How Payment By Third Parties Distorts Health Care Decisions

Investors.com ^ | October 29, 2009 | The great THOMAS SOWELL

[Kaslin]

Following is the third installment of a nine-part series excerpting the chapter on medical care from the new edition of Thomas Sowell's "Applied Economics." All installments can be found online at www.investors.com/IBDeditorials.

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Third-party payments are at the heart of much confusion about the cost of medical treatment— and are a major factor in the increased cost of that treatment.

In government-run medical systems, the public pays in taxes for its medical care, either wholly or in part, with a share being paid directly by the individual patient.

Political slogans about "bringing down the cost of medical care" are almost invariably about programs or policies directed toward lowering the price paid directly by the patient. But the fact that only part of the costs are reimbursed by direct out-of-pocket payments from individual patients to doctors, hospitals or pharmacies in no way indicates that the total cost of the particular medical treatment is any lower than before.

To the extent that the direct payments by patients are lower than they would be if they had to cover the full costs, medical treatments tend to be sought more often — and that alone is enough to cause the total cost of medical care to rise, not fall. Whether these lower payments are due to price control or to supplementary payments by insurance companies or the government, the net result is that

To the extent that third-party payments require a bureaucracy to administer these payments — whether a government bureaucracy or a private insurance company bureaucracy — the people in those bureaucracies have to be paid, adding still more to the cost of medical care.

[Kaslin]

[Kaslin]

ping

[jazusamo]

Here’s link to IBD for all segments as they’re posted, The Economics of Medical Care
or use keyword sowellmedicalcare here at FR for threads.

I won’t ping to any additional threads.

Thanks for the ping, Kaslin.

[Kaslin]

You are welcome, jazusamo

[MrB]

As I’ve been reading these, it keeps occuring to me that it doesn’t matter how true or convincing or well explained these objections are,

because they don’t address the true goal of gov’t health care.

Sure, the economic explanations tell us how it “won’t work” - TO ACHIEVE “AFFORDABLE, UNIVERSAL HEALTHCARE”.

But it WILL achieve the REAL GOAL -

GOVERNMENT (ELITIST) CONTROL OVER EVERY ASPECT OF YOUR LIFE
through the granting or denial of healthcare depending on
your level of political favor.