Healthcare Costs and Perspective

I have provided a short series on the healthcare dilemma of rapidly rising costs (most recently, January 2, 2012 and September 12, 2011).  I have argued that insurance for more people is not a bad thing, but it doesn’t address the problem of rising cost at all and has a good chance of making it worse.  Once again, let's apply a little perspective to the cost issue.

Today we have drugs and procedures that are saving and extending lives far better than what was available 50 years ago.  It should be obvious to anyone that these advances have come at a rapid pace and that some part of the cost increase that everyone complains about is directly related to these additional benefits.

Look at three articles in the news within the past week or so.  The first tells of a first generation of robotic devices developed to help paralyzed people gain more independence.  Researchers expect significant advancements over the next ten years as new capabilities are added.  The second article tells of a doctor in Virginia using ultrasounds focused on a specific point in the brain to relieve a condition called “essential tremors, a neurological disorder that causes patients to lose control of their hands, heads and voices.”  They locate the problem areas using an MRI and "operate" without surgery.  The procedure is painless and recovery time is essentially non-existent rather than days or weeks for traditional brain surgery.  The third is about the use of embryonic stem cells to improve the sight of people with severe vision loss.  This discovery “could provide hope for hundreds of thousands of people suffering from macular degeneration - one of the most common forms of blindness in developed countries.” (Regardless of your ethical stance on embryonic stem cells, this is still a significant medical achievement.)  By the way, only one article lists the cost - $100,000 for the robotic exoskeleton, probably not covered by insurance; but this new stuff, like any new product or service, usually is quite expensive initially.  In healthcare, the cost often stays high because the choice between having local access with a smaller client base and traveling a longer way to share technology with more people usually drives us toward the more expensive option.  Our competitive healthcare system and patient expectations tend to favor the local model.  (A large group of people pay less to support a single $1-million machine than smaller groups paying to support four or five $1-million machines.)

All the above examples are in the trial stage, but these procedures and devices that were unheard of only a couple of years ago may be things we take for granted ten years from now.  This has been happening for the past 50 years and seems to be accelerating.  So when people ask why healthcare costs (and health insurances premiums) increase so rapidly, part of the answer is that the range and sophistication of treatments are increasing so rapidly.  But we quickly take for granted last year's breakthrough technology and expect a trip to the doctor to cost about the same.