This is a biggie. The services that we pay for (medical, legal, dental, etc) are not permanent. The actual product that we buy (food, clothing, etc) might be the same day but what it will cost us in the future will likely be different.
This is what’s known as the “fixed cost” problem. Services are in that they cannot be stored for use in the future. A good example of this is health care. The majority of us pay for health care now, but over a period of time, the price of that same health care will likely change. This is a problem because if the price of health care changes, so does the cost of everything else we have to buy. That means our cost savings will also change.
Services are a great example of this concept. If we had a fixed cost for health care, one of our biggest expenses, we would be in trouble. Instead we have to pay for all the other things we use our health care for. As a result, we end up spending a lot more on health care than we would had we had the fixed cost.
Services are one of the major reasons that our health care costs rise. The other major reason is that health care costs also change as the costs of various health care services change. In the old days, the fixed cost of health care was the amount of money an employer paid for their employees’ health care. That fixed cost remained the same for as many as 50 years. It dropped once our health care costs began to rise.
The problem is that now it’s the fixed cost of health care that is rising as well. We have to pay for all these other health care services that don’t cost anything. As a result, we are paying more and more for health care while we don’t actually need it. And that is one of many reasons that health care costs rise. The other big cost is that health care is being rationed. Like other goods and services, health care is rationed.
It is a good thing the government has done a number of things in the past to combat this problem. For instance, the government has a program called Medicare. The program allows the government to pay for medical care for the elderly on an equal basis to that of younger individuals. You would think that, being the government, they would be the ones deciding what to do with Medicare. But the opposite is the case.
Medicare is just one example, but it’s one of the most important ones. So much so that the bill would pass into law without anyone even knowing it. We’ve all seen this happen over and over again in our own lives. No one is even aware that they’ve hit a limit.
But what about the government? They don’t have a limit, so they can pay for the elderly a flat rate for the rest of their lives. That’s insane. They should just pay at their regular rate for the rest of their lives. They can afford it.
So what is the next big thing in healthcare? For sure it’s Medicaid which has been so controversial. The current system is a system where the government and insurance companies both pay for all the care for the elderly. But the government is paying for it because they can. But what about these private companies that can’t just pay for it all themselves? They could just buy it from the government. But the government doesn’t have to pay for it all. They just don’t have to pay.
Health care is the only industry that’s been so heavily regulated that it cannot be changed. And by the way, it’s been that way for a long time, at least since the 1960s. There is still a lot of money being spent on this. And the problem is that the way to get money to pay for it is by cutting off the supply of money. So the government is cutting off the money from Medicaid. And they’re cutting off insurance companies.
