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Rising Gas Prices vs. Rising Health Care Costs |
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From today’s daily health care news, Jane Sarasohn-Kahn at The Health Care Blog points out the connection between gas prices and health care costs:
Now comes a pharmacy connecting the dots between consumer spending categories: the interdependency of fuel and prescription drugs.
As the differences between price tiers of prescription drugs have increased over the past ten years, I’ve often asked pharma clients the question: what is the consumer’s marginal value of that $20 (or $30 or $50) co-payment compared to something else on their shopping list — say, a new electric razor for their husband, or that $95 jar of anti-aging skin cream?
Jane’s point is a good one. As rising gas prices squeeze our pocketbooks, we’re going to start thinking about foregoing medication or doctor’s visits (as is already happening) in favor of filling up our tank so we can go to work or putting food on our family’s table.
Still, I wonder. Rising gas prices are driving policy in Washington and media all over the country. Everyone is concerned - and rightly so. Still, here’s a chart of gas prices since 2001 (via Swivel):
And here’s a chart of national spending on health for roughly the same time period (via Kaiser):
Don’t they look similar?
The question that springs to my mind is, where is the media on this one? And for that matter, where are the politicians? All the talk lately has been about gas creeping up towards the $5/gallon mark. What about health care costs creeping up to 20% of our GDP?
There is no question rising health care costs are hitting American families just as hard - remember, the #1 cause of bankruptcy in America is because of health costs. And there is no question we can see what we’re paying - direct costs like premiums and co-pays are rising like everything else in the health care industry. Even worse, unlike gas, where we know exactly what we’re getting, the private insurance industry is giving us less and less services for more of our money.
Health care is the kitchen table issue this year, and even though the media isn’t fueling conversation around this issue like they are around energy, I believe those of us living in America understand how important health care costs really are.
As I argued this weekend, we have a health care crisis in this country, and we need to reign in costs to solve it:
To reduce health care costs, risk must be spread out - even if it is at the expense of profits. Premiums should be calculated based on a person’s ability to pay, not on their health history or age. Standard levels of care need to be established, both for preventative medicine and for treatment of the sick. A public health care plan must be created that is open to all to fairly share risk. Most importantly, insurers - both private and public - must not be allowed to drop customers or raise rates when health circumstances change. To do less is not fair, and as it is currently practiced, unfair sharing of risk is the main driver of health care costs in this country and one of the main reasons we spend so much more on health care than other countries.
It’s a bigger problem than gas prices. As Jane points out over at Health Populi, health care costs account for $0.17 of every dollar we spend. Gas and fuel costs account for barely $0.04:
You’re upset about the cost of gas. Yet, gas, fuel and energy consume 75% less of your spending than health care. Face that fact, and get smart!


















We should put billboards out in front of hospitals and pharmacies to show the day to day fluctuations in the cost of health care. The reason we freak out about gas prices is because we are reminded of them many times a day as we drive around.
That’s a really great idea!
2 points,
1 no they dont look similar, other than to say that over a long time period, they both rose. Also the scale is fucked, the healthcare graph covers almost 60 years whilst the oil covers a little over 6
2, The reason why the price of healthcare has risen, and is bound to rise without some intervention is because of the innate qualities of healthcare as an economic good. It is an experience good and it is a superior good. A superior good means that the proportion of our income we spend on healthcare rises with our income. It makes sence, if all you can afford is a roof over your head and food then healthcare is not a priority, but as your income starts to rise a little, it becomes essential. Therefore as our income has risen over the latter half of the twentieth century we have so too has the proportion we spend on healthcare. Its demand has risen and so has the cost.
An experience good means that you cannot tell the quality of the product without experiencing it. For example, you cant say, oh that doctor didnt do a very good job with my heart bypass, next time I am going to another one. Therefore people tend to judge quality on price, they go for the most expencive option because they feel it must be the best.
Incidently in my view it is not the cost of healthcare that it is the problem. The US is a rich enough country to afford the 18% of its GDP that it spends annually, the problem is who pays that cost, individuals, resulting in the lower income bracket bearing a much heavier burden, secondly what you get for all that money, which is a poor system that leaves many without basic treatment.
I’m not sure I can agree that it’s ok we spend 18% of our GDP on health care. We spend more than the rest of the world by a long shot, even if you control for our wealth, and studies consistently show we get worse care than the rest of the world. We’re spending more and getting less. I’m not sure how anyone can be ok with that.
We need HR676 SINGLE=PAYER HEALTH INSURANCE PEOPLE NOT PROFIT.
Go to http://www.guaranteedhealthcare.org
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Thanks for your time to post this article.