A Healthy Diatribe

If you think health care is expensive because of technology, pharma, doctors, or hospitals trying to gouge patients, think again.

In 1960, the average person paid about 4% of annual income on health care. In 2003, it was 13.4%. Doctors, nurses, hospitals, pharma, evolving technology were all present in 1960 as now. What has changed? As the phrase goes, follow the money.

Here are some clues:
1. In 1960 most people died of acute disease, now it is chronic illness.
2. More people in "health care" who are not service providers. Each of these requires expenditure, from salary to health benefits to buildings in prominent metropolitan areas to house their activities. Some even work in your hospital or your office, handling the red tape.
3. More government, regulations, friction.
4. More lawsuits that result in a financial drain but little reduction in the overall incidence of malpractice worthy events.
5. Managed care organizations focus on short term costs when what we need is a focus on reducing the burden of chronic disease by maintaining health. Managed care creates friction that leads to long term problems that we, the people, wind up paying for through government programs as patients with chronic disease lose their jobs and go on social health programs such as Medicare.

Adam Smith has left the building on health care a long time ago. We exist in a regulated environment where there are two payors (employers and taxpayers) and many administrators (government, managed care).