Imagine someone were to say, "Homes are very expensive to purchase. That's why we need insurance to make the purchase of a home affordable." It would be a remarkably silly statement, because there are plenty of non-insurance ways to finance very expensive things. In fact most listeners would probably immediately think about how the average home buyer does some combination of saving for the down payment and borrowing to cover the remainder. Insurance is great if your house burns to the ground or otherwise is in need of expensive repairs that would break the bank. The unexpected house fire is a good case for insurance. But "paying for my first house" is emphatically not an "insurable risk." It is something that is perfectly predictable from the point of view of the home buyer. (Traditionally, insurable risks have to be "fortuitous from the point of view of the insured", which means they don't decide when the "risk" is coming.) Most of medicine is predictable in the same sense as buying a home is predictable. Routine check-ups, the occasional illness, and the more intense utilization of medicine in old age are predictable costs, even if these things are expensive. Insurance doesn't make these things any more affordable. Whatever you think your insurer is "paying for" is in effect making your premiums more expensive. So at best it's a wash. (In reality, it's expensive to have someone handle your money and then go through a claims adjustment process when you need some of it back. Financing via insurance makes routine, expected medicine, the kind that the average person can expect to consume over the course of a typical life, less affordable.) Insurance is great if you have a (temporarily) debilitating but treatable disease or injury. That would be roughly analogous to the house fire mentioned above. But expected medicine (say, the amount of medicine consumed by the median individual) would be better financed through savings and perhaps even borrowing. (I'd love to have the option of saving on my insurance premiums if I could purchase a "medical line of credit", rather than making the insurer promise to pay outright for my treatment.) The "insurance makes healthcare more affordable for typical patients" argument is silly on its face. It seems like we recognize the silliness in any other context.
Or suppose someone said, "Information technology keeps improving rapidly. That's why computers keep getting more and more expensive." This would be another silly statement, because a unit of computing power has been getting cheaper at an exponential rate. Even if someone takes "a computer" to mean "the unit that a consumer purchases, as in a single laptop or desktop", the purchase price has fallen (or at least has not been rising). Improvements in technology bring costs down, not up. On the other hand, if Dell came out with the fastest possible laptop it could build and everyone wanted one as soon as it came to market, you might see an "increasing cost". Unconstrained demand for the very top of the line would tend to drive costs up. I think that's more analogous to what we're seeing in medicine. The new drug comes out that it slightly better than the next best alternative. Since the patient generally isn't the one paying, and since almost no one in the chain of decision making is sensitive to costs, almost everyone gets the new drug. In one sense, the cost of "achieving the cancer-fighting effectiveness of Latest Generation Chemo Drug " has come down. It used to be infinity, because there was nothing on the market that was as good. In another sense, patients (or insurers or governments) are spending exorbitant sums and society at large is sinking tremendous resources to eke out a tiny gain in medical outcomes. The casual observation that "medicine is getting more expensive because of advancing technology" is a half-truth. The cost of buying "the medicine we would have bought taking last year's technology as a given" is going down. The cost of buying "top of the line medicine for all ailments without any constraints on demand" is probably going up. It seems like there is a useful way of phrasing this and a misleading way of phrasing this, and I usually hear the latter. Maybe when people say this, there is an implicit "...and of course once new technology comes out, it is obligatory that everyone has access to it." My usual response to this is to say that of course cybernetic organs are a basic human right. Of course, a trip to the lunar health spa, which has been shown to improve life expectancy by an average of ten weeks, is a basic human right. It's fine to be soft-hearted and think we have an obligation to help people who have trouble affording healthcare. But when it leads to logical absurdities or spiraling costs, it's time to rethink how we're doing it.
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