting their medical treatment in ER's and then walkin away from their bills - expenses also passed on to other patients. And there is the simple fact that our society, in general, is an aging one. There are more elderly folks; they are livin longer; and they are living more rewarding lives as seniors, thanks to modern medical treatments for disease that once would have been deadly or debilitating. I used to think this was universally considered a good thing, but with all the talk of rationing "end of life" care, I am not so sure.

OK, so the cost of health care is going up as a percentage of GDP and as a percentage of people's income. Is this ipso facto a social evil? We are getting a lot out of our health care. We are living longer and living better. We are paying less of a percentage of income for food, or household goods, for consumer tech, etc. Are we as individuals really being choked off by our health care spending, or are we simply adjusting our budgets? Most of us are not, despite the much-exaggerated anecdotal scare stories about health care related BK's.

And then there is the cost curve itself. Progressives love to wield 10/20/30-year projections showing looming disaster, whether for global warming, the Reagan deficits, the Iraq War, or whatever. They also like to touch themselves while looking at well-fingered copies of projections for the Clinton surpluses which did not survive the bursting of the tech bubble. Projections are little more than predictions of the future. They are eye-grabbers. They are attention getters. But they do not tell you, with absolute certainty, what is going to happen. Sure, we should be worried about out-of-control health care spending. But we should be worried about a lot of things, or so we are told.

The real problem with health care cost is how little choice already exists. Sure there is a huge multi-billion insurance industry, but it is only competitive within the borders of each of the 50 states. There is no such thing as a national insurance market (or a national insurance regulator, something we should really be exploring in the wake of AIG). There is also no such thing as price competition between health care providers. We don't know the price of our care until the bill comes. And, it is very difficult to find a policy that allows you to buy catostrophic health insurance and then pay your regular bills out of pocket. There is the third-payer phenomenon, which has been much discussed elsewhere, and which effectively hides the cost of health care from the beneficiaries.

And then there is the most basic inequality in the entire system: the disparate tax treatment that favors those who get health insurance from their employers at the expense of those who buy their own insurance. Beneficiaries of employer-based insurance do not have to report this as income, despite it being a clear (and substantial) taxable benefit. This is free money, even if it is not handed to them in piles of unmarked bills. Meanwhile, the rest of us are stuck paying for our own insurance out of our pre-tax income. This makes no sense. In fact, the exception is only the result of the wage & price controls from WW2, proof positive that "temporary emergency" measures are anything but.

There are plenty of reasons for the increasing costs of health care. But before attacking patients and private enterprise to decrease those costs, there ought to be some attempt to reduce the distortions in the market created by the government before moving on to the free market. Instead, progressive reform retains the distortions while adding new ones. Is it any wonder people are revolting against this approach?