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Suprising NYT article


I don't agree with the insinuation of the conclusion, but this a suprisingly
good look at the "crisis" of rising insurance costs.
The most authoritative report on the cost of health insurance came out yesterday, and itÂ’s sure to cause some new outrage.

The average cost of a family insurance plan that Americans get through their jobs has risen another 7.7 percent this year, to $11,500, according to the Kaiser Family Foundation. In only seven years, the cost has doubled, while incomes and company revenue, which pay for health insurance, havenÂ’t risen nearly as much.

These spiraling costs — a phrase that has virtually become a prefix for the words “health care” — are slowly creating a crisis. Many executives have decided that they cannot afford to keep insuring their workers, and the portion of Americans without coverage has jumped 23 percent since 1987.

An industry that once defined the American economy, meanwhile, is sinking in large measure because of the cost of caring for its workers and retirees. For every vehicle that General Motors sells, fully $1,500 of the purchase price goes to pay for medical care. “We must all do more to cut costs,” G.M.’s chief executive, Rick Wagoner, said on Capitol Hill this summer while testifying about health care.

Mr. WagonerÂ’s argument has become the accepted wisdom about the crisis: the solution lies in restraining costs. Yet itÂ’s wrong. Living in a society that spends a lot of money on medical care creates real problems, but it also has something in common with getting old. ItÂ’s better than the alternative.

To understand why, it helps to look back to a time when Americans didn’t worry much about health care costs. In 1950, the country spent less than $100 a year — or $500 in today’s dollars — on the average person’s medical care, compared with almost $6,000 now, notes David M. Cutler, an economist who wrote a wonderful little book in 2004 titled, “Your Money or Your Life.”

Most families in the 1950’s paid their medical bills with ease, but they also didn’t expect much in return. After a century of basic health improvements like indoor plumbing and penicillin, many experts thought that human beings were approaching the limits of longevity. “Modern medicine has little to offer for the prevention or treatment of chronic and degenerative diseases,” the biologist René Dubos wrote in the 1960’s.

But then doctors figured out that high blood pressure and high cholesterol caused heart attacks, and they developed new treatments. Oncologists learned how to attack leukemia, enabling most children who receive a diagnosis of it today to triumph over a disease that was almost inevitably fatal a half-century ago. In the last few years, orphan drugs that combat rare diseases and medical devices like the implantable defibrillator have extended lives. Human longevity still hasnÂ’t hit the wall that was feared 50 years ago.

Instead, a baby born in the United States this year will live to age 78 on average, a decade longer than the average baby born in 1950. People who have already made it to their 40’s can now expect to reach age 80. These gains are probably bigger than the ones the British experienced in the entire millennium leading up to 1800. If you think about this as the return on the investments in medicine, the payoff has been fabulous: Would you prefer spending an extra $5,500 on health care every year — or losing 10 years off your lifespan?

Yet we often imagine that the costs and benefits are unrelated, that we can somehow have 2006 health care at 1950 (or even 1999) prices. We think of health care as if it were gasoline, a product whose price and quality have nothing to do with each other.

There is no question that the American medical system does suffer from a lot of waste, be it insurance industry bureaucracy or expensive procedures that haven’t been proven effective. But the No. 1 cause of the cost increases is still the one you can see at the hospital and in your medicine cabinet — defibrillators, chemotherapy, cholesterol drugs, neonatal care and other treatments that are both expensive and effective.

Not even most forms of preventive care, like keeping diabetes under control, usually save money, despite what many people think. The care itself has some costs, and, more important, patients then live longer than they otherwise would have and rack up medical bills. “When I make this point, people accuse me of wanting people to die earlier. But it’s exactly the opposite,” Dr. Jay Bhattacharya, a researcher at Stanford Medical School, told me. “If these expenditures are keeping people alive, it’s money well spent.”

As Dr. Mark R. Chassin of the Mount Sinai School of Medicine in New York says, “You almost always spend money to gain health.” Of course, the opposite is also true: the best way to reduce health care spending is to reduce health care itself.

Which is exactly what we’re starting to do. The growing number of families without health insurance are, in effect, families who have been kicked off the country’s health care rolls. Many will go without available treatment, will get sicker than they need to get — and will thereby save the rest of us money. They are what now passes for a solution to the health care mess.

The current situation is indeed unsustainable, a point that the conventional wisdom has right. The cost of health insurance can’t keep doubling every seven years, and wasteful spending — the brand-name drugs that are no better than generics, the treatments that haven’t been proved to extend lives or improve health — does need to be reined in.

But far too much of the discussion has been centered on this narrow idea. Somehow, going to the mall to buy clothes has come to be seen as a vaguely patriotic way to keep the economy humming, and taking out a risky mortgage is considered to be an investment in oneÂ’s future. But medical care? ThatÂ’s just a cost.

It’s easy to be against high costs, and it will no doubt be hard to come up with a broad health care solution. But the way to start is by acknowledging that an affluent society should devote an ever-growing share of its resources to the health of its citizens. “We have enough of the basics in life,” Mr. Cutler, the economist and author, points out. “What we really want are the time and the quality of life to enjoy them.”
In 1950, the country spent less than $100 a year — or $500 in today’s dollars — on the average person’s medical care, compared with almost $6,000 now

Of course this ignores the fact that in 1950 we had children in iron lungs because of polio, leukemia (especially childhood) was an automatic death sentence, and IF you survived the heart attack you would be out of work and under a doctors care for at least 3 months.

American medical system does suffer from a lot of waste

And more so in the public sector than the private sector.
Interesting View (heard on the radio)

It would be cheaper for companies to buy their employees a house then insure them.

The average mortgage in America is $1,100 (or $13,200 per year).

The average premium (as mentioned above) to insure a family $958.33 per month (or $11,500).

The mortgage will not move since it is a fixed amount. The cost to insure a family will get higher (more then likely). Over a 30 year period, the company would save a ton of money.

I know I know, if you ever left your job you would loose your house, but it is just a different way of looking at it.

Could you imagine being at an interview and they tell you they do not provide health insurance, but they will buy you a house?
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Not that it takes away from the main point, but that mortgage average is skewered since it includes all the existing mortgages. I bet the average mortgage taken out in the last 2 years is almost double that.
I do not know about that. I am sure there is a BIG curve on that, depending on the market.

An average house in CA is a mansion in Kansas City (price wise).

Point being, that for some, their health care costs (even though they only pay a portion) is more then their mortgage.