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Health Care / Free-Market Reform

Health Care: Cheaper Than Ever Before

By Sarah Brodsky on Nov 29, 2007

This looks like an interesting report about Missourians’ health insurance coverage and spending on health care. I enjoy learning new statistics (or facts, or numbers — whatever Dave and Justin want to call them) about Missourians’ medical spending. Unfortunately, Families USA has taken what could have been a great opportunity to analyze data and turned it into an opportunity to spread fear and panic about health insurance.

The report details the percentage of income spent on health care for various segments of Missouri’s population. It shows that 1,225,000 Missourians under age 65 are projected to spend more than 10 percent of their pre-tax income on health care, and 341,000 are projected to spend more than 25 percent. The press release concludes that this is a "health care affordability crisis."

I’m not convinced. First, the quality of health care is continually rising. All kinds of new drugs and procedures are available now that didn’t exist in the past. These are often expensive when first introduced, but their cost decreases with time. Some drugs are now so cheap that stores can give them away for free. Health care consumers have more options now than they once did, and treatments that have been around for a while are getting cheaper and cheaper.

Second, looking at percentage of income is the wrong way to go. Once, we were all hunter-gatherers who spent 100 percent of our "income" on food and shelter. Health care wasn’t really available at all. Fast forward through a lot of economic growth, and today we spend larger percentages of our income on human capital investments like health care and education. Likewise, we spend larger percentages of our income on computers than we did 30 years ago. That’s not because computers are becoming more expensive — they’re getting cheaper all the time — but because they used to be so expensive that most people didn’t spend any part of their income that way. Computer spending and health care spending are rising. Computer costs and health care costs are not.

Finally, there’s one obvious way to give people more pre-tax income to spend on stuff other than health care: lower taxes!

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Sarah Brodsky

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