Quote:
Originally Posted by Adder
Credit cards aren't third-party payer situations. There isn't anyone guaranteeing your credit card debt, and the lenders have to weigh risks accordingly.
ETA: Btw, students loans are an interesting variation as the third party guarantee only explains some of the $100k in loans to the history major. Apparently the private lender who is providing the rest is sufficiently comfortable with the interest he's getting and the student's projected ability to pay. So I guess I'm skeptical that you've pinpointed the right source of the problem for escalating education costs. I think it has more to do with supply and demand, and having "artificially" constrained supply, the institutions' ability to extract higher payments thanks to the availability of financing.
I don't think that's accurate. He just isn't interested in a world in which we just write off people who can't afford to pay for their health care.
Obviously if one is freed of the constraint of wanting to provide health care for all (or all old people), it's pretty easy to control the cost of health care to taxpayers.
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The relevant psychological factors at work in use of a health insurance card, credit card, or student loan, are near identical. Divorce a person from the act of feeling money leave his wallet, or writing a check for something, and he will spend more.
I'm not advocating writing anyone off anything. I'm advocating a shift, slowly, incrementally, toward more of a direct purchaser model. Prices will drop as the revenue stream from third party payments decreases (supply, demand, etc.). It's not in debate whether a third party payment structure drives prices upward. It's just a question of how much. We can reverse the trend toward an exclusively govt/insurer-run HC system and in doing so, reduce costs.*
There's no constrained supply in education. A huge percentage of the $600bil in non-performing educational debt is tied to for profit institutions that let anyone in the door and charge a ridiculous tuition, often above that charged by an actually accredited, and 10X better state school.
*The loudest argument against trying to do this is that the common person cannot manage his finances, or his health care. Essentially, it is "We have to have a third party take care of a large part of this country because these people will not be able to, or won't care enough to, take care of themselves." There's a lot of merit to that. I think we'll always need Medicare to take care of those who simply don't have resources. But as to the second group - those who are able but would rather spend the money elsewhere, or not bother being responsible for themselves - I'm having a hard time justifying why they deserve anything. Just about the same kind of hard time I have justifying why bankers whose firms should have collapsed in a true free market should receive bonuses on par with what they received in 2007. These "free riders," it seems to me, should be left to fend for themselves. (I know... I know... "How do we separate the merely irresponsible from the truly needy?" Vexing.)
