The health care fairy, obviously

Brad DeLong asks:

What is the most likely outcome for the U.S. budget come 2060? 1. We will have raised taxes to pay for government health spending. 2. We will have cut doctors\’ wages and enslaved them by drafting them into a socialist national health service. 3. We will have abandoned our commitment to providing state-of-the-art health care to the sick and not just the wealthy. 4. The health care fairy will have figured out a way for us all to have all the medically-appropriate care we need for a surprisingly low private and public budgetary cost. 5. The federal government as we know it will have collapsed, and those of us still alive will be starring involuntarily in a remake of “Mad Max: Beyond Thunderdome”.

The health care fairy, obviously.

Assuming we continue to allow markets to work of course.

For, as I\’ve noted already today, while Baumol tells us that improving productivity in services is hard and that thus the price of services will rise relative to the price of manufactures, this isn\’t the end of the story although it is what gives us the grief of the projections for health care costs.

For the let out here, the escape hatch, is mechanisation: which brings us back into the realms of manufacturing where we can improve productivity.

As I\’ve also already said today, aspirin is the mechanisation of that comely maiden with the brow cooling cloth attending upon a headache. Vaccines the mechanisation of tending to those pustulent with smallpox, penicillin the mechanisation of tending to those with the general paralysis of the insane.

Each medical treatment is becoming cheaper as we mechanise them: it\’s only that we keep finding new things we can treat which is pushing up the total cost.

12 thoughts on “The health care fairy, obviously”

  1. If manufacturing can come up with a vaccine that cures people from the insanities of left wing thoughts and behaviour then we will have a healthy society.

  2. As long as medicine remains the preserve of the expensive few, increasing productivity will remain slow and arduous from the end-user’s PoV.

  3. Why is mechanical/scientific advance more likely in a liberal decentralised society?The days of Lavoisier working on his own (and living off tax-farming and pinching Priestley’s ideas)
    are over.Big centralised societies that put different specialists in contact with each other and quite likely force them to work together are
    surely more likely to come up with something.
    The Los Alamos project was the exact equivalent of the set-up in Soviet Russia. I am fairly confident that the Nazis produced synthetic petrol later on in the war (What happened to that BTW?)

    Tim adds: That’s another Baumol point. Centralised/planned societies are just as good as anyone else at inventing things. But howlingly shite at actually getting everyone to use them. And it'[s the getting people to use things which leads to the increase in productivity/reduction in price.

    The Nazi petrol thing was carried on in S Africa by Sasoil. It works, it’s just expensive.

  4. I could be wrong here but I think synthetic petrol pre-dates the Nazis or at least the war, and was IG Farben (or some other German firm’s) belief that the oil was running out and it would make great business sense.

  5. I think it would be wise to plan on the basis of what we currently know, without assuming any advances at all. It is very easy to revise the plans and tell the public that <actually, things are going to be better than they expected, than it is to tell them that promises must be broken.
    Furthermore, an x% improvement in a field probably represents a 3x% improvement in part of it, and none in the rest- and we have no idea which part will improve.

  6. Currently, everybody in the west has access to a medically-appropriate quantity of food, but they don’t all have access to caviar. This is partly because they can’t all afford it, and partly because there aren’t enough sturgeon.

    There will always be caviar treatments that cost millions of dollars and have only a small benefit. They won’t always be the same ones – as your health care fairy makes existing treatments cheaper, some smart bugger is inventing another new thing, but they will always exist, and it will always be impossible to apply those treatments to everyone.

    The real answer is that “We will have abandoned our commitment to providing state-of-the-art health care to the sick and not just the wealthy.” Actually, that’s not the real answer, because it implies that that commitment ever existed. It doesn’t. Compare, for example, the contemporary American experience of a rich man and a poor man with diabetes.

  7. “Centralised/planned societies are just as good as anyone else at inventing things.” But surely all the key inventions of Western Civilisation were made before those Centralised/planned societies existed?

  8. Any time we choose, the U.S. could revert to 1970’s-era medical care at 1970’s era costs (adjusted for inflation). That would mean giving up today’s state-of-the art medical care invented since the 1970’s.

    After all, it was state of the art in 1970, and Americans were about equally smug about it then.

    However, I think instead the U.S. will continue to demand current state-of the art medical care and complain about not having 1970’s-era prices.

    Oh, well.

  9. from personal experience they have almost mechanised general practice in Australia –
    it has the short time click clack turnstyle plus the almost non verbal consultation wher the GP mostly wants blood tests and then treats the bit of paper they come on.

  10. But isn’t the actual costs driven a lot by demand created by provided a cheap or “free” service (whether in the form of an NHS or subsidised employer-provided group health care).

    If there were not several intermediaries between the patient and the provider (making services appear cheaper than they are to the end user), and direct payment was made, I suspect declining demand would drive down the price of services.

  11. Big centralised societies that put different specialists in contact with each other and quite likely force them to work together are surely more likely to come up with something. The Los Alamos project was the exact equivalent of the set-up in Soviet Russia.

    Um, do you really have absolutely no doubt about your belief? Even though it is only based on two examples, of doubtful truthfulness? (For a start, the Los Alamos project varied in numerous ways from the set-up in Soviet Russia, for a start the US authorities had not spent the 1930s sending physicists to the gulag and the initial theoretical work was done by Lise Meitner and her nephew Otto Frisch, in a non-forced project.)

    I don’t have any comparative statistics to hand about decentralised societies, but examples of inventions involving people who weren’t forced to work together, in recent times are:
    – the Internet (the US government is not in the habit of holding guns to its’ citizens heads and forcing them to work for its research arms)
    – the silicon chip
    – organ transplants
    – multi-point HVDC lines
    – optic cables
    – the development of chemotherapy for cancer

    Tim adds: And those societies which force people into doing things are unlikely to get the sort of free and flowing exchange of ideas which are essential to scientific development in general.

    But note that in the original I was sorta quoting Baumol. The emphasis is on the clear superiority of the free society, market economy, on dispersal into hte hands of those who can use it the new inventions: not the relative merits of different system of invention.

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