Judge Richard Posner, co-blogger of economist Gary Becker, posted an interesting piece on the American healthcare system recently:
Posner’s perspective is shaped by his conservative ’Chicago School’ background, but unlike the noise emanating from the soundbite punditocracy and presidential campaigns, his post has a refreshing honesty that comes from the ability to openly speculate. He brings up some alternative viewpoints that are worthy of exploration and too often ignored in popular coverage of healthcare issues. Among Posner’s objections, he argues that rising healthcare costs should not be assumed, without deeper investigation, to be a sign of trouble; that longevity is not necessarily the proper measure of health care quality; and that the proper focus for any policy debate is on opportunity costs, i.e., assessing the next best use of available resources.
On the first objection, he writes:
It is true that health costs are rising faster than the inflation rate. But rising costs, even of “essential” products and services, such as food, health care, and national defense, do not necessarily demonstrate the existence of a problem. Costs may be rising because quality is rising, which is true of health care (new and better therapies and diagnostic tools), or because demand is rising (and average cost is not flat or declining), which is also true; as people live longer, their demand for health care rises because more health care is required to keep people alive and healthy the older they are.
On the second:
It is also true that Americans spend much more on health care on average than the people in other wealthy countries do, without greater longevity to show for these expenditures. But health care does much more than extend life; it alleviates pain, discomfort, disfigurement, limited mobility, visual and hearing impairments, and mental suffering, and it is not clear that foreign health systems, which also involve considerable costs in queuing, do these things as well.
He concludes with his argument about opportunity costs, which in our view is one of the most valuable (and also most underappreciated and underutilized) concepts that the field of economics has contributed to social science and to public policy debates:
The question should be not whether the percentage of spending that goes to health is increasing but whether there are better things to spend some of the $2 trillion on than health care. Notice that liberals’ concern with the increasing percentage of expenditures on health parallels conservatives’ concern with the increasing percentage of GDP that is spent on government services. In both cases the proper concern is not the percentage of overall spending that goes for a particular class of services but whether there are better uses for some of the money being spent for those services. [emphasis added]