Pick Two: The Economics of Healthcare

Fishing the Abyss ^ | 9/10/02 | Chris Lyons

[Military family member]

Everybody is talking about healthcare.

Everybody is talking about healthcare, but few are really articulating the classic economic choices at work in the debate – and by missing this, they tend to devolved into ‘bitch-sessions’ which usually lead nowhere.

In reality, despite the complexity of American healthcare, the issues at play in the current discussion circle around the three basic economic choices that are in play with any good or commodity – of which healthcare IS one, by definition.1 Quality, Supply and Cost are the three economic levers at play in managing the healthcare ‘market’, and, not unexpectedly, the misapplication of these forces is at the root cause of our current economic woes, regarding the healthcare market.

By trade, I am a licensed professional engineer, specializing in project management (for you engineering geeks, I am a Six Sigma “black belt”) – and one of the key aspects of my work is breaking down complex process problems into simplified explanations, models and choices for customer groups. In this article, I would like to (at least attempt to) use this part of my background to frame the current healthcare debate, and the choices & trade-offs involved.2

[Darth Reardon]

An interesting and often useful model, but the author takes a huge leap from describing the model to assuming it applies to the health care situation. Still a useful tool for discussing the implications of hiding costs from the consumer, though.