Bad prices, public spending, and poverty
A serious person would follow this up with a discussion of relative prices. Over the past 50 years, televisions have gotten a lot cheaper and college has gotten a lot more expensive. Consequently, even a low income person can reliably obtain a level of television-based entertainment that would blow the mind of a millionaire from 1961. At the same time, if you’re looking to live in a safe neighborhood with good public schools in a metropolitan area with decent job opportunities you’re going to find that this is quite expensive. Health care has become incredibly expensive. The federal poverty line for a family of three is $18,530 a year. I wonder how many Heritage Foundation policy analysts are deciding they want to cut back and work part time because it’d be super easy to raise two kids in DC on less than $20k in salary?
I think it’s important to note that healthcare and education are unique goods. For one thing, there’s a lot of public spending on each but that spending tends to not really tackle the rising costs. The more we spend, the more the cost goes up. This isn’t because the public spending is driving costs, either, it’s because the spending is done within a system with a really stupid, almost non-existent, pricing mechanism. This is especially glaring (and complicated) in healthcare.
In healthcare there are virtually no competitive pressures and the pricing system is a disaster. Meanwhile, our public spending on healthcare tends to simply subsidize the bad, opaque pricing mechanism, driving costs up further.
For instance, my daughter got a piece of ribbon stuck up her nose that my wife could not get out. So we took her to the pediatrician, and moments later all was well. The ribbon had been removed. No expensive surgery was necessary, no medicine, no materials, and only a handful of minutes of the doctor’s time. The doctor then asked the billing person to bill us for the cheapest procedure they had.
The bill came back a couple weeks later for $250. In what sane world does this cost $250? We have such a ridiculously mangled healthcare system. In a sane world we would have been able to go down to a nurse’s office where we would have been told upfront the cost of the procedure. We could have called around to five different offices, or checked on their websites to comparison shop. We would have paid $20 to have the two minute procedure done, and we wouldn’t have bothered to bill it to insurance. In fact, insurance would be reserved for big costs and emergencies, while low-cost, simple procedures and check ups would be cheap and come out of our pocket.
Meanwhile, in music, tech and many other areas consumers are getting way more for their hard-earned dollars, and that has indeed improved the material well-being of the poor. The trick is getting healthcare and education costs to follow a similar pattern. We can’t do that by simply spending more public money on bad prices. We need to address the supply of these goods as well as access to them. That means more low-cost health clinics, fewer supply-side protections, and more competition in healthcare. Education is a different ball game, but similar rules apply.
This doesn’t mean we stop spending public dollars, either. It just means we should be spending them wisely.