Monday, February 15, 2010

As Congress sleeps health insurance profits skyrocket –coverage plummets - Rick Ungar - The Policy Page - True/Slant

Rick Ungar and I are having a good dialog in the comments on the relative merits of free market versus governmental solutions to America's health care challenges.

As Congress sleeps health insurance profits skyrocket –coverage plummets - Rick Ungar - The Policy Page - True/Slant

2 comments:

Health Insurance Manchester said...

According to the market-research group Datamonitor, medical inflation is the reason for yearly increases of 8% in health insurance premiums. The steady progress in the development of new drugs, therapies and equipment used to diagnose medical conditions and the resulting costs are an obvious reason for this. This is understandable and everyone wants the latest in diagnostics and treatments. Equipment becomes obsolete with time and invariably the very words newer and improved mean a rise in cost.

Bill Starr said...

Thanks for your comment, HIM.

I agree that medical costs are the driver behind increased insurance premiums.

However, we disagree on the reasons behind the rise in medical costs. I attribute a large amount of it to the loss of a direct financial link between the provider and the consumer. Absent such a link, the consumer has the illusion of a lower-cost, less-scarce resource than is actually the case, and therefore, tends to overconsume, leading to cost increases as a form of rationing.

In other arenas, innovation and competition generally tend to drive availability and quality up while driving costs down. Look at computers, for example.

In medical care, at least in the U.S., one reason this does not occur so much is due to government over-regulation of the industry.

The U.S. Food & Drug Administration (FDA), for example, drives delayed introduction of innovative new products and drives up the costs of those which are eventually introduced.

http://mises.org/story/1805