The Ayatollah of Health Care

I know health care is a hideously complicated subject, and it is more than likely I am talking doggy doodoo, but here is what I think I know.

There was never any chance, whatever, that Obamacare was going to reduce costs, and everybody knew it at the time.  Except, possibly, Barack, who does not care about cost.  Cost was never an issue for him.

Barack wants to lead a revolution, nationalized health care is a means to an end, and he channels the late Ruhollah Khomeini, master of the 1979 Muslim revolution in Iran.  It was once explained to Khomeini that certain of his plans would have adverse economic consequences, to which he famously replied, "This revolution is not about the price of watermelon."  As with Khomeini, so with Barack.

Oh, the old American health care system certainly could have benefited with some tweaking, here and there.  Maybe a lot of tweaking.  But nothing more than tweaking.  Certainly, there were some inefficiencies and some fraud, but there never were massive inefficiencies, or massive frauds, and rising costs were not due to the rising costs of established medicines and procedures.

It is not as if we are paying more for aspirin, for example.  To the contrary, we are paying much less.  Consider aspirin prices in Morris County, NJ.  In 1932, aspirin cost 1¢ per pill.  Prices varied over time, and in 2012 aspirin cost 3¢ per pill.  Nominal prices.  In real dollars (2011), aspirin cost 16¢ per pill in 1932 and just under 6¢ per pill in 2012.  A 62.5% drop in the cost of aspirin in the 80 yr span.

And that's how it is with all old, established medicines.  The "problem", especially over the last 30 years or so, is that pharmaceutical companies have developed a wide range of miracle drugs, real life savers.  It may well be true that Big Pharma extorts obscene profits, but it is also true that it can cost half a billion dollars to bring a new drug to market.  There is no way around the evident fact that, these days, we are buying aspirin and a whole lot of, very expensive, new life saving medications.  In other words, we are buying more health care and we have to pay for it.

The same with medical procedures.  Before 1967, nobody was buying a heart transplant because no such thing existed.  The first heart was transplanted in December, 1967, it then took a while for the expertise to spread, and these days there are about 2,000 transplants a year, in the U.S. alone.  Should I mention this is an expensive procedure?  Well, the more heart transplants (and other daring, new, and very expensive procedures) we buy, the more we have to pay.  It's really that simple.

There is also a well known allocation problem in health care.  It is a strange but true fact that fully 30% of all Medicare expenditures are made in the last year of life.  As the population ages, this will get worse.  Does this enormous expense really make sense?  Almost certainly not.  Now, you explain to your neighbor that he cannot spend money on his beloved, dying mother.  See the problem?  The problem is that we have to pay for what we want.

In other words, unless Obama was going to withhold new medicines, or withhold new procedures, or withhold some significant amount of care from the elderly, there was no chance he was going to reduce costs.  To the contrary, as he put more people on the health insurance rolls, costs had to go up.

And so they have.