>GAO on health care

>The GAO has an interesting report on the long-term effects of spending on health care.

Health care is the basic conundrum behind the long-term entitlement spending problem. Social Security is not really that big a problem. It’s about 1.7% of payroll out of whack, which if we had to make up with tax increases would be entirely doable, though I would prefer that we fix the problem in a balanced fashion.

Health care is a completely different story. It’s harder to deny people health care than to deny them money, since a lot of the time their quality of life, and even their life itself is at stake. We keep coming up with new treatments and medicines, and it would be hard to deny these life-improving and extending treatments to people, especially if they vote.

The basic fixes boil down to cold, hard economics. It’s either ration by price, or ration by inconvenience or government decision. The ideal system would provide preventive care cheaply, then figure out the other treatments that are cost effective, and provide them with a reasonable co-pay or co-insurance, then additional treatments would only be funded if medically necessary. All forms of treatment should be treated the same (e.g., fold together Medicare Part A, Part B and Part D) into one plan. There should be a significant deductible for the plan (about $1000-5000) based on income.

For prescription drugs, provide generics cheaply. Other drugs go on a formulary and negotiate heavily with the companies for good prices. Note that anyone who calls for the government to negotiate drug prices is implicitly calling for some drugs not to be provided as part of Medicare, because if the Government is not threatening to take the drug out of Medicare, then the companies don’t have any incentive to grant a discount. This is the reason the VA can get good drug prices compared to Medicare.

Honestly, health care isn’t my strong suit. Go ahead and read the paper and comment to enlighten me.


About perkinsms

I'm an engineer and father interested in transit, parking and economics.
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2 Responses to >GAO on health care

  1. Mark says:

    >> It’s harder to deny people health care than to deny them money, since a lot of the time their quality of life, and even their life itself is at stake.You can’t magically create things though, and you have to draw the line somewhere.I once read a sci-fi short story (maybe by Clarke, but that is a total guess) about a fellow who, due to some high-tech physics 4th-dimensional accident, had his chirality (left/right polarity) swapped. [Please note that this is an old, old story, so just assume all the science is ‘correct’.]This was, of course, confusing at first, then, of course, he couldn’t read (unless things were put in a mirror), but the real problem didn’t occur until they realized that he couldn’t digest food, because he couldn’t metabolize any of the normal molecules.They could synthesize food for him by sending it through the 4th dimension twisting machine, but doing this is incredibly energy intensive and will cost (say) a million dollars a day (that’s today’s money; in the story, it was some number that doesn’t seem very big to us now-a-days).Also, apparently sending him through the machine again will kill him, so they can’t switch him ‘back’.So….what should they do? It isn’t fair to let the guy die, but, well, $350M/yr just to make food for one guy is pretty insanely expensive.Where do we draw the line for random people who want medical care? Unfortunately, society cannot sustain paying millions of dollars a person on medical care.

  2. Mark says:

    >It is also interesting that society seems to value ‘mere existance’ more than anything else.It is seen as wrong to ‘let’ someone die because we don’t pay for their health care, but it is NOT seen as wrong to force people to go to work for hours a day to pay for other people’s health care. In a sense, this prevents people from ‘living’ their lives.However, it is seen as wrong to ‘let’ someone die a month earlier, but not wrong to take a month of everyone’s life (30 days = 90 work days = 9 days a year over a 30 year working lifetime = 5% of income, which seems about what we spend on medicare/medicaid/free medicine).

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