A good question…

Here’s a short excerpt from an interview with Milton Friedman, which raises a very interesting point about medical costs and technology:

RK: Well, but part of that surely is because medicine has figured out more ways to treat people.

MF: Every other technological improvement lowers costs. What technological improvement raises costs? Government is now paying at least half the costs of medical care. Obviously, that’s why, whatever the technological improvement, it’s generating higher and higher costs.

Is the problem as obvious as Friedman suggests? I think that if there were more people paying for their own medical treatment, costs would indeed come down. And we would see that many new treatments are found to be unreasonably expensive for most people, at least at first.

Whole interview is here at The American Prospect.

Update: On the other hand… new technology in medicine tends to keep people alive longer… thus giving them more time to rack up medical bills! And my understanding is that a vast amount of spending is done in the last week of a person’s life, particularly as life-saving technologies are used.

In the end, I think that there do need to be more incentives for people to keep themselves healthy and fit, but since medicine is a rather special product, I’m not sure it’s all so obvious as Friedman suggests.

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