Wednesday, March 07, 2007

Interesting reading

Three interesting articles:

Assymetrical warfare: We're just a little too powerful.

Reforming the patent office: Wikipedia strikes again!

And finally, this is an article I read off line, so you'll have to bear with me as I explain it. When Medicare was introduced, it did not create a statistically significant increase in life expectancy (a rough measure of healthcare). It did, however, increase health spending by 37%, and reduce the out-of-pocket health expenses for retirees by 50%.

Why this seems important to me is that I had not thought of health care as a pure money problem before. People seem to be following general economic predictions: they are able to provide vital services for themselves (thus the lack of increase in life expenctancy), but do so at considerable financial cost. When the price of health care is cut by two-thirds, the consumption of healthcare increases by about half that amount. It appears, therefore, that healthcare has an unusually shaped demand curve. Demand is extremely inelastic on the survival edge (the article stated that about one fifth of retirees were spending more than 20% of their income on health care), but becomes quite elastic later on (as nominal fees in the form of co-pays reduce consumption considerably).

The real issue, however, is the essential economic issue: scarcity. Some people think we should ration health care by money, others think we should ration it by queuing. It seems to me that the money approach has been shown to maximize care in the long run.


Post a Comment

<< Home