Throwing Money At The Problem
Posted by Jeffrey EllisSep 10
From Andrew J. Coulson, on the Cato-At-Liberty blog, comes this chart showing public school spending compared to test scores:
Public education spending (adjusting for inflation) has more than doubled since 1970, and yet test scores are flat. It would appear that throwing money at the problem has done nothing; I suspect there are systemic dysfunctions in our education system that need to be fixed.
Hat tip to Coyote Blog.
Also, check out this chart from Carpe Diem:
It would seem that rising college tuition expenses represent a larger problem than rising health care costs. Hopefully we won’t see a government solution to that too. (Although arguably, decreased state subsidization of public universities may be a big contributor to the above trend.)
7 comments
Comment by Mom on September 10, 2009
I have wondered why medical care is so expensive. Does it (that is, procedures, drugs, personal attention from doctors and hospital workers) really cost that much, or is it a case of “well, we can charge $X because their insurance will pay for it”? If everyone had to pay their own medical expenses, do ya think the prices would come down? Or am I not seeing the whole picture?
Comment by Cam on September 10, 2009
Here are my theories:
1. From working in hospitals for several years, I saw first hand so many tests run, not because of the need of the test results, but to cover the tail of the doctor or facility in case of a lawsuit. This helps to jack up the cost of our health insurance.
2. Due to the rising cost of malpractice insurance, doctors/facilities need to make more money, so they raise costs of procedures/services. If there was a decent cap put on judgments awarded in malpractice suits, then maybe the insurance wouldn’t be so darn high for the doctors, then there would be less need to gouge the patient with high costs.
3. Uninsured people have caught on that if they go to the emergency room for their medical care, they can not be turned away. A hospital can refuse to schedule an elective surgery on you if you don’t have the money or insurance, but they must give you emergency treatment. Of course, this leads to the ER’s being abused by those who do not have true emergencies and should just be going to the doctor. Those ER bills don’t get paid then the hospitals have to compensate by other costs being higher.
4. And What Mom says in the above comments (oh, Hi Mom!) really irks my taters. The costs of procedures are so arbitrary it’s ridiculous. They have a “usual and costomary” price for regions in health care, this price is typically what insurance comapnies will pay the doctor/facility for a given procedure. However, the facility may charge whatever they want. That means, the insurance company only has to pay the usual and costomary amount, but if you don’t have insurance and are paying the bill with real money, then you have to pay their inflated price. This is crap. You should be able to pay the same price as any insurance company would pay, but I don’t know of anyone who has successfully negotiated down the price of anything with a medical facility.
That’s my 2 cents.
Comment by Jeffrey Ellis on September 10, 2009
Mom & Cam — I think it’s all a combination of those things, plus one even greater factor: the third party payer system. See for example this Forbes article (http://www.forbes.com/2009/06/18/milton-friedman-medical-insurance-opinions-columnists-health-care.html) discussing a seminal paper by renowned economist Milton Friedman. Health care costs have risen almost in direct correlation to the percentage of consumers’ health care that is paid by someone else (i.e., their employers/health insurance) because consumers no longer have the incentive to question health care costs or look for a good deal. In other words the free market has been compromised and one of the pressures to keep cost down has been removed. So it’s entirely NOT fair to characterize rising health care costs as a failure of the free market.
Comment by jess on September 17, 2009
Rising health care costs are not a failure of the free market; they are an expression of it. The healthcare system has been plagued by the shifting of cost between the three parties involved: consumers, providers, and insurance companies. Costs continue to rise because each party reacts to the actions of another to minimize costs to themselves. Each of the three groups has proved that they are unable to self-regulate themselves to control costs, instead acting to ensure low costs (or higher profits) for their respective group.
In order to keep overall costs down, we need a way to force consumers, providers, and insurance companies to share the costs equally. Forced sharing may not be popular with anyone, but until it happens (in our current system) healthcare will continue to suffer either in cost, quality, or availability (or all three).
Comment by Jeffrey Ellis on September 20, 2009
Jess, I’m not sure if we’re that far apart in our opinions. Rising health care costs DO reflect the parties involved fulfilling their own self-interests. But since a third party (insurers) is paying the bill, the consumer no longer has a self-interest to seek low-cost health care. Thus an important free market feature has been disabled. In a true free market this wouldn’t be the case.
Comment by Maddog on September 29, 2009
Jess misses the elephant in the room - Government paid health care. Whether Medicare, Medicaid or other the govt reimburses providers at well below market rates. Providers recover these losses from private payors and insurance payors.
Furthermore, forced cost sharing is no solution to either the govt underpayment issue or the third party payor issue. No economic system can function over long periods of time where the users and payers are not unified. The user must pay for the good or service or there must be rationing since where demand is stripped of the price function demand will outpace supply.
Conceptually this is difficult because we phrase the issue counter-intuitively. But if we ask, “if your employer purchased your meals would you eat more steak or lobster or steak and lobster?”, the answer is obviously - yes. We might still eat healthy meal most of the time but we would likely eat more costly foods and more often.
The only effective way to limit costs and return the system to a sane arena is to return to actual insurance and individual policy ownership. This means no more prepaid medical policies with low copays and low deductables purchased by employers or government. We need higher deductables of $5,000 to 10,000 per family and some sort of tax favored savings component to persuade the young to go along with health insurance.
Without this the result will be increased costs and/or rationing.
Mark
Comment by Jeffrey Ellis on September 29, 2009
Maddog, I believe you are right about government-imposed artificially lower prices just cause the uncovered expenses to get passed on to the rest of us. This is one of the reasons that private insurance will get crowded out under Obamacare. And I agree getting rid of the third party payer system is a fundamental necessity to bringing down the costs of healthcare and avoiding rationing.