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Tuesday, September 1, 2009

What's wrong with spending trillions of dollars on health care

A couple of years ago I decided that the reason that Americans spend so much money on health care is because it is our national pastime. In Brazil they like soccer and Carnival, and in France they like fine wine and good food. In the US, we like our MRI scans, our bypass operations, CAT scans and the whole gory and dramatic process of getting them and discussing them. When we have a spare moment, we talk about going to the doctor and what tests the doctor ordered and what the doctor said. We have other hobbies, true, but we are very interested in things medical.

When I developed this theory of health care as a national pastime, I saw it as interesting and neither particularly good nor bad. It seemed that any national pastime costs money, and the money that is spent on it goes to pay the salaries of the many people who provide the goods and services related to the pastime. Since medical care consumes such a large amount of money, it must support many households whose wage earners make medical equipment, administer to insurance companies, provide direct care etc.

Then came the realization that our nation's health care budget is rising faster than any other segment of that budget, that our national debt is rapidly increasing, and that a rising national debt threatens to wreck our economy. At the same time it has become clear that much of the money spent on health care is spent on unnecessary care, inflated procedure costs and administrative waste. This wasted money does eventually make its way back into the revenue stream, but without creating any product of value.

In the federal budget the biggest expenses are medicare/medicaid, defense and social security (about 20% each). Social security gives us a safety net in retirement and in disabling circumstances. Defense spending, at its best, provides for a structure that keeps the bad guys from messing with us. Medicare provides for maintaining health and treating disease in people who are at the age of retirement, or unable to work. Other budget items include money spent to maintain roads, pay for police and public works, support education. In the ideal world, all of this money not only pays the salaries of citizens, it also creates something we value. Money that is spent on things that are truly waste, if not spent that way, will remain in the revenue stream as disposable income. ( I would argue, on another point entirely, that money spent to build beautiful shiny bombs that are then blown up to destroy people and property in unwinnable wars is money more extravagantly wasted that that spent on a needless CAT scan.)

We come back, again, then, to what is wrong with spending trillions of dollars on health care. I would argue that spending money wisely on health care creates something we value. Spending vast amounts of money on things that don't make anybody healthier or happier is wasted money, and the extent of that waste goes considerably beyond what I can consider a national pastime and becomes more of a self destructive addiction.

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