Quote of the day - Health care costs

Well, not quite of today.  I'm just trying to make a dent in my backlog of notes.

"How does Medicaid achieve these lower costs? Partly by having much lower administrative costs than private insurers. It’s always worth remembering that when it comes to health care, it’s the private sector, not government programs, that suffers from stifling, costly bureaucracy."
- "Medicaid on the ballot", Paul Krugman, New York Times, 2012-10-29.

For some counter arguments, see "Krugman Flunks Health Econ 101", John Goodman, National Center for Policy Analysis, 2012-11-05 http://healthblog.ncpa.org/krugman-flunks-health-econ-101/

One thing critics ignore about private sector versus government programs is that government doesn't have CEOs taking home eight-figure salaries and other perks.

Don't worry, insurance will pay for it!

How often have you heard this remark?  This leads many people to see a doctor for even small problems that may go away on their own.  This also leads many providers to not be cost conscious of the work they do, at least not as cost conscious if the patient was paying out of pocket.

People rarely ask the follow-up question: who pays for insurance?  The answer is that we all do, directly or indirectly.  If we pay the premiums directly, it comes out of our pockets.  If our employer pays the premiums, its money that could go into our pocket instead or its money that has to come from the price of the goods or services sold.  If the government pays, it comes out of our taxes.

Since there are so many payers of health care, there are no real controls on the costs.  So, no controls, no limit on costs.  Up and up they go.

For some more thoughts on this, see "What Happened to U.S. Health Care Costs?" Megan McArdle, The Atlantic, 2010-12-01.

She has an interesting graph showing how U.S. health care costs diverged dramatically from the costs in other countries.