Saturday, December 31, 2011

Reset our thinking?

Which do you think has more value to us as a nation? A growth industry that saves lives, uses high tech equipment made in the USA or another growth industry that is degenerative to human lives and uses high tech equipment manufactured in China? Perhaps that's stated a bit strongly, but how else can I make my point? We get all up tight when health care grows and takes a bigger share of the gross national product. We run out and buy stock when we find out that electronic entertainment or video games are selling off the shelves at Xmas. Why do we go nuts and look for "solutions to the problem" when health care spending goes up, and glow with stock market happiness when entertainment expenses go up? Why do we see health care growth as a negative and brain numbing games as a positive. I think we need to push the reset button on our thinking. If video games were provided by the government from our taxes the same way that liberals propose to provide health care, maybe we'd have a federal death panel in charge of video games usage.


Ira Glickstein said...

Happy New Year ALL, and to Joel, and thanks for your new Topic.

You contrast two growth industries that both utilize and advance technology, engineering, and science: (1) Health Care, and (2) Electronic Entertainment.

Why do most of us worry when Health Care spending goes up and cheer when Electronic Entertainment increases? (Especially, as you point out, when the latter is mostly made in China while the former is mostly domestic.)

Well, IMHO, it is because Health Care is now mostly paid for by third parties (insurance companies and government) to benefit: a) people who are ill, and b) the Health Care industry (doctors, nurses, hospital administrators, drug companies, etc.)

Those of us who do not need medical care at the moment see our money (the portion our employers paid to insurance companies out of the value we added by our work, and a portion of our taxes) being paid to benefit others.

Those of us who need medical care do not feel as if we are the decision makers in the process of treatment. The providers follow rules and guidelines set by insurance and government bureaucrats.

We, the ultimate (but indirect) payers of the costs, are not the direct payers, so we cannot control the rules or the quality of the care. We cannot put inferior hospitals and doctors and insurance companies and government agencies out of business. We cannot reward superior providers either, so we get a mediocre mess.

And, we notice the cost we must pay is going up rapidly. Since those who benefit from the care are not the direct payers, there is no limit to the demand for care. Imagine if restaurant food was free. We'd all go for the steak and lobster and leave the hamburger and beans for others.

With Electronic Entertainment, we only pay for what we, personally, wish to purchase. Every year we get better products and the cost for each unit of performance is going down. That is because the direct payers are also the direct beneficiaries of these products. If any supplier puts out an inferior product or tries to charge a higher price, they lose customers and have to reform their products and price list, or go out of business.

Ira Glickstein

joel said...

Exactly! Doesn't this suggest that we need to reset our thinking and remodel health care along the lines of electronic entertainment? To what extent would a medical savings account satisfy this condition?

Ira Glickstein said...

Well, Joel, a Medical Savings Account, where any money not spent would accrue to the account holder, who could leave his or her money in the account for payment of future medical expenses, or take excess over a mandated minimum and spend it, would certainly make for more price-conscious consumers.

However, the consumption of health care is not like any other product in that the consumer may be under duress (e.g., pain from some ailment) and not really capable of comparing different suppliers and products the way we do with electronic entertainment.

How about combining Health Care with Entertainment?

For example, say an employer (or the government through Medicare or Medicade) spends an average of X dollars for each person of a given age. Those who consume less than the average for their age group could be rewarded with a voucher valued at, say 20% of the savings, that would be accepted by any provider of Entertainment (either hardware or software or tickets to a show or sports event or the cost of a meal at a restaurant).

So, say someone of my age, on average, consumes $10,000 per year in reimbursed medical care per year. If I consume only $9,000, I would get a voucher for 20%, namely $200.

I could take that voucher and use it to purchase a small HDTV, or a smart phone, or anything else, and the seller would be reimbursed the $200 by the insurance company (or the government) which would be ahead by $800 in the deal. That would make me a cost-conscious consumer and would, I think, have a dramatic effect on pricing and advertising of medical care.

Furthermore, I'll bet that sellers of Entertainment products and services would compete for the vouchers by, for example, offering a 10% or 20% premium. So, my $200 voucher would buy $220 or $240 or more in Entertainment.

The more I think about this idea the more I like it!

Ira Glickstein