Then and Now

[dcarrigg]

Some quick facts from 1950 and 2010, in 2010 dollars, according to the ever accurate CPI. The numbers change somewhat, depending on your source, but the trends are clear. So, for illustrative purposes:


Wage Info

Mean Annual Wage
1950: $28,996.74 | 2010: $40,921.31

Minimum Wage
1950: $6.91 | 2010: $7.25

Average Percentage of Personal Income Paid in Taxes
1950: 9.2% | 2010: 8.8%



Non-Loan / Insurance Purchases

Levis 501 shrink to wear jeans
1950: $44.91 | 2010: $35.99

Gallon of Gas
1950: $1.62 | 2010: $2.79

Mid-range Television of the Era
1950: $2,203.36 | 2010: $1,299




Loan / Insurance Purchases

4-Year Public College Annual Tuition
1950: $4,324 | 2010: $21,329

Median House
1950: $55,192 | 2010: $168,213

Average Cost per Hospital Day
1950: $70.11 | 2010: $5,780


Where has all the money gone? How efficient are markets brokered by finance, real estate, or insurance agents? Why are health care, housing and education costs so high?

[don]

Re: Then and Now

The pie has obviously been re-cut. Wonder what it took among those who matter to make that happen?

[bagginz]

Re: Then and Now

Average Cost per Hospital Day

1950: $70.11 | 2010: $5,780

Wow! Unbelievable. Increased by a factor of 82 in inflation adjusted dollars

Someone is getting the shaft big time here and I don't think it's the insurance companies...

[dcarrigg]

Re: Then and Now

Wow! Unbelievable. Increased by a factor of 82 in inflation adjusted dollars

Someone is getting the shaft big time here and I don't think it's the insurance companies...

Well, to be fair, a lot of the modern tech is much more expensive. Nurses are making more, and the profession has evolved. Groups like the grey nuns are no longer running schools and hospitals in the way they were before. More hospitals are for profit. Drug companies are making a lot more money. So are pharmacists (it seems that we've averaged a new CVS or Rite Aid per 20,000 people per year around me for the last 5 years or so).

Still, you can bet that at least 5 or that factor of 82 is going directly to insurance companies. The not-for-profits are not really much better than the for-profits in the insurance world. They all extract what they can from the system while making pricing decisions opaque. Thus they make the rest of the factor of 82 possible in ways it would not be without them.

[unlucky]

Re: Then and Now

Well, to be fair, a lot of the modern tech is much more expensive. Nurses are making more, and the profession has evolved.

It's kinda weird that medicine is the only walk of life where (as we are told) better technology makes things more expensive. In all other areas either costs fall as techology gets better, or else they stay about the same (but your tv/computer/phone delivers much more for the same price).

Medical providers are using technology to deliver more effective treatments for longer, at higher cost. I can understand that. But technology is also used in most walks of life to deliver equally effective solutions while reducing costs. That doesn't seem to happen in medicine. Or does it?

[stealthcat]

Re: Then and Now

Medical providers are using technology to deliver more effective treatments for longer, at higher cost. I can understand that. But technology is also used in most walks of life to deliver equally effective solutions while reducing costs. That doesn't seem to happen in medicine. Or does it?

I won't say that all of the higher price is "justified", but there is a significant cost factor difference between a device that works perfectly 99% of the time and one that works perfectly 99.999% of the time. If your cell phone drops a call or your computer blue-screens, it's inconvenient, but most of the time people don't mind due to the low cost of the equipment. People have come to expect almost a zero-tolerance of failure of medical procedures; that very high level of reliability carries a high monetary cost.

[FRED]

Re: Then and Now

Wow! Unbelievable. Increased by a factor of 82 in inflation adjusted dollars

Someone is getting the shaft big time here and I don't think it's the insurance companies...

Here's the old classic iTulip chart from 2006 that shows how tuition and health care costs have gone up while appliances and other manufactured goods prices have gone down.

Original iTulip analysis based on personal expenditures data in 2007.

[unlucky]

Re: Then and Now

I won't say that all of the higher price is "justified", but there is a significant cost factor difference between a device that works perfectly 99% of the time and one that works perfectly 99.999% of the time. If your cell phone drops a call or your computer blue-screens, it's inconvenient, but most of the time people don't mind due to the low cost of the equipment. People have come to expect almost a zero-tolerance of failure of medical procedures; that very high level of reliability carries a high monetary cost.

Sure, it wouldn't surprise me for medical devices to be more expensive than non-medical gadgets than do similar things. I personally would pay more for stuff if I though my life is going to depend on it.

What I'm puzzled about is more the fact that improving technology is always cited as a factor that drives prices higher in medicine, and never as a factor than can reduce prices. Suppose I'm a medical device manufacturer in competition with several other firms. If price is a significant factor for my customers then I may decide it's worthwhile to invest in R&D to reduce the cost of my devices (without reducing their effectiveness). If all other things remain equal this could be a great investment. But as far I know this doesn't happen much... presumably because the people who make the purchasing decisions are not particularly motivated about price?

[bagginz]

Re: Then and Now

there is a significant cost factor difference between a device that works perfectly 99% of the time and one that works perfectly 99.999% of the time. If your cell phone drops a call or your computer blue-screens, it's inconvenient, but most of the time people don't mind due to the low cost of the equipment. People have come to expect almost a zero-tolerance of failure of medical procedures; that very high level of reliability carries a high monetary cost.

"Shocking statistical evidence is cited by Gary Null PhD, Caroly Dean MD ND, Martin Feldman MD, Debora Rasio MD and Dorothy Smith PhD in their recent paper Death by Medicine - October 2003, released by the Nutrition Institute of America."

"The number of unnecessary medical and surgical procedures performed annually is 7.5 million. The number of people exposed to unnecessary hospitalization annually is 8.9 million. The total number of iatrogenic deaths shown in the following table is 783,936. It is evident that the American medical system is the leading cause of death and injury in the United States. " link

(my bolds)

Also:

http://www.cancure.org/medical_errors.htm

[jiimbergin]

Re: Then and Now

"Shocking statistical evidence is cited by Gary Null PhD, Caroly Dean MD ND, Martin Feldman MD, Debora Rasio MD and Dorothy Smith PhD in their recent paper Death by Medicine - October 2003, released by the Nutrition Institute of America."

"The number of unnecessary medical and surgical procedures performed annually is 7.5 million. The number of people exposed to unnecessary hospitalization annually is 8.9 million. The total number of iatrogenic deaths shown in the following table is 783,936. It is evident that the American medical system is the leading cause of death and injury in the United States. " link

(my bolds)

Also:

http://www.cancure.org/medical_errors.htm

so the decrease in deaths at all ages are purely because American's have such a healthy diet So if a given population has 100 deaths in a year, but a new procedure saves 95 of these deaths, but produces 8 new deaths the new procedure is now the leading casuse of death. Which situation would you prefer.

[flintlock]

Re: Then and Now

Here's the old classic iTulip chart from 2006 that shows how tuition and health care costs have gone up while appliances and other manufactured goods prices have gone down.

Original iTulip analysis based on personal expenditures data in 2007.

One obvious factor is that Medical and education cannot easily be outsourced to take advantage of cheap foreign labor, Manufacturing can. No coincidence manufactured item prices have dropped while the price of things you can't pay someone in a third world country to do, have not. It's been a lose/win/lose situation for most Americans. Higher prices of things you really NEED, lower prices for the things you simply WANT, and lower pay to buy both with.

Edit: I just saw the graph mentions "things that cannot be traded". Same thing I guess.

[c1ue]

Re: Then and Now

Actually, technology isn't directly the factor in increasing costs.

Strictly speaking, the increasing costs are due to aging. Now that people live much longer, there is a direct relationship between age and total spending on health care.

So while, for example, a 75 year old person with a defective valve would probably just have passed away in 6 months or a year in 1950, today they go through a major surgery to correct the valve and live another 3-5 years.

Medicare is complicit in this: much more so than any private plans, Medicare has a far more open ended limit on medical spending, doubly so given its mandate (65 or over).