Health Care Is Already Rationed

The New York Time's economics blog has a really great article about the fact that health care (and everything else) is already rationed in the U.S. and scare tactics coming our way on this issue are just so much bluster and obfuscation.

The rapid rise in medical costs has put many employers in a tough spot. They have had to pay much higher insurance premiums, which have increased their labor costs. To make up for these increases, many have given meager pay raises.

This tradeoff is often explicit during contract negotiations between a company and a labor union. For nonunionized workers, the tradeoff tends to be invisible. It happens behind closed doors in the human resources department. But it still happens.

Research by Katherine Baicker and Amitabh Chandra of Harvard has found that, on average, a 10 percent increase in health premiums leads to a 2.3 percent decline in inflation-adjusted pay. Victor Fuchs, a Stanford economist, and Ezekiel Emanuel, an oncologist now in the Obama administration, published an article in The Journal of the American Medical Association last year that nicely captured the tradeoff. When health costs have grown fastest over the last two decades, they wrote, wages have grown slowest, and vice versa.

So when middle-class families complain about being stretched thin, they’re really complaining about rationing. Our expensive, inefficient health care system is eating up money that could otherwise pay for a mortgage, a car, a vacation or college tuition. - The New York Times

Fixing our health care crisis, from costs to quality to coverage, is a catalyst for fixing everything else that is broken with our economy and society. Removing that burden from us as individuals and companies will yield many multiples of benefits down the road.

Oh, and a real Public Option is key. Having a public plan available for people to choose will force private plans to really compete on the basis of quality and costs. Don't believe me? Look at the public option in other walks of life (think schools), the reason that private schools are "better" is because everyone has the option of going "public" and will only pay to go private if it offers something better. That is what a public healthcare plan option is about, creating the basline minimum. Right now the baseline minimum is non insurance/emergency room care. A Public Option is about changing that, and saving you and me the costs of subsidized acute ER care for conditions that should be managed preventatively or pro-actively.

At any rate, go read the New York Times article, it's chock full of evidence, links and the case for real reform.