Monday, March 14, 2005

Good Read in NYTM on Health Care Reform

There was a very good article on reforming our health care system in this Sunday’s New York Times Magazine. It mainly talks about how one economist, David Cutler, is arguing that most major health care reform ideas focus too much on cost and that is why the fail. Instead, better health care reform looks to create incentives to improve the quality of the care and promote innovation and that if both aspects are successfully encouraged, health care will better serve us and be more efficient.

“Looking at the data, they discovered that, on average, heart attack victims were surviving eight months longer than in the 1980's. In economic terms, they argued, the increased spending was ''worth it.'' Subsequently, Cutler concluded that a 45-year-old American could expect to spend $30,000 over the course of his life on all forms of cardiac care and that, thanks to improvements in cardiac technology alone, he could expect to live three years longer. That worked out to $10,000 a year of added life. Cutler can rattle off figures to prove that Americans value life even more. (Air bags cost something like $100,000 per year of life saved, for instance.) But you don't need to be an economist to believe that $30,000 for three extra years is a pretty good deal.”

We obsess about cost of care, but yet we are willing to spend whatever it takes to improve and extend our lives and the lives of those we love. Health care costs are not simply going up because we waste money and are inefficient choosing more expensive health care, which is happening to some degree, but instead because we value health and long life so much more than other things our money can buy. My feeling on health care is that I would love to have universal health care but I do not want universal health care like it is just about any other country. In other countries that have universal health care, invariably there is rationing of services to keep the costs down. In England for example, they do not even bother many expensive treatments for those over 65. But it is not just rationing of services within the health insurance program that bothers me, it is rationing the services to even the people who want to pay more to have better and more rapid care.

The existence of our country to allow Europeans and Canadians to pay for better treatment is what is keeping people from rebelling against the single-payer, government supported health care. The competition and lack of caps on health provider salaries in our country helps foster innovation. When you have a single-payer, the government, providing all of the health care, there is much less incentive to innovate. When was the last time a bureaucracy came up with something fresh and innovative?

People complain about the costs of prescription drugs in this country and say that we should go to the price control model that the rest of the developed world uses. Many opponents of that idea point to the need to have high returns of investment in order to encourage future drug innovations. That’s the truth, but it is not the full story. According to Forbes, Americans finance 50% of the research money on all prescription drugs precisely because we lack price controls. So basically we are paying for all other countries to have nice new helpful drugs at low prices. Part of true health care reform would not just be us putting in price controls it would also be us negotiating a better deal with all of these other rich countries in who pays for drug research. We end up financing their military defense with blood and money, it’s the least they can do.

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