7 ms·

Back when he was alive, Milton Friedman did a study of the costs of health care in the US from 1900 to the 1970s. (I think the first study was in the 1970s, and

by nirvana 14y ago

Back when he was alive, Milton Friedman did a study of the costs of health care in the US from 1900 to the 1970s. (I think the first study was in the 1970s, and it was updated in the 1990s) What he found was that the funding mechanism of health care over that time had shifted from patients paying out of pocket to government paying hospitals and government incentivized (by making it a tax write off for employers) and regulated (by preventing efficient pools of insured with state-by-state regulations) insurance. Consequently, not only did the availability of health care go down, but the costs went up 26fold. Or put another way, despite massive improvements in technology, medicine and productivity over 70+ years, costs skyrocketed from what you could afford out of pocket to what would bankrupt you. To put it in 2013 dollars, if you hypothesize a $100,000 surgery, in 1970[1] it would cost you $100,000, and you'd need insurance or go bankrupt, but in 1900 it would have cost you $3,846 (an amount you could put on credit cards today.) Command economies don't work, and the change in health care over the last century has been a centralization in control. I with Obamacare this has dramatically ramped up and now there are boards to decide who gets what care based on cost measures, rather than medical need. Whenever someone talks about the need for socialized medicine because "otherwise people would go bankrupt", remember it is the socialization of medicine that caused costs to rise to the point where people would go bankrupt. [1] The study was originally done in the 1970s, but I'm using 2013 dollars here so you can understand how cheap things would have been.

myko 14y ago
> now there are boards to decide who gets what care based on cost measures, rather than medical need. How is this different from insurance companies, or are those what you are referring to? I'm really confused by your statement.
- kefka 14y ago
  You can thank Rush Limbaugh politik for the "government death panels" garbage.
- danielweber 14y ago
  Hardly anyone is really approving or denying care based on cost-effectiveness. Which is why costs are out of control.
Shivetya 14y ago
The same could be said about college education. The increased availability in grants and loans has exploded education costs. With regards to medical care, far too many types of care are required to be carried by insurance companies who then pass the costs to their customers. Hospitals do not get full reimbursement for all types of patients, specifically government covered patients, so they pass the costs along to groups who can and do pay. Those being individuals and insurance companies, the later nothing more than a collection of individuals.
- ctdonath 14y ago
  The same could be said about home mortgages. The increased availability in loans has exploded housing costs. ...and we've seen where that went. The problem in all of these is the promise of a must-have little more if only repayment can be extended and others can be persuaded to contribute. What were luxuries become perceived as necessities. (And yes, I've said "no" to hospital tests, mortgage offers, and tuition financial aid.)
cdavid 14y ago
There is an easy way to refute your argument: what you're saying about 'socialization' also happened in most developed countries. At least in France, so-called 'social security' (which is about mandatory health insurance, and not pension as in the US) came in place just after WW 2, and without the US insanity in price inflation. Comparing with 1900 prices is a bit of nonsense given that there was little surgery at that time as well. Also, there are quite a few things that are inherently expensive: diabete, dialysis, cancer (things that would have got you killed in the 1900). I don't know about the US, but dialysis costs around 100-200k euros / year, diabete around 100 k euros / year in France. I would be curious to know how much cancer + dialysis + diabete contribute to health costs. I am ready to bet it is not in the low 2 digits.
- noahc 14y ago
  He is comparing prices by putting it into 2013 dollars. It has nothing to do with availability. You can take a car, computer, or any other good that has a price and easily convert it back to 1865 or 1900 or whatever dollars and this helps understand the cost of things relative to today. This makes your two middle paragraphs irrelevant. If you want to just look at cancer here is a place to start: http://www.cancer.org/cancer/cancerbasics/economic-impact-of-cancer http://www.cancer.org/cancer/cancerbasics/economic-impact-of... Much of the health care costs in America are generated by major medical issues. I've recently seen a number released by my insurance provider that said that 7% of those who use them for insurance generate 90% of the claims by dollar amount. The thing is, no one knows when they will be in the 7%.
  - jbooth 14y ago
    Comparing medicine in 1900 and 1970 is just silly, full stop. Regarding everything about 'government' vs 'free market'.. do you feel like you're in a free market healthcare system in America? I sure don't. I feel like I have no idea what's going on with medicine and the only difference between my insurance bureaucracy and a government bureaucracy is that the insurance company is actively trying to fuck me rather than just passively doing it. I'm not saying big government bureaucracies are great -- they're terrible. Yet every other industrialized country's disaster of a bureaucracy is miles better than our private-public system. They have the same cost issues and also have cost inflation, but it's less inflation on a lower cost.
adjwilli 14y ago
You're definition of socialism is a little funny. There's a big difference between socialized medicine as a single-payer system where the government has an incentive to keep costs low and a somewhat-centralized and somewhat-regulated system "socialized" system where the government has no such incentive.
larrywright 14y ago
One of the ideas I've heard discussed is that the only way we will ever get the cost of health care down is if consumers are back in the drivers seat with how the dollars are spent. Right now it's disconnected. I go in to have something done, the doctor bills my insurance company, and I really don't know (or care) how much it costs, unless I happen to look at the insurance paperwork. The same goes for pharmaceuticals. Which pharmacy in your town has the lowest price on that antibiotic that was just prescribed for your son's ear infection? Who cares, right? It's a $15 co-pay no matter where you go, so you go wherever is most convenient. One solution that's been proposed is the increased use of HSAs + high deductible policies. That way people are paying their expenses out of pocket (for the day-to-day things at least), and are therefore more likely to shop around. I'm not hear to argue the merits of that, but it definitely seems like an approach that might work. I fail to see how anything that takes control out of the hand of the individual will fix this problem (short of regulating the prices, which I wouldn't be a fan of).
- nhashem 14y ago
  Unfortunately healthcare is not a market you often willingly participate in. Some health needs can be anticipated, and doing more to encourage consumer empowerment would definitely lower prices. Think about cosmetic surgery or LASIK. Every participant in that market is voluntary, so all the providers are motivated to do it cheaper and better. But when you have a major health crisis, your "empowerment" is just fundamentally limited. If you get into an accident with a loved one and they're unconscious, you're not doing to be in a position to decide whether you should go to the hospital 1 mile away, that may be X% more expensive than the one 5 miles away. Your ability to price discriminate is also fundamentally limited by your own knowledge of medicine. If you have a tumor and one doctor suggests taking medicine A which costs $50,000, and medicine B which costs $5,000, is A better than B? Is it 1000% better? If it's only 2% better, unlike any other consumer product, are you trying to optimize for "value" or "not actually dying"? There's definitely things we can do in terms of government policy to encourage more customer empowerment to bring down costs. But ultimately you have a market with unvoluntary participation and opaque pricing, which means Adam Smith can't really do his thing.
  - 14y ago
smutticus 14y ago
>Whenever someone talks about the need for socialized medicine because "otherwise people would go bankrupt", remember it is the socialization of medicine that caused costs to rise to the point where people would go bankrupt. Because there are thousands of Canadians every year that go bankrupt because of health care costs. Your argument doesn't even begin to make sense.
- skylan_q 14y ago
  Because there are thousands of Canadians every year that go bankrupt because of health care costs. Actually, there are. They go the US to get care that's not offered in Canada. The care here is about as good as former soviet bloc countries. If there was a chance that an illness such as cancer could kill me, I'd get out of Canada in a heartbeat and embrace poverty if it meant keeping my life.
  - rubyrescue 14y ago
    It's just not true that large numbers of Canadians go to the US for healthcare. You need to supply evidence of this. The numbers are vanishingly small.
    - danielweber 14y ago
      The numbers are vanishingly small Well, compared to what? The odds of having your private health insurance rescinded in the US is also very small -- but it's quite likely among people who suddenly rack up big health care costs. Similarly, if you compare Canada-to-US medical tourists to the Canadian population, I'm sure it's amazingly tiny. But how does it compare to the people of means who have a medical procedure denied by the Canadian system? (I don't fault Canada for denying care in some cases. Sometimes it's not worth it. But the Canadian system would be better if people were still allowed to top off the denied care with their own dollars and didn't need to leave the country to get it.)
      - bjelkeman-again 14y ago
cpleppert 14y ago
>>I with Obamacare this has dramatically ramped up and now there are boards to decide who gets what care based on cost measures, rather than medical need. It would help if actually knew what you were talking about. There are no "boards." There is the IPAB which makes cuts to medicare if congress can't. I'm sure you are in favor of reducing this "socialized medicine" so your stated basis of opposition is nonsensical. Maybe you would prefer instead a "board" made up of people elected across the US that will make cuts to medicare instead. It's called Congress and maybe you should learn about it as I hear it has existed for a long time. >>Command economies don't work, and the change in health care over the last century has been a centralization in control. >>Whenever someone talks about the need for socialized medicine because "otherwise people would go bankrupt", remember it is the socialization of medicine that caused costs to rise to the point where people would go bankrupt. Milton Friedman also said that single payer system have many advantages over the system we have right now.[1] It isn't centralization of control its a broken system that has never had any reform whatsoever. [1] http://www.hoover.org/publications/hoover-digest/article/7298 http://www.hoover.org/publications/hoover-digest/article/729...

by nirvana 14y ago

myko 14y ago

> now there are boards to decide who gets what care based on cost measures, rather than medical need. How is this different from insurance companies, or are those what you are referring to? I'm really confused by your statement.

kefka 14y ago
You can thank Rush Limbaugh politik for the "government death panels" garbage.
danielweber 14y ago
Hardly anyone is really approving or denying care based on cost-effectiveness. Which is why costs are out of control.

Shivetya 14y ago

The same could be said about college education. The increased availability in grants and loans has exploded education costs. With regards to medical care, far too many types of care are required to be carried by insurance companies who then pass the costs to their customers. Hospitals do not get full reimbursement for all types of patients, specifically government covered patients, so they pass the costs along to groups who can and do pay. Those being individuals and insurance companies, the later nothing more than a collection of individuals.

ctdonath 14y ago
The same could be said about home mortgages. The increased availability in loans has exploded housing costs. ...and we've seen where that went. The problem in all of these is the promise of a must-have little more if only repayment can be extended and others can be persuaded to contribute. What were luxuries become perceived as necessities. (And yes, I've said "no" to hospital tests, mortgage offers, and tuition financial aid.)

cdavid 14y ago

There is an easy way to refute your argument: what you're saying about 'socialization' also happened in most developed countries. At least in France, so-called 'social security' (which is about mandatory health insurance, and not pension as in the US) came in place just after WW 2, and without the US insanity in price inflation. Comparing with 1900 prices is a bit of nonsense given that there was little surgery at that time as well. Also, there are quite a few things that are inherently expensive: diabete, dialysis, cancer (things that would have got you killed in the 1900). I don't know about the US, but dialysis costs around 100-200k euros / year, diabete around 100 k euros / year in France. I would be curious to know how much cancer + dialysis + diabete contribute to health costs. I am ready to bet it is not in the low 2 digits.

noahc 14y ago
He is comparing prices by putting it into 2013 dollars. It has nothing to do with availability. You can take a car, computer, or any other good that has a price and easily convert it back to 1865 or 1900 or whatever dollars and this helps understand the cost of things relative to today. This makes your two middle paragraphs irrelevant. If you want to just look at cancer here is a place to start: http://www.cancer.org/cancer/cancerbasics/economic-impact-of-cancer http://www.cancer.org/cancer/cancerbasics/economic-impact-of... Much of the health care costs in America are generated by major medical issues. I've recently seen a number released by my insurance provider that said that 7% of those who use them for insurance generate 90% of the claims by dollar amount. The thing is, no one knows when they will be in the 7%.
- jbooth 14y ago
  Comparing medicine in 1900 and 1970 is just silly, full stop. Regarding everything about 'government' vs 'free market'.. do you feel like you're in a free market healthcare system in America? I sure don't. I feel like I have no idea what's going on with medicine and the only difference between my insurance bureaucracy and a government bureaucracy is that the insurance company is actively trying to fuck me rather than just passively doing it. I'm not saying big government bureaucracies are great -- they're terrible. Yet every other industrialized country's disaster of a bureaucracy is miles better than our private-public system. They have the same cost issues and also have cost inflation, but it's less inflation on a lower cost.

adjwilli 14y ago

You're definition of socialism is a little funny. There's a big difference between socialized medicine as a single-payer system where the government has an incentive to keep costs low and a somewhat-centralized and somewhat-regulated system "socialized" system where the government has no such incentive.

larrywright 14y ago

One of the ideas I've heard discussed is that the only way we will ever get the cost of health care down is if consumers are back in the drivers seat with how the dollars are spent. Right now it's disconnected. I go in to have something done, the doctor bills my insurance company, and I really don't know (or care) how much it costs, unless I happen to look at the insurance paperwork. The same goes for pharmaceuticals. Which pharmacy in your town has the lowest price on that antibiotic that was just prescribed for your son's ear infection? Who cares, right? It's a $15 co-pay no matter where you go, so you go wherever is most convenient. One solution that's been proposed is the increased use of HSAs + high deductible policies. That way people are paying their expenses out of pocket (for the day-to-day things at least), and are therefore more likely to shop around. I'm not hear to argue the merits of that, but it definitely seems like an approach that might work. I fail to see how anything that takes control out of the hand of the individual will fix this problem (short of regulating the prices, which I wouldn't be a fan of).

nhashem 14y ago
Unfortunately healthcare is not a market you often willingly participate in. Some health needs can be anticipated, and doing more to encourage consumer empowerment would definitely lower prices. Think about cosmetic surgery or LASIK. Every participant in that market is voluntary, so all the providers are motivated to do it cheaper and better. But when you have a major health crisis, your "empowerment" is just fundamentally limited. If you get into an accident with a loved one and they're unconscious, you're not doing to be in a position to decide whether you should go to the hospital 1 mile away, that may be X% more expensive than the one 5 miles away. Your ability to price discriminate is also fundamentally limited by your own knowledge of medicine. If you have a tumor and one doctor suggests taking medicine A which costs $50,000, and medicine B which costs $5,000, is A better than B? Is it 1000% better? If it's only 2% better, unlike any other consumer product, are you trying to optimize for "value" or "not actually dying"? There's definitely things we can do in terms of government policy to encourage more customer empowerment to bring down costs. But ultimately you have a market with unvoluntary participation and opaque pricing, which means Adam Smith can't really do his thing.
- 14y ago

smutticus 14y ago

>Whenever someone talks about the need for socialized medicine because "otherwise people would go bankrupt", remember it is the socialization of medicine that caused costs to rise to the point where people would go bankrupt. Because there are thousands of Canadians every year that go bankrupt because of health care costs. Your argument doesn't even begin to make sense.

skylan_q 14y ago
Because there are thousands of Canadians every year that go bankrupt because of health care costs. Actually, there are. They go the US to get care that's not offered in Canada. The care here is about as good as former soviet bloc countries. If there was a chance that an illness such as cancer could kill me, I'd get out of Canada in a heartbeat and embrace poverty if it meant keeping my life.
- rubyrescue 14y ago
  It's just not true that large numbers of Canadians go to the US for healthcare. You need to supply evidence of this. The numbers are vanishingly small.
  - danielweber 14y ago
    The numbers are vanishingly small Well, compared to what? The odds of having your private health insurance rescinded in the US is also very small -- but it's quite likely among people who suddenly rack up big health care costs. Similarly, if you compare Canada-to-US medical tourists to the Canadian population, I'm sure it's amazingly tiny. But how does it compare to the people of means who have a medical procedure denied by the Canadian system? (I don't fault Canada for denying care in some cases. Sometimes it's not worth it. But the Canadian system would be better if people were still allowed to top off the denied care with their own dollars and didn't need to leave the country to get it.)
    - bjelkeman-again 14y ago

cpleppert 14y ago

>>I with Obamacare this has dramatically ramped up and now there are boards to decide who gets what care based on cost measures, rather than medical need. It would help if actually knew what you were talking about. There are no "boards." There is the IPAB which makes cuts to medicare if congress can't. I'm sure you are in favor of reducing this "socialized medicine" so your stated basis of opposition is nonsensical. Maybe you would prefer instead a "board" made up of people elected across the US that will make cuts to medicare instead. It's called Congress and maybe you should learn about it as I hear it has existed for a long time. >>Command economies don't work, and the change in health care over the last century has been a centralization in control. >>Whenever someone talks about the need for socialized medicine because "otherwise people would go bankrupt", remember it is the socialization of medicine that caused costs to rise to the point where people would go bankrupt. Milton Friedman also said that single payer system have many advantages over the system we have right now.[1] It isn't centralization of control its a broken system that has never had any reform whatsoever. [1] http://www.hoover.org/publications/hoover-digest/article/7298 http://www.hoover.org/publications/hoover-digest/article/729...