Wednesday, September 16, 2009

Health care reform – the reality problem

The problem, at long last, is becoming hard to avoid.

If everyone buys insurance, then our current health care system can provide “Lexus” care for a cost of about $13-15K for a family of 3-4 persons.

That’s the kind of care that my family enjoys. It’s not bad, really.

The problem, of course, is that Americans expect a bill more like $6-8K/year. We can’t do that in America. If we were to deliver health services at this price point, they’d be “Manhattan subway” services. An excellent form of transportation, but loud, smelly and lacking plush carpets.

So we have a reality problem.

Update 9/16/09: Economix has a relevant post. The $13-15K number turns out match a Kaiser study.

2 comments:

judell said...

And yet the real price of a Lexus or Accord has declined over the last decade, according to this economist:

http://mjperry.blogspot.com/2009/03/real-price-of-new-cars-has-fallen.html

That's for a product that has improved markedly over the period.

Meanwhile, as your Economist/Kaiser chart suggests, the price of Lexus healthcare has doubled since 1999. For a product that hasn't improved.

What gives?

John Gordon said...

Great question Jon. I have lots of thoughts that I'd like to develop into a blog post.

Here's part of one to start with.

When Penicillin was introduced in 1945 or so it cost a fortune. It was so expensive that the urine of treated patients was collected so the penicillin could be recycled. It was a miracle drug.

Today Penicillin is dirt cheap. It's a minor drug, nearly useless.

If the bacteria hadn't changed, the price drop in Penicillin would have been far greater than the drop in the Lexus price.

It would be great to drill down further on this. Are you sure you won't be visiting Minnesota any time soon?