Healthcare, technology, monopoly and costs

Alan McLeod, of Gen-X at 40 and, now, CBC fame, writes,

One thing that we may have to admit is that sooner or later medical technology will advance to the point that we cannot afford it. It is a marvel what can be done now but is it a marvel that we can afford? At a certain point - and one that we may have passed long ago - wellness and prevention should become more and more important than dealing with the after-effects of the modern, idle and indulgent society.
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I agree with much of what Alan is saying in the piece; but I can’t help but suggest that the mid-range prospect is for a decline in the costs of medical care driven by technology. Scanning and analytic technolgies are tending to follow the PC model of much great capacity at lower and lower cost, DNA based testing and therapy is following the same trend. Targeted cancer treatments, some employing rudimentary nanotechnology, are more accurately hitting the tumours and reducing the collateral damage.

Preventative strategies from half an aspirin and a glass of red wine a day, to statin drugs through the early use of TPA where indicated are postponing the onset and the morbidity of cardio vascular disease.

The combination of intelligent preventative and wellness measures, early detection, targetted treatment and clever use of emerging medical and technical procedures will tend to cap and then decrease healthcare expenses.

There is only one problem: these advances and cost savings are currently being administered by a monopoly which has no particular interest in cost reduction. As Kate McMillian points out, the healthcare workers - from head surgeon to apprentice bottle washer - are paid and paid well regardless of outcome.

Without the impetus of competition, healthcare costs, if not the actual cost of the technology and medicine employed, will continue to increase.

One of the sillier beliefs on the right is that the demand for healthcare in the absence of an allocation of resources by price is effectively unlimited. This cannot be true else Bill Gates and Warren Buffet would be having a colonoscopy a day instead of playing bridge. Most economists understand this but somehow that has not penetrated the wooly heads of our political leaders.

What is effectively unlimited is the demand for monopoly prices for everything from brain surgery to bedpan changing within the healthcare monopoly.

Until there is a real, competive alternative in Canada the temptation to monopoly price and to avoid more efficient technologies and proceedures will be overwhelming.

Written by jay on December 23rd, 2005 with 2 comments.
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