18.8.09

The cost of health

Through research on the impact of tort reform in Texas
I came across some interesting articles on the situation
of healthcare. Some of them diverged from the issue and
attributed unrelated failures in the medical system to reform.
One New Yorker article investigated the state of the extremely
high costs of medical treatment in McAllen, Texas.
It was calculated that the Medicare costs in this city
were almost twice that of the national average.

The journalist discovered that the doctors were racking
up costs by regularly calling for the most expensive procedures
that were largely unnecessary. They did this because they
either 1) were entirely unconcerned with cost or 2) earned
money from the use of expensive treatments. The author
of the article thought that this showed many areas in which
Medicare costs could be cut down as a part of universal healthcare.
What I got from it however was rather different.

Since Medicare covers the costs of medical treatment
patients are often unconcerned with whatever the price.
This means that they will readily agree to take the
most expensive procedure assuming that higher prices
mean higher quality (as it sometimes is in other sectors).
In healthcare however this rule does not apply, and
costlier does not mean better. If patients were paying for
their own treatments they would have to be aware of the
costs and would go for expensive options only when
absolutely necessary. This would save a tremendous
amount of money that is wasted on unneeded procedures.

Government programs such as Medicare and that which is
proposed by Obama just go to take responsibility and
pragmatic thinking away from patients.

One article mentioned government plans to create
incentives for living healthy. That in itself is a horrible
concept, but which shows how much impact government
intervention can have on how people live. The current
system of medical care for which consumers do not
have to pay at all are incentives to 1) live unhealthy
lifestyles and 2) abuse the system and waste money.
As the article acknowledged, "Every incentive in the
system is an invitation to go the way McAllen has gone."

Once again it is shown that when people pay for what
they use, they are more responsible with how they use it.

This John Stossel bit about health insurance and responsibility
is excellent, and it has John Mackey!

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