Thursday, February 10, 2011

The American dream is the root cause of expensive healthcare

So here is my thesis - I think this country is just too big. So we have all these small towns each with their own school, fire station, police station and hospital. This is just too expensive to maintain. Specifically healthcare, is really a luxury item. I was talking to this doctor friend of mine and asked him why medical services do not follow the law of economics. If a certain good becomes expensive you should be able to flood the market with supply and bring down the price of the good. So for instance, if doctors are expensive, why not import cheaper doctors from overseas and bring down the cost ? Paradoxically, for medical providers, the cost goes up when you increase the number of providers. The private healthcare system we have in place is based on capitation. This means that regardless of whether you fall sick or not, each doctor gets paid on capitation. They get paid per number of members, regardless of whether their services are used. So the trick to controlling costs is to reduce the number of providers. It is not possible to maintain a system of having millions of small towns each of them with thousands of podiatrisits, Physical therapists, all kinds of specialists and hospitals without causing a huge cost burden. So comparing the US healthcare system to any geographically smaller country's system is meaningless. We need to understand that maintaining the suburban life along with the availability of all these medical services, is a luxury. We can either suck it up, and pay for medicare, as it is a necessary item to maintian our standard of living. In that case, stop whining about the costs, and especially stop bitching about Obama's public healthcare plan. You do not want to create a system of haves and have-nots in healthcare. That is a recipe for social unrest. Otherwise, give up the current system and go to a National scheme that has fewer specialists, and other high-end doctors. This is what works for Canada, and other such systems. We cannot have it both ways.

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