Selected in the top 100 Economics Sites

Follow me on Twitter

Tuesday, February 23, 2010

This is why (among other reasons) promising to cap health care expenditures at 20% of GDP is fantasy.

The great Dr. Rothman alerted me regarding the hypothesis described below in the NY Times link regarding health care expenditures. If the "cost disease" is so, and I believe it is, then any future cost savings, it seems to me, will have to come from demand-side factors, namely, making healthy lifestyle choices and outcomes economically desirable with real monetary incentives that persuade peeps to stop cramming so much crap in their pie hole. All of the proposed health care legislation from the House does nothing but have the government pay for continued poor choices. Anyway one should not promise things they can not possibly deliver. Thus I have given up all hope to join the Chippendale dancers. But we should not promise to cap the percentage health care is of GDP if it suffers from the cost disease. Here's why...


Jeffrey said...

Aside from the obvious ways to fix healthcare like getting insurance companies out from in between doctors and patients by taxing all income the same (lower taxes but tax it all the same) and eliminating the prohibition of competition across state lines, I have another proposal. If everyone really wants healthcare paid for, then lets do that! Give everyone a debit card with $5000 on it that can only be spent at the hospital, the doctor's or dentist's office, or on health insurance. If at the end of the year the $5000 hasn't all been spent, then the individual can get the rest in cash. Allow cards to be donated and of course the cash could be too. This way if someone with high expenses gets the benefit of a donated card they know exactly who paid for it. This is roughly a $1.6 trillion plan but if we eliminated a few of the less successful social programs we could pay for it.

Randall Parker said...

We tried this with debit cards after hurricane Katrina remember? Lap dances for all was the result. If you compelled people to at least buy catastrophic insurance and then use the rest for an incentive for healthy outcomes/lifestyle there is something to this proposal.