by Marya Zilberberg, MD, MPH
The costs of healthcare have been rising exponentially, but people’s incomes have not. Despite the biggest economic expansion over the last 50 years, and despite astronomic rise in our productivity, the real wages for the bottom 80% of all earners have not increased one iota since 1975. This means that, while the costs for all products and services have grown at the pace of inflation or more rapidly (as in the case of healthcare), our buying power has remained stagnant.
What is the result of this disparity? Well, one result was the implosion of the mortgage-backed derivatives market. Some economists posit that the productivity-wages gap allowed corporations to stockpile enormous wealth. This wealth, in turn, was translated by the Wall Street Wizards into the obscure mortgage-backed derivatives Ponzi scheme, where mortgage loans lent to people with no way to pay them back were being used as collateral for these assets. The math is simple: productivity was up, wages stagnant, consumerism rampant, cash abundant — bingo! The nation lived beyond its means for over a decade, imaginary wealth made and lost in a blink of an eye.
What does any of this have to do with healthcare? The connection is pretty obvious to me: rapidly escalating costs in the face of stagnant wages and diminished capital. Without any changes in the trajectory of the healthcare costs even more people will be unable to afford health coverage. This simple arithmetic should not be so difficult to grasp. Closer to home, anyone who now says “Not my problem, I can still get ‘everything’”, prepare for it to become your problem. Who will pay for “everything”?
Without the needed cost containment, the faces of those left behind by our cruelly inequitable system will be getting more and more familiar.
Marya Zilberberg is founder and CEO of EviMed Research Group and blogs at Healthcare, etc.
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{ 5 comments }
And where have Price Controls worked?
Senator Schumer, years ago, was so upset about the price of cereal, he wanted the govt to Control the cereal costs. Fortunately, he got nowhere – and the markets were allowed to function. Is anyone today, clamoring about the price of cereal?
If any entity is responsible for distorting the costs of healthcare, one would have to point to Federal & State govts. They prevent interstate competiton, they impose all kinds of mandates, they bend to all sorts of political pressures, and mess with incentives through a maize of ridiculous taxes and deductions – which again are simply the manifestations of political influence.
The key to healthcare is to get the govt out of the way and let markets work. We can help those who cannot afford healthcare – and that is where it should end.
If the author is suggesting that we can control costs via governmental actions, she is stating that political influence will control healthcare costs. Does that make sense to anyone?
Fine. How about controlling the cost needed to run a medical practice?
Every time a new regulation is imposed on a medical practice, the cost of doing business gets a little higher.
Ninguem – you are right, of course.
Regulations, mandates, SGRs, etc — all these are the excrement of the sausage making beast known as Congress.
Costs will be controlled by free market forces when we all pay cash for our care, out of our health care savings accounts. The government gave us good IRA’s so it should be able to give us good HSA’s. And it will have to get its hands off all the rest of it.
WHAT THE ???
” .. Well, one result was the implosion of the mortgage-backed derivatives market. Some economists posit that the productivity-wages gap allowed corporations to stockpile enormous wealth .. ”
Why .. of course. It had nothing to do with all the burned-out politicians at Fannie/Freddie, demands that marginal houses be financed, refusal by the likes of Barney Frank to face the growing leverage problem reported by the “Wall Street Journal” as early as 1999, and the demands of both parties for eternal, high-paying employment.
Just because someone has an MD does not make them an expert in operations and finance.
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