Wednesday, February 8, 2023
HomeAll Ch00 Ch00 NewsSpending More Government Money on Healthcare Does Not Improve Health Outcomes

Spending More Government Money on Healthcare Does Not Improve Health Outcomes

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n 2008, the State of Oregon inadvertently ran a randomized health insurance experiment. They decided they had just enough money in their annual budget to give Medicaid coverage to an additional ten thousand citizens randomly chosen via a lottery.

While there was no improvement in health outcomes, hospital admissions increased by 30 percent, outpatient visits by 35 percent, and ER visits by 40 percent. The experiment cost a lot of money—36 percent more—with no tangible benefit.

Amazingly, there is not a strong relationship between healthcare spending and health outcomes. America spends almost $4 trillion a year on healthcare, around twice what most other developed nations spend per head, and approximately half of it is taxpayer funded. With only 4 percent of the world’s population, the US accounts for half of the pharmaceuticals consumed worldwide. If more healthcare were the answer, the US would be the healthiest country on the planet. Yet while Japan’s and Singapore’s healthcare expenditures per head are only a fraction of those of the US, Japanese and Singaporeans live over five years longer than Americans.

The US’s excess spending on healthcare mostly goes to overpriced, ineffective, and unnecessary treatments. It is generally assumed that more care is caring more, but the reality echoes the eerily astute insight that Ivan Illich put forth in the initial pages of his 1970 book Deschooling Society, in which he deconstructed the bureaucratic ethos. He noted that bureaucrats

confuse process and substance. Once these become blurred, a new logic is assumed: the more treatment there is, the better are the results; or escalation leads to success. The pupil is thereby “schooled” to confuse teaching with learning, grade advancement with education, a diploma with competence, and fluency with the ability to say something new. . . . Medical treatment is mistaken for health care, social work for the improvement of community life, police protection for safety, military poise for national security, the rat race for productive work.

Actually, clean drinking water, nutritious food, workplace safety, sanitary living conditions, employment, and a supportive social network have a bigger effect on health outcomes than access to healthcare does.

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