no third solution

Blogging about liberty, anarchy, economics and politics

Why Does the U.S. Spend More on Health Care?

September 1st, 2010

The fact that the US spends more on health care is not particularly alarming. The NYT points out that, for the last 50 years the US has always spent more (as a % of GDP) on health care than the rest of the developed world. The problem is the velocity of change: health care expenditures are rising considerably faster in the US.

health care spending trend, OECD nations, 1960-2008

If you want to make something more affordable, you cannot continue to spend more money on it, nor can you continue policies which encourage bloat and bureaucracy. To be quite fair, there are dozens if not hundreds of factors that have contributed to the price increases.

  • The $100B/year tax subsidy given to corporations is pretty pervasive. Anyone who doesn’t work for a large corporation is at a disadvantage, unable to write off their health care expenses as tax-free — and more unfairly handcuffs people to their jobs.
  • The digital age has rapidly accelerated the development of new techniques and new technologies over the past few decades, but many of these procedures are extremely expensive (a problem that is exacerbated by the fact that many people view health care and insurance as a “Free Lunch”).
  • The technological advances have allowed us to live longer than ever before — but there is a price to pay. An aging population will always require more attention as the frailty of old age sets in: everything from reading glasses to new drugs and procedures to elder care and hospice.

But something else happened in the 80s that contributes to this problem: The AMA, an evil cartel the sole purpose of which is to extract the highest possible monopoly rents for its member doctors, with the collusion of congress, began restricting the number of new and potential doctors, in spite of an obviously aging population.

The marketplace doesn’t determine how many doctors the nation has, as it does for engineers, pilots and other professions. The number of doctors is a political decision, heavily influenced by doctors themselves…

The United States stopped opening medical schools in the 1980s because of the predicted surplus of doctors.

— via USAToday

The moratorium on new medical schools was not overturned until 2002 when the damage was already well underway. Thirty-ish years later, despite spending more, the US has fewer doctors, fewer nurses, and fewer hospital beds per capita than the OECD average [source: pdf].

This problem is going to take years to fix. I pointed out the metaphysical problem last time: there is already a shortage problem, and it’s only going to get worse if someone pronounces that medical care (provided by whom? at what costs?) will be an American birthright. A shiny new label that says “Universal Single Payer Awesome Health Care America Fuck Yeah!” isn’t going to work, the entire “system” is broken, and rotten to the core.




no third solution

Blogging about liberty, anarchy, economics and politics