Scarcity and Rationing are like gravity

They exist, everywhere and always.  You can no more run from gravity then you can from scarcity (unless of course you are a nobel laureate who writes for the NY times) and its consequences.

Here’s a little bit of info one can all too easily find with just a little googling (and, hey, it’s a .gov site, so it has to be true!!):

  • Five percent of the population accounts for almost half (49 percent) of total health care expenses.
  • The 15 most expensive health conditions account for 44 percent of total health care expenses.
  • Patients with multiple chronic conditions cost up to seven times as much as patients with only one chronic condition.

“Half of the population spends little or nothing on health care, while 5 percent of the population spends almost half of the total amount.”

“The elderly (age 65 and over) made up around 13 percent of the U.S. population in 2002, but they consumed 36 percent of total U.S. personal health care expenses.”

“One study found that a small number of conditions accounted for most of the growth in total health care spending between 1987 and 2000—with the top five medical conditions (heart disease, pulmonary disorders, mental disorders, cancer, and trauma) accounting for 31 percent.”

“The rise in the number of people being treated for expensive conditions has had an impact on the growth in private insurance spending similar to that on overall health care spending. The rise in the number of people being treated, rather than the rise in spending per treated case, was the most important determinant of the growth in private insurance spending between 1987 and 2002, according to a recent study.”

“In 2001, 5 percent of Medicare fee-for-service beneficiaries accounted for 43 percent of total spending, with 25 percent accounting for 85 percent of all spending. Chronic conditions were closely linked to high expenditure levels: more than 75 percent of high-cost beneficiaries (the 25 percent of Medicare beneficiaries with the highest costs) had one or more of seven major chronic conditions.”

And here’s the “bombshell”:

Conclusion

“Analyses of health care spending patterns shed important light on how best to focus efforts to help restrain rising health care costs. Recognition that a relatively small group of individuals account for a large fraction of spending in Medicare, Medicaid, private plans, and the population as a whole serves to inform more focused cost-containment strategies. The concentration of health care expenses also has implications for the effective design of consumer directed health plans.” [yes, even in private plans]

It is as obvious as the nose on one’s face: if you “insure” more, and promise to give health care to more, you necessarily HAVE to take it away from others.  That’s a fact, undeniable, irrefutable.  It’s econ 101.

Now, in a free market, nobody takes from anyone, that can only occur through force at the hands of the state.  And make no mistake about it, if a reform bill passes, that will assuredly happen.

The other undeniable fact is that any savings or spending controls will be default come at the expense of the small percentage that consumes the vast majority of health care resources.

People have caught on the fact that they will be forced to pay for many people and much health care that they themselves are not going to consume.  In doing so, they will pay more for their own health care, and receive far less, both in quantity and quality.

Something else should be obvious, or one would think.  The massive increase in spending in those few select areas has driven health care resources in that direction, at the cost of care in other areas.  What has actually been driving up the cost (used politically here!!) of treatments for the young, has specifically been the increase in consumption by the elderly.

In an odd sense, this is exactly how markets work.  Greater demand in one area forces prices upwards which drives producers in that direction.  Econ 101.

Scarcity and rationing.  Supply and Demand.  As Homer Simpson says, “Doh!!”

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