Friday, August 14, 2009

That which does more, costs more


For the last few years, we've been having a national freakout over the "rising cost" of healthcare.

And the underlying assumption, without even questioning it, has been that rising healthcare costs are a bad thing. But is that true?

Say for instance, in 1950, you were told you had leukemia. The treatment for it at that time would be to take 2 aspirin and go home and make out your will. Today, you'll get hundreds of thousands of dollars worth of treatment, and you have a good chance of living 5 or more years.

So when something goes up only with inflation, the cost is essentially static. So why would we expect the cost of leukemia treatment to remain static since 1950, when it does so much more for us now than it did then?

And everyone is carping over the fact that healthcare has risen to 16% of our economy. But it's just assumed this is a bad thing, but is it? Imagine if healthcare advances to the point where we all live to 200. This may involve not just hip replacement, but perhaps new organs grown in the lab, and a whole host of other advances. So what would be the problem, if by then, healthcare was 50% of the economy? It would be a bigger economy, since so many people would stay healthy for so much longer. Of course living to 200 would require medical equipment manufacturers, skilled doctors, pharmaceutical resources etc. and the jobs that come with it. It would be 50% of our economy, but that would be a good thing!

Healthcare has risen so much more than inflation, because it has delivered so much more to us, and continues to deliver at a rate that outpaces inflation. Two aspirin and a will requires fewer resources than years of lab tests, drug administrations, radiation treatments and the like. But our economy has grown over the years, and 16% of a larger economy with more people living longer and healthier should induce a hearty amen, not a national freakout.

So let it be 50% of an even larger economy with even more people living longer and healthier! Let it be 75% of our economy if we all live to 300!

Yes, we have some problems - fair access, pre-existing conditions, families in debt up to their eyeballs when dad gets sick, paperwork galore and many others. Admittedly we have some problems, and they are not easy. But we'll never get anywhere if we can't sort out what shouldn't happen from what is natural to happen. And it's just accepted as axiom that rising healthcare costs is a bad thing, when rising healthcare costs is literally no more than the natural by-product of healthcare doing more and more to service an increasingly older and healthier population.

Meanwhile we have the 500 pound gorillas of the economy and terrorism waiting to throw us around the room like a piece of Samsonite, and Obama is not hosting a single town hall about those issues. Our leadership is blind, and we're following it, with our newly replaced hips, right into a ditch.

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