On Health-care:
- The federal government accounts for nearly 50% of all health-care expenditures.
- Third-party payers (aka insurance) removes the consumer from being sensitive to price, thus prices rise.
- Barriers to entry in to the medical field also raise prices.
- Americans who don't die in car accidents have the highest life expectancy than in any other Western country.
- Due to wage and price controls in WWII, employers found that offering health insurance was a way to attract the top talent and still be compliant with wage controls. The wage control police didn't consider health insurance to be a wage, thus it wasn't taxed as such. This is the history of the tax exemption status of employer provided health insurance.
- As a result of insurance footing the bill, consumers are no longer aware of prices, thus prices can rise w/o the consumer noticing. There is no need by the provider to lower prices, in fact, there's incentive by the provider to RAISE prices.
- In 1960, government covered 21% of medical expenditures and consumers covered 55%. In 2000, government covered 43% and consumers covered 17%. Prices rose.
- When Medicare and Medicaid tried to push rising costs on to the doctors, the doctors began to start changing private insurance more. Private insurance costs began to sky rocket. This resulted in what we call today "managed care."
Why Higher Costs?
- The AMA restricts the number of medical candidates by restricting the number of accredited medical schools, and state governments going along.
- 19 states are limited to having 1 medical school.
- "Certificate-of-Need" states allow the existing hospitals to issue permits for the creation of new hospitals.
- Americans are prohibited from purchasing medical insurance across state lines.
- Some states have mandates that health insurance should cover certain things, like hair transplants, thus inflating prices.
