What’s wrong with this picture?
Maybe that healthcare costs are eating us alive, and ever more jobs in healthcare is a symptom?
A growing healthcare sector is not per se bad. Once, we needed most people employed in farming just to feed us. Improved agricultural productivity freed them to work instead in factories, producing other goods, making us richer. Then industrial productivity gains freed many of those people to work in services, making us richer still. One such service is healthcare, which improves our lives, so if we choose to spend more on that, fine.
But – there are some big buts. First, regarding productivity, the health sector’s record is atrocious. Whereas greater productivity enabled us to shift manpower out of agriculture, then manufacturing, and now even many non-healthcare services, in contrast healthcare employment continues to rise because healthcare is a productivity sinkhole.
Second, my phrase “choose to spend” is misapplied when it comes to most healthcare. Instead healthcare spending is an out-of-control juggernaut carrying us along, with a high proportion going to proliferating tests and procedures because providers get paid not for results but for tests and procedures, useful or not; and to end-of-life care (or torture?) we can’t seem able to limit, even though it doesn’t add real value.
Steve Brill had a much-noticed Time magazine piece recently, examining what determines healthcare pricing. The answer, too often: whatever providers think they can get away with. And that tends to be a lot, because actual recipients of these services aren’t normally who pays. Often government pays, or else insurance. This is a big reason for poor healthcare productivity; there’s no incentive for it. And so, again, it’s not that we, as a society, are choosing to spend ever more on healthcare.
In fact, we have gotten into a bizarre mindset that we shouldn’t have to pay for it at all – that it should all be “covered” (so someone else pays). Worse yet, that “someone else” is not paying for it either, because government is borrowing a big chunk of the money (since we’re willing to pay neither our medical bills nor the taxes to cover them). This will blow up in our faces. Another reason why the seemingly cheery monthly healthcare sector jobs report should give us pause.
I’ve said this before: the root problem is that healthcare doesn’t work like a market, where customers shop for services. Lefties like to mock free-marketeers as supposedly believing the market solves everything. Well, in healthcare we see how the lack of a market screws up everything. A market wouldn’t solve it all, but sure would solve a lot. The tragedy of Obama’s “Affordable Care Act” is its doing nothing about this fundamental problem – so it certainly won’t make healthcare “affordable” for us as a nation.
The Economist recently reported on a new phenomenon in Britain: private for-profit walk-in health clinics providing basic services like gynecology, dentistry, pediatrics, etc., with the (non-reimbursable) charges clearly advertised upfront. Originally started to serve Polish immigrants particularly, now they’re expanding as many other customers flock to them,
Why would they? After all, Brits famously get treatment free through their sacralized National Health Service. But the answer is obvious. People must prefer the expeditious, personalized, non-bureaucratized care they get by paying at these clinics. It really tells us something when you can actually make money competing against a free service!
I was glad to read this, because I’ve often thought this very kind of thing would be great for America – clinics in shopping malls where you can just walk in and get basic care, for a reasonable fee, bypassing the whole insurance and governmental quagmire. We do have some like this, but not enough. If it became widespread, we’d be a lot more healthy – and wealthy – and wise.