Health Care Waste, Continued
By Arnold Kling
Interesting comments from Roy Poses at Health Care Renewal. He, er, poses an interesting question.
Outside of medicine, the price of technologies drop as they age. Admittedly, there have been many incremental improvements in CT scans, but there have been no revolutionary changes. In particular, the “C” in “CT” stands for computer. CT scans use computers to process multiple x-ray images into the images of body slices which we are familiar. The original CT scanners used main-frame computers to do the image processing. Main-frames were very expensive in the 1960’s. Yet now one can get a personal computer that is just as powerful for a many orders of magnitude lower price. Since a large part of the expense of CT scanning used to be computer hardware and software, why hasn’t the price dropped like the prices of other computer hardware and software?
Great question, and I wish I knew the answer. Perhaps the FDA approval process is an issue? Perhaps the compensation structure in government and private insurance is an issue? By that, I mean that perhaps the custom is to reimburse hospitals in a way analogous to the old “rate of return” approach to utility regulation, which encourages excess capital cost?
By the way, Poses and a number other commenters took me as suggesting that doctors are paid too much in this country. I should have made it clearer that this is not my view. Although I think that the supply side of medicine is poorly served by professional regulations, which probably artificially inflate the incomes of all licensed professionals, I do not favor a direct assault on doctor salaries. Nor do I claim that other countries pay their doctors enough.
What I was arguing was that doctor salaries are a more likely source of the difference in spending levels between the U.S. and other countries. (Poses offers some contrary data, which differs from what I’ve seen, but that is beside the point here.) But just because we pay doctors more does not automatically mean that we are right and other countries are wrong.
UPDATE: commenter Jim Erlandson points to this story, which suggests that, as with personal computers, the nominal price decline has been small relative to the quality-adjusted price decline.
For Discussion. Has the cost of computer-based medical technology remained anomalously high? If so, why?