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Thursday, Nov. 7, 2013 11:12 am

Health care cuts

I tried to say all this a year and a half ago in “Living too high off the hog” (March 3, 2011) but this time I will hand the mike over to Aaron Carroll at the Incidental Economist. Referring to recent news that hospital systems are laying off people, and that the layoffs are being blamed by some on the Affordable Care Act, Dr. Carroll writes:

Almost everyone agrees that we spend too much money on health care, and that we should spend less. And now we are! Did you think that would have no consequences?

We don’t take all of our health care spending and put it in a pile and burn it. All of that money goes into other people’s bank accounts. It’s wages, and profit, and benefits. It goes to doctors, and nurses, and janitors in hospitals, and execs, and pharma reps, and medical device designers, and on and on. One man’s “waste” is another man’s “salary”. If we spend less on health care, there’s less money to go to wages and profit. Period. You can try to operate leaner, but eventually, you’re still taking money out of someone else’s pocket.

So if we manage to spend less on health care, it doesn’t matter if we do it by the most free market method, or by the most price-setting regulated method. The result will pretty much be the same in the end. Someone is going to make less or be fired.

It should be noted that spending reductions occasioned by efficiency measures should be offset to some extent by the expansion of market for medical services that will result as Obamacare gives more people the means to pay for them. The pharma-medical industry does not face imminent collapse in Springfield or anywhere else. But some jobs will disappear, some clinics might close, yes. You can’t have everything, even in America.

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