The simple assumption underlying America's approach to healthcare is that the market price is wrong. In any market where one adjusts prices for these sorts of reasons, there is either a glut or a deficiency. Here, if the assumption that the market price is too high, one will produce deficiencies.
The underlying assumption, which is not entirely wrong, is that there is a price-fixing cabal which is driving the prices up "faster than inflation." This is an assumption which discards other reasons for price increases - that efficiency is lowered opposite the general trend over time where innovation decreases costs; or that inflation drives prices up artificially. The cabal might well be the government-industry tangle which has been forced upon the healthcare market. This is getting treated with Steroids now, being bulked up.
One element which I believe to be central is that "inflation" and the "healthcare CPI" are one and the same. There are other things in the artificial "CPI index" which cause it to be reported as abnormally LOW. Several economists, such as John Williams on Shadowstats, believe that inflation is actually MUCH higher than reported. Until 2009, the decade's inflation rate has been about 6% - which brings us to about 60% in constant dollars to what we had in 2000.
And efficiency IS lowered - not because healthcare is a free-market commodity, but precisely the opposite. Few people realize that much of physicians' reimbursements are set by Medicare already. The private insurers then negotiate reimbursement as a Percentage of Medicare. Doctors salaries are adjusted politically by measure of the mean state income and "costs" in the various states.
We pretend that lowering price and raising demand will force the innovators to improve quality. The system is seen as burdened by overhead and profit-taking. Overhead cannot be signficantly improved until such things as internal auditing, measuring and "efficiency charting" are reduced. That will not happen.
It takes a certain bit of punitive and harsh attitude to ram changes through at the expense of a certain sector. There is certainly that sort of ire against American healthcare now, and it has been simmering for a long time.
Unfortunately, "punishing healthcare to make it better" is likely to fail.
The underlying assumption, which is not entirely wrong, is that there is a price-fixing cabal which is driving the prices up "faster than inflation." This is an assumption which discards other reasons for price increases - that efficiency is lowered opposite the general trend over time where innovation decreases costs; or that inflation drives prices up artificially. The cabal might well be the government-industry tangle which has been forced upon the healthcare market. This is getting treated with Steroids now, being bulked up.
One element which I believe to be central is that "inflation" and the "healthcare CPI" are one and the same. There are other things in the artificial "CPI index" which cause it to be reported as abnormally LOW. Several economists, such as John Williams on Shadowstats, believe that inflation is actually MUCH higher than reported. Until 2009, the decade's inflation rate has been about 6% - which brings us to about 60% in constant dollars to what we had in 2000.
And efficiency IS lowered - not because healthcare is a free-market commodity, but precisely the opposite. Few people realize that much of physicians' reimbursements are set by Medicare already. The private insurers then negotiate reimbursement as a Percentage of Medicare. Doctors salaries are adjusted politically by measure of the mean state income and "costs" in the various states.
We pretend that lowering price and raising demand will force the innovators to improve quality. The system is seen as burdened by overhead and profit-taking. Overhead cannot be signficantly improved until such things as internal auditing, measuring and "efficiency charting" are reduced. That will not happen.
It takes a certain bit of punitive and harsh attitude to ram changes through at the expense of a certain sector. There is certainly that sort of ire against American healthcare now, and it has been simmering for a long time.
Unfortunately, "punishing healthcare to make it better" is likely to fail.
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