[PEN-L:9506] Re: Shades of Summers

[sawicky@xxxxxxxxxx (Max Sawicky)]

>>
In the mid 1990s there were several interesting radical
poli-econ arguments about the basis for massive increases
in healthcare costs/GDP. O'Connor did a great paper that partly
attributed cost increases to quality increases and longevity; Navarro
>>

It's obvious that part of the increase is due to new
procedures, drugs, and gadgets that do things that
couldn't be done before, or do them better.

The same goes for longevity, but we should be very
wary of the "aging" story regarding social insurance.
This is positively radioactive because it is being
used as a pretext for austerity and privatization
of social insurance in all of the older, advanced
industrialized countries.  Obviously aging raises
certain public costs, but their magnitude is typically
grossly inflated in public debates by you-know-who.

>>
argued also I think correctly that the massive overburdening of
health administrative systems during the 1990s coincided with the
fragmentation/diversification of private care and the growing role of
admin-intensive insurance companies/HMOs. I would add that there was
dramatic overaccumulation of capital, in a very classical marxian
sense, in the private US health system.
>>

Regarding administrative costs, as elsewhere, one must distinguish
cost levels from rates of growth.  Fragmentation of provision
certainly ought to increase administrative costs.  Over time,
however, it seems doubtful that these costs grow more rapidly
than, say, GDP.  For that one would have to have constantly
increasing fragmentation costs.  What is more likely is that
over time, we have continual accumulation of innovations which
raise costs and consumption, though not necessarily at the same
rate.  Provider rents matter, as others have noted, though again
one has to ask not only how these affect the level of cost, but
also its rate of growth.

>>
So Max, wouldn't universal health services a) increase health
costs/GDP due to the O'Connor argument (assuming it made folks live
longer and gave better quality), but b) reduce it (via single-payer
finance/admin savings) due to the Navarro argument, and reduce costs
if it allowed a rational (not managed-care type) shakeout of the
excess capacity that capitalist healthcare has generated?
>>

I agree these forces are mutually offsetting,
but the question gets down to how big each one is.
The forces for increase look stronger to me.

HMO's and managed care have slowed down some
costs, but to some extent this has been done
by denying care.  The nature of this sort of
privatization is to sort out the good risks
from the bad.  The HMO's are trolling for the
good risks, often getting reimbursements
from Medicare at a premium (i.e., above
their costs), and the bad ones will be
herded into the public sector, exacerbating
the strain on public financing in a fragmented
system.

mbs