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Eminent Domain Stuff

New London Update (2/24/06)
Coverage of the Rally at New London's City Hall (w/ pics)

Tuesday, May 04, 2004

Prices vs. Costs in Medicine

Thomas Sowell nails it hands down. Here’s a bit of insight:

The difference between prices and costs is not just a fine distinction made by economists. Prices are what pay for costs -- and if they do not pay enough to cover the costs, then centuries of history in countries around the world show that the supply is going to decline in quantity or quality, or both. In the case of medical care, the supply is a matter of life and death.

Simple enough. If you’re operating in the red you have two choices, decrease costs or go out of business (unless you’re the government, then just keep spending other people’s money with impunity). So what are the root causes of our current medical problems? Sowell offers a thought:

Many of the same politicians who are gung ho for imposing price controls on prescription drugs, or for importing Canadian price controls by importing American medicines from Canada, have not the slightest interest in stopping frivolous lawsuits against doctors, hospitals, or drug companies -- which are huge costs.

Tort Reform is no doubt badly needed to head off the crazy ambulance-chasing lawyers springing up like you-know-what telling people that they need to take their doctors for a ride no matter the ‘offense.’ However, Mr. Sowell also mentions one all too often overlooked factor that deserves more attention:

The average medical student graduates with a debt of more than $100,000.


If the bureaucratic hassles that doctors have to go through make their huge investment in time and money going to medical school not seem worthwhile, some can retire early and some can take jobs no longer involving treating patients. Either way, the supply of medical care can begin to decline, even in the short run.
In the long run, medical school may no longer look like such a good investment to many in the younger generation. Britain, which has had government-run medical care for more than half a century, has to import doctors from the Third World, where medical school standards are lower.
So long as there are warm bodies with "M.D." after their names, there is no decline in supply, as far as politicians are concerned. Only the patients will find out, the hard way, what declining quality means.

With two years of medical school experience behind me (and some vicarious third and forth year insight) I can tell you without fear of correction that medical school is an extremely serious commitment. No matter what anyone tells you about the altruistic reasons that intelligent, dedicated individuals decide to go into debt and spend 7+ years in training the economic influences cannot be ignored.

I also happen to think that the things a society is willing to pay for tells you something about people’s priorities. We will pay $30, $40, $50 and up to watch a professional sports game. Yet we complain when our copay doubles from $5 to $10. Or take for example what the general reaction is when, horror or horrors, a person has actually pay for a medication that will improve his or her life. It just seems like we have misplaced our priorities. I hope we get them back in shape soon, before we do any more damage to our health care system.

Draw what conclusions you will.


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