Rising health care costs - don't blame smokers, blame technology and insurance expansion

[The Straight Story]

Smoking and Obesity have been with us many years, but costs did not start to rise like crazy until the last 20 years or so. And two reasons given? Technology and the expansion of insurance (see further below):

22% of Americans were estimated to be smokers in 2003, a .1% drop over previous years.

Yet insurance rates continue to rise.

Study says health premiums rise faster than wages—
http://www.wmdt.com/wires/displaystory.asp?id=56331776

Californians' health insurance premiums rise 8.7% in '06
http://www.mercurynews.com/mld/mercurynews/news/local/16126223.htm


Third-Party Payment. Howard Gleckman had an article in Business Week in which he
reveals the real driver behind escalating health care costs. He says, “Economists have
long believed that technology is the main reason that health care costs are rising so
much,” – responsible for 65% of the growth, “according to some studies.”

But now, “a young economics professor at MIT is challenging the conventional wisdom.
Amy N. Finkelstein has concluded that the real culprit for the rapidly rising cost of health
care is the massive expansion of medical insurance over the past 40 years.” Mr.
Gleckman adds, “Sure, new technologies play a role, but doctors, hospitals, and
consumers adopt them so freely largely because insurance foots the bill.”

The article quotes AEI’s Joe Antos as saying, “This is pathbreaking work,” and MIT’s
Jonathan Gruber says, “This really changes the whole landscape in the way we think
about health economics.” The article goes on to say this work, “confirms a theory first
advanced almost 30 years ago by Harvard economist Martin Feldstein (but) he didn’t
have detailed health- cost data to prove his case.”

Feldstein’s idea seemed to be put to rest after the completion of the massive Rand
Health Insurance Experiment, beginning in 1987, which found that insurance was
responsible for only 10% of increased costs, and technology for over half.
In the paper itself, “The Aggregate Effects of Health Insurance – Evidence from the
Introduction of Medicare,” Ms. Finkelstein explains the disparity by saying the Rand
experiment was a “partial equilibrium” study. That is, it involved a relatively small
number of people, so providers (mostly hospitals) did not see enough of a critical mass
to justify major investments or changes in operations. But the introduction of Medicare
represented a “general equilibrium” change that completely affected the entire market
for medical services. She says, “market-wide changes in health insurance can
fundamentally alter the nature and character of medical practice in ways that small-scale changes cannot.”

health.nase.org/pdf/CHCC%20article-%20Causes%20of%20Health%20Care%20Costs.pdf


Now, I am not meaning to focus only on smoking here, the new arguments are that obesity, eating X instead of Y, etc is making your and my costs rise - so the wisdom of some is to regulate your life because it is costing me more.

Aging population, larger population, less people with health care to spread the costs out, etc all contribute a lot to costs.

So next time someone says 'Hey the Scott's company should be able to regulate whether or not you smoke at home because it costs me and them more' ask em why our rates keep going up faster than our wages, and faster then smokers are being generated.

[Mythsaje]

1. The current insurance industry is a scam...

We need to move toward a no-profit healthcare system.

[msongs]

2. if nobody smoked, there would be ZERO cost for related med services. nt

[TahitiNut]

3. Government would lose $24,386,718,693 annually in taxes, too.

:shrug:

Even beyond that, California alone has collected $ 5,186,786,778.00 through June 2005 from the Master Settlement Agreement with the tobacco companies.