Healthcare

Long before the words “universal healthcare” were uttered in congress to be seriously deliberated, the United States ha passed another program that was similar to, but just as altruistic in intention as its more contemporary relative. Medicare was to the 60s, what UH is in present times. It was held up as the political golden child of a generation of legislation aimed at “eliminating racial discrimination and ending poverty”.

Yet, more than half-a-century in the future, it has managed to become a monstrosity that has not only failed to achieve what it sought out to accomplish but has now made the things worse for Americans (and most certainly the world with respect to some theories of capital) in an age where it should be more affordable than ever thanks largely to the innumerable technological advancements and their applications through the years since.

Somehow, in an age where we can literally see and model the inside of another individuals body without making a single incision thus avoiding the overall risk of using surgery as a diagnostic tool and subsequently malpractice suits, the price of medicine has skyrocketed to the point that at any given time the average American family cannot afford to pay for a simple doctors visit. However, for some reason (which I will go into), politicians cannot bring themselves to ask “why?”

Figure 1: An Indexed Comparison of Health Care Inflation and Consumer Price Index in US from 1935 to 2009 (Source: US Census 2013

Figure one shows us a comparison of the price of health care since the mid 1930s against the average rate of inflation as measured by using the consumer price index. While largely matching the rate of inflation from 1930 and through out much of 1960, we can see a growing distance between the two from the latter half of the 60s on. It is no coincidence and by no means cherry-picking to assume then that Johnson’s “great society” can be held responsible. After all, who would deny that one of the greatest interventions in the economy and business of financing healthcare had widespread economic consequences?

Thus, after taking into account what Medicaid and Medicare did, it is disgustingly obvious what has happened economically: an decrease in the overall cost of healthcare followed by the subsequent demand for it naturally leads to a shortage and thus an increased price of the good in question (which in this case is healthcare).

Medicare was and continues to this day to be defined as such:

Medicare and Medicaid were enacted as Title XVIII and Title XIX of the Social Security Act, providing hospital, post-hospital extended care, and home health coverage to almost all Americans aged 65 or older (e.g., those receiving retirement benefits from Social Security or the Railroad Retirement Board), and providing states with the option of receiving federal funding for providing health care services to low income children, their caretaker relatives, the blind, and individuals with disabilities. At the time, seniors were the population group most likely to be living in poverty; about half had health insurance coverage
— “Medicare & Medicaid Milestones” from Centers for Medicare & Medicaid Services

However if the aim was to provide impoverished individuals with more affordable healthcare, why has the result been a drastic increase in price for everyone? While one can attempt to sugar coat the situation with completely irrelevant arguments like those that the Kaiser Foundation make to put Medicare in a more favorable light, one cannot deny that the actual price continues to go up as a result of artificially increased demand. To speak of it in terms of the efficacy of a legislation is to completely ignore the actual problem at hand. It is to argue that we have solved hunger because we implemented food stamps, or in terms that supporters of programs like UH can understand — just because we’ve won the battle it doesn’t mean we’ve won the war.

On second thought, war is more efficient in that some battles do in fact win the war. In the Colosseum that is health care, better performances lead to a higher demand, a higher price, and more blood for everyone.

For the more serious scholar out there, it may be interesting to conduct a weighted regression study between demand for both programs and the subsequent cost for the following year. The forecaster could do well by himself to subject it to some sort of trend study. If anyone does this, please let me know. I want to see how high the k-values go.

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