The Cost of Living
Recently, I've had a few friends either quit or lose their job. I like to hear their plans and hopes for the future as well as their concerns in the present. I have found that there is one common source of worry. It isn't paying for their house or buying food and clothing - Inevitably, the question they all have is: How will I get health insurance for me and my family?
For an average health care plan purchased individually (Not thorough a company), it is very normal to pay $600-$800 per month. A friend who lost his job told me that COBRA health insurance for him and his family of 4 is $1,600/month!! Needless to say, he is very concerned about finding a job.
The question is - Why does health care insurance cost so much?
To find the answer, we have to understand the real drivers of Health Care costs. There are of course many theories and rumors:
-Malpractice
-Smokers
-Cost of Emergency Room care for uninsured
-Beauracracy
While these factors certainly impact the cost of Health care, most Health Care experts point to one primary cause - Medical Technology.
New drugs, technologies, techniques, and so on are developed at great expense by pharmaceutical and biotechnology companies. The costs of developing many of the current drugs and technologies frequently runs in the billions of dollars. Those costs must be passed on. In addition, doctors who are skilled in innovative surgeries and techniques are in high demand and can charge almost anything for their services.
We must also not forget that most Hospitals, HMOs, Private Practices, Medical Technology companies are run for a profit. They are businesses attempting to provide a valuable service and be compensated accordingly.
The ever increasing array of medical services that patients demand is clearly a driver of Health Care costs. But are all people entitled to all new forms of medical technology? This is a complex political and ethical issue, which is not likely to be solved anytime soon, if ever. In the meantime, we can expect Health Care costs to continue rising and more people becoming uninsured. The alternative of Socialized Medicine that is proposed in one form or another has its own problems, so I can't see any easy answers.
http://kqed02.streamguys.us/anon.kqed/radio/tcr/2007/05/2007-05-10-tcr.mp3
For an average health care plan purchased individually (Not thorough a company), it is very normal to pay $600-$800 per month. A friend who lost his job told me that COBRA health insurance for him and his family of 4 is $1,600/month!! Needless to say, he is very concerned about finding a job.
Health expenditures continue to grow very rapidly in the U.S. Since 1970, health care spending has grown at an average annual rate of 9.8%, or about 2.5 percentage points faster than the economy as measured by the nominal gross domestic product (GDP).
- http://www.kff.org/insurance/snapshot/chcm030807oth.cfm
The question is - Why does health care insurance cost so much?
To find the answer, we have to understand the real drivers of Health Care costs. There are of course many theories and rumors:
-Malpractice
-Smokers
-Cost of Emergency Room care for uninsured
-Beauracracy
While these factors certainly impact the cost of Health care, most Health Care experts point to one primary cause - Medical Technology.
New drugs, technologies, techniques, and so on are developed at great expense by pharmaceutical and biotechnology companies. The costs of developing many of the current drugs and technologies frequently runs in the billions of dollars. Those costs must be passed on. In addition, doctors who are skilled in innovative surgeries and techniques are in high demand and can charge almost anything for their services.
We must also not forget that most Hospitals, HMOs, Private Practices, Medical Technology companies are run for a profit. They are businesses attempting to provide a valuable service and be compensated accordingly.
The ever increasing array of medical services that patients demand is clearly a driver of Health Care costs. But are all people entitled to all new forms of medical technology? This is a complex political and ethical issue, which is not likely to be solved anytime soon, if ever. In the meantime, we can expect Health Care costs to continue rising and more people becoming uninsured. The alternative of Socialized Medicine that is proposed in one form or another has its own problems, so I can't see any easy answers.
http://kqed02.streamguys.us/anon.kqed/radio/tcr/2007/05/2007-05-10-tcr.mp3
posted by Vijay Swamidass at
11:30 PM
2 Comments:
A corollary to the "medical technology" argument is the "life expectancy" argument: today's seniors are both healthier and wealthier than their forbears and thus drive demand for medical treatments and innovations.
There is a dark side, though. These longer lives (whether active or not) are often spent dependent on drugs to be taken regularly for the rest of one's life. The physical life extension also gives more opportunity for dementia (e.g. Alzheimer's) to manifest and be "treated" for a decade or more.
By
Leeton Lawdoc, At
5:57 PM
awesome post. i have been wondering about the whole healthcare issue for a while since i've heard so many people complaining about it. now i have something intelligent to contribute to the argument.
By
Paul Johnson, At
1:29 PM
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