2007 February 20 Tuesday
Medicare Drug Benefit Slows Drug Spending
Federal number crunchers said yesterday that the new Medicare drug benefit appears to be slowing the growth in national spending on prescription medicines because the drug plans are negotiating lower prices with drug companies.
But the analysts also forecasted that overall health-care spending would continue to rise and would account for nearly 20 percent of the economy -- or more than $4 trillion a year -- by 2016. In contrast, health-care spending was about $2.1 trillion in 2006, accounting for about 16 percent of the economy. In 1985, it was just over 10 percent.
Drug spending is that part of total health spending which has the largest impact on commercial research and development funding for new treatments. I'd rather see drugs cost more than physician services or nurses cost more.
What I'd like to see: a tax on medical services, the proceeds of which would go to fund biomedical research.
The medical industry is the industry in greatest need of automation. It is going to become the largest industry if it isn't already. We have less to spend on other things because so much goes to medical care. Expert systems, robots, and other technology to cut costs and raise quality can save us huge amounts of money and raise living standards.
Anyone have any suggestions for how and what in medicine should get automated?
Radiology could be the first cab off the rank. I think that a pattern matching AI, once trained by being fed a few million xrays & diagnosis, should be able to offer reasonably reliable automated diagnosis.
Short-term nothing much will happen and we'll have to suck it up.
The long-term solution, IMO, is Health Savings Accts (HSA). HSAs can do for the medical care of future retirees (those of us in the near-term will need to stick to Medicare) what 401k's will do for the income of retirees. Unfortunately, it'll probably fall in the same politics as Social Security (SS) privatization. Nearly 20 years ago I ran the numbers and saw that if I could put just my part of the SS contribution into EE Savings Bonds (at that time paying 6%), I would retire a millionaire. Needless to say, I've long been an advocate of privatization. Too late for me now and too late for me personally to build a significant HSA before retirement ... but it isn't too late for my son.
If HSAs were implemented today for those with about 30 years left until retirement, it would take a lot pressure off Medicare in the far future.
BTW, I will probably still retire a millionaire just off my 401k ... depending on the age I actually retire. So I see it working. It could have been working for me on the SS side too had it been privatized.
"What I'd like to see: a tax on medical services, the proceeds of which would go to fund biomedical research."
How about a tax on farmers to fund agricultural research? A tax on automobile manufacturers and dealers to fund alternative fuels research? A tax on airlines to fund advances in aviation safety? Health care costs enough already - we don't need any "help" from the government in pushing up costs - they are high enough already.
Don't expect robots and other advanced technology to reduce costs - that's not the way it works. They will increase costs but improve outcomes.