Health Care Costs

I've been meaning to write about this for some time, but I keep changing my mind. It is complicated, but I'm now at the point that I realize that it will a long time, if ever, before I really understand the issues. There are a number of good pieces at www.fresh-thinking.org. Here is one by Victor Fuchs. A long time ago, Atul Gawande's article convinced me the overutilization caused mostly by fees for services payment systems was the large elephant in the room. But there are lots of causes of overuse. Consumers don't feel the effects of choices. In normal markets demand is modulated by cost. That isn't the case here. Advertising by big pharma causes higher costs, among other factors. Also, we have to take into account administrative costs imposed by private insurers trying to keep sick people off the rolls, as well as administrative costs due to our very complicated payment systems. Think of all the people a doctor must employ in order to get payment for services. We also pay doctors more than in other developed countries. We don't use information technology as well as others. We generally fail to evaluate how our health care works. New technologies drive up costs. Then there are the effects of malpractice lawsuits. And finally, the wealthier you are, the more rational is it to spend for health care. Like food and housing, health care can make a fundamental difference in your life. The marginal utility of any other purchases pale in comparison.