May 16, 2009

THIS GUY'S AN ECONOMIST?:

Health Costs Are the Real Deficit Threat: That's why President Obama is making health-care reform a priority. (PETER R. ORSZAG, 5/15/09, WSJ)

[H]ealth-care costs vary substantially across regions of the United States and across hospitals and doctors within a region -- even for patients with a similar diagnosis. Medicare spending in 2006 varied more than threefold across U.S. regions, mostly due to variation in the volume and intensity of services provided for similar types of patients. The kicker is that Medicare enrollees in areas with higher spending do not appear to have better health outcomes on average than those in areas with lower spending. We don't seem to be getting anything in exchange for the extra costs except more intensive tests and procedures, and additional days in the hospital -- and who would want any of that if the additional tests and procedures do not actually help to promote health?

The consumers. Health care is just another commodity now and most of it unnecessary. People consume it because they want to, not because of any benefits. And since they don't bear the costs--at least not directly--they consume mass quantities.

Now, Mr. Orszag could achieve his dream of reducing expenditures by controlling what health care people can have delivered. But that's a political non-starter. The only reason anyone supports universal health care is because they perceive it as the promise that they'll got lots more medicine, not drastically less.

Or, we could make those who consume health care back into normal consumers again. Put everyone into HSAs and make them draw upon their own accounts, their own money, to pay medical bills. There's a big difference between the pointless cancer screening that you're buying for me and the one I have to pay for myself.

Posted by Orrin Judd at May 16, 2009 8:13 AM
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