Health Care Costs (3)

So to continue:  The way I see Health Care has seen a bubble in the US that has grown huge over a very extended period.  Most have called this ‘bubble’ Health Care Cost inflation.  But a bubble over any period between inception and bursting can be seen as (mistaken for) inflation. Is the HCC “Bubble” going to burst or do we have to just accept this as inflation.  I think that too many people want this to be Inflation, not a bubble. And I do not want a ‘bust’ but I do think we need to get on the off ramp, to a price plateau at the very least.

I’ve discussed:

  1. The pernicious effect of opaque pricing
  2. A spike in Cost/Value in capital investment (buildings and equipment.) 
  3. The Gov’t affected floor to pricing
  4. The profit motive effect of increasing costs in the system

Now I’ll add some more:

  • Direct sales…more and more selling of this that or the other service, drug, wonder cure, to the general populace who have no real way of parsing the useful from the useless or even harmful.  And then the sales guys got to congress and punditry and started demonizing those who tried to point out that the common man was not really in a position to make medical decisions. (Not that the god-doctors should be put in charge, much as many of them believe that they should be because they are smarter than anyone else.)
  • Litigation, because medical outcomes are impossible to ensure, and there has been a Lawyer bubble going on for many decades, doctors got sued more and more frequently, malpractice insurance costs went up and so another cost was added into the equation (and for a long time absorbed because the system hid the costs)
  • Specialization, again 9% of 10,000 is a lot more money than 10% of 5,000, but 15% of 10,000 is even more.  Specialist charge at a higher rate because they are specialists and have special skills, that are needed by special cases…..they don’t have to see as many patients, get to go to conferences and consult with other wizards and look down their noses at the rest of the world, even at other doctors.  What’s not to like? Just one more cost adsorbed in the system.
  • Administrative fief building, its a fact of nature, or rather an emergent property of human society:  administrations grows more complex and adsorbs more resources as time moves on, as the top level administrators increase the number of ‘direct reports’ then create hierarchies so they don’t have to talk to as many people so they can be ‘more efficient.’  Administrators (Bureaucrats) are extremely good at capturing the system and turning it to serve them versus the customer the system is supposed to serve.

So what is the solution.  Well I think you can see the one I would focus on first but that will be a discussion for another day.

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