The New Voodoo Economics
Or perhaps Obamanomics. Tyler Cowen writes,
MEDICARE expenditures threaten to crush the federal budget, yet the Obama administration is proposing that we start by spending more now so we can spend less later.
This runs the risk of becoming the new voodoo economics. If we can’t realize significant savings in health care costs now, don’t expect savings in the future, either.
I think this is right. I’d love to see the success ratio of programs that started out by spedning more money, then later spent less. I’m thinking the list of successful programs is going to be really dang small.
It’s not the profits of the drug companies or the overhead of the insurance companies that make American health care so expensive, but the financial incentives for doctors and medical institutions to recommend more procedures, whether or not they are effective. So far, the American people have been unwilling to say no.
Not so sure about this. Not that I don’t think it is happening, I just don’t think the U.S. health care problem can be summarized so…neatly. Dave Schuler has gone a long way to convincing me that there is indeed a supply problem. Heck, we actually import nurses from places like the Phillippines vs. training our own even though U.S. nursing schools have long waiting lists for admission. I also think that the incentives are screwy. For example, a young person might think that obtaining health care is a suckers game. So long as he doesn’t have much in the way of assets why not gamble that he’ll not need health care and spend that money elsewhere? Then, there is employer provided health care which comes with a nice tax break. People would have much leaner health care benefits packages if they had to pay for it with after-tax dollars.
Still this is not a big problem for the next several paragraphs in the story. These look at using comparative-effectiveness studies as a way of redcing Medicare expenditures. A great idea actually. Yes its limiting what procedures people can get. Yes its a type of rationing. So what. It is also an attempt to say, “We aren’t going to subsidize every possible medical procedure out there.” And the market/price mechanism rations resources.
Prof. Cowen closes with,
The demand for universal coverage sounds like a moral imperative to “take care of everybody,” but in reality it would make only a marginal difference when it comes to the overall health of the American population. The sober reality is that universal coverage is another way to spend money, which may or may not be a good idea.
The most likely possibility is that the government will spend more on health care today, promise to realize savings tomorrow and never succeed in lowering costs. It is rare that governments successfully cut costs by first spending more money.
Mr. Obama has pledged to be a fiscally responsible president. This is the biggest chance so far to see whether he means it.
I agree here. If we are going to get health care savings we need to get them now, not later.