Wednesday, February 21, 2007

The soaring cost of private healthcare

Healthcare costs in America are rising, according to a Fox News report headed Health Costs Soon May Be 1/5 of Individuals' Expenses. A forthcoming publication from the Centers for Medicare and Medicaid Services states this will soon account for one fifth of all consumer spending.

At first glance, that sound terrible - the cost of a single commodity - health care - is going up. Not so:

Consumers are spending more on the latest treatments, despite their rising costs. For example, federal officials cite a significant increase in the use of imaging to detect blockages or other diseases.
So it's not a single commodity, it's lots of different treatments, the total number of which is increasing. If the cost of imaging is rising, that makes it like, well, pretty much everything else. We don't have negative inflation. But we do have stupidly negative headlines. The report continues:
Income will also play a significant role in the greater health spending. Historically, when income rises 1 percent, health expenditures go up about 1.5 percent, officials said.

"What that indicates is a desire to purchase good health," said John Poisal, deputy director of the government's National Health Statistics Group.

Dr. Mark McClellan, an analyst who used to oversee the Medicare and Medicaid programs, said greater spending on health care has its benefits. People are not having heart attacks because they're taking medicine that lowers their blood pressure and cholesterol. They're surviving cancer because of more frequent exams and new treatments.

"Greater health care spending is having a tremendous impact on the length and quality of people's lives," he said.
Worth the money, then.

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