05 November 2013
As debate rages over the O'Bama Tax sick care program [aka Affordable Health Care Act] any objective assessment must declare that the implementation has been an abysmal failure. Whether it becomes effective, gets repealed or is amended in some form it will not be what the American public wants. The reason for this is that the current medical services industry is exactly as the American public wants. I make this declaration knowing the results of public opinion polls and hearing the years of ongoing complaints from consumers and pundits broadcast over the various political programs.
The medical services industry as it exists in the United States is priced primarily as a function of a free market system save the interdiction by the government to raise the prices. Interestingly the government that artificially raised prices now seems set upon portraying itself as the price reduction saviour. The pricing system is a result of supply and demand. As anyone who has paid attention to the landscape in their community for the past 30 years or so it is obvious that the medical service industry is expanding at a rate which exceeds that of our population or the business sector in general. Hospitals now generally sit among what has become a campus of medical practitioners and long term care facilities. So how did this rapid expansion of the medical care industry and the associated costs acceleration occur?
During World War II there was a shortage of domestic labour as most young men were enlisted into the military and Americans staying at home were increasingly employed in the war machine industries. As an incentive to employees the businesses started offering health care insurance coverage. When the employees share of the insurance cost was given favourable tax treatment it became a way for employers to pay their employees in a tax-free manner. Going from a cash pay system to an employer based pay system increased the use of health care services. This is the result of mainly two factors: that when people don't have to pay for a service immediately they are likely to spend more. This is the reason that retailers offer lay-away or installment plans. This also accounts for the success of credit cards as a means to increase personal debt and spending. The second is the psychological mandate to use that for which we have paid. This is based upon the anthropological efficiency of action inherent to man. That is our early hominids functioned on a needs basis and their efforts expended were to facilitate those needs. Thus, as this inherent motivation carries itself into the modern world we are incline to want to use that for which we have paid. If we have paid for sick care coverage and don't use it then we are not fulfilling our biological mandate – something the subconscious cannot allow. To not use our investment – the payment for sick care coverage – is to admit that we are wasting our efforts, that we are a waste of time. This has resulted in greater levels of ailment among the insured. Studies continually reveal that uninsured people have fewer ailments than those who are insured.
There is another underlying cause that leads to rising costs. A high cost to employers is employee turnover. This is why there are pay increases attached to duration with an employer rather than performance. Employers have found a way to skirt the turnover problem without increasing costs. This has been done by making insurance coverage a part of the pay structure. As employees become dependent upon their coverage they are less likely to switch jobs. But, this can increase the stress on an employee who finds the employment unsatisfying. The increase in stress related ailments leads to greater dependence on the employer thus the employee becomes locked into a vicious circle. The problem is compounded in that the medical care industry, especially acute care providers, rarely display their prices nor do consumers ask. If you were a retailer who had customers come in, select products and then hand a card to you that identifies who will pay for the goods what do you think you would do to your prices?
The greatest increase in medical care cost does not come from these underlying manipulators but instead are from the more direct demand. Even as cost rose consumers continued to make greater demands upon the limited supply – the quintessential formula for accelerated price increases. It is now well established that 90+% of cancers are chosen, and obesity along with it's related ailments are nearly exclusively chosen. Also primarily chosen are diabetes, stress related ailments, high blood pressure and a wide swath of psychological conditions.
Trauma care is the portion of medical service that could be said to be entirely discretionary. Although it would be unreasonable to eliminate all possible sources of trauma there is still much that can be done to mitigate it. Recklessness in all it's forms is unnecessary yet still chosen. Very few vehicle collisions are the result of weather, roadway design, or mechanical failure. Most are the result of decisions to not avoid collisions.
The wonderful thing about free markets is that if you don't like the price you may opt out. Markets are a reflection of choice. When given financial liberty we have a market that reflects exactly what we want. We 'elect' the goods and services available to us through our 'votes' cast with money. It is in this way that we have more healthful foods available because by purchasing those I have voted for more. Likewise medical costs are lower because I decided to not use those services after my 1991 surgery. I elected to have that because I was in prison and the U S Government paid for it with taxpayer funds thus I didn't care what the price was. Rather than complain or demand interventions I enjoy the freedom to choose among the basket of services in the marketplace. I don't want to pay what I feel are exorbitant medical service prices so I instead choose among many of the other options.
So now that the pricing structure of the medical services industry and a market economy is understood it is easy to see that the prices are what the customers have demanded. The beauty of a free market based system is that everyone is satisfied with it because it represents their most fundamental wishes. Unfortunately we have a government that wants to make people unhappy by disrupting the price structure that they have very carefully crafted over generations.
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Tuesday, November 5, 2013
The Health Care System that we all want
05 November 2013