Sept. 25, 2006
The conventional wisdom says that Americans are facing a crisis in medical care and medical insurance. The conventional wisdom couldn’t be more wrong. Americans are not facing a crisis in medical care/insurance. They are facing a crisis in self-restraint.
According to the Bureau of Labor Statistics, the average household spends about half as much on health care/insurance as it does on automobile expenses. Yet, curiously, the conventional wisdom doesn’t say that Americans are facing a crisis in car care.
The reason that sniveling Americans snivel about medical costs but not car costs is that they’ve been led to believe that medical care should be paid by someone else, a myth perpetuated by the leftist media, by leftist academia, and by politicians on both the left and the right. Thus, Americans have a hissy fit when they pay $300 out of their own pocket for a medical procedure done by a surgeon with 22 years of education, but they don’t have a tantrum when they pay $300 for a brake job done by a mechanic with 12 years of education.
Of course, cars are more than basic transportation. They are also a status symbol, a class equalizer and the opiate of the masses. Someone behind the wheel of a Cadillac Escalade could be a multi-millionaire or a peon who will still be making car payments when the plasticized truck is ready for the used car lot. Those with high status needs or low self-esteem or the need for immediate gratification don’t get the same psychological “fix” from saving money for future medical expenses as they do from chrome wheels, leather seats, automatic door locks, GPS mapping systems, big engines, CD players, and pop-down DVD players.
A similar phenomenon has occurred with housing, which consumes as much household income as cars. Due partly to the tax code, which allows income tax deductions for mortgage interest, houses are twice as large as they were in the 1950s, and Americans spend more of their capital on housing than citizens of other industrialized countries.
For example, I live with my wife and son in a 3,900 sq. ft. home, which is three times larger than the bungalow I lived in as a kid. And when my parents were kids, they lived in an even smaller flat.
Is my life three times better and three times more comfortable because my home is three times larger? Absolutely not. In fact, my life has three times the hassles, because of the cost of heating, cooling, repairing, cleaning, furnishing, remodeling and insuring the large house.
It sounds like a cliché, but my parents and grandparents had time to sit in the backyard or on the front porch and talk to neighbors and watch their kids and grandkids play ball in the street or alley. Today, I wave to my harried and hurried neighbors as they park their expensive cars in the garages of their large homes and go inside to bitch about the crisis in medical care.
Things weren’t much different when I lived in the barrio and in working-class neighborhoods. There, people spent money not only on chrome wheels but also on lottery tickets, cigarettes, tattoos, sporting events, casinos, fast food, all-terrain vehicles, cell phones, cable TV, and wide-screen TVs. Instead of carrying a lunch box and Thermos bottle to work as my dad did, they could be seen at the convenience store paying twice as much for fat-laden food and sugary drinks. Then they went home at night and bitched about the crisis in medical care.
Technological advances in medical care are expensive but cheap—expensive in that they cost a lot; cheap in that they are a small price to pay for curing diseases and extending lives. The problem is not the cost of medical care but the fact that too many people don’t have the self-restraint to save money when they’re younger and healthier for the increased medical costs they will incur when they are older and not as healthy. In economic terms, they have a short-term time preference. If the entire human race had a short-term time preference, we’d still be living in caves, wearing animal skins, and dying by the age of 25.
Government policies have exacerbated the problem of the short-term term horizon by making people dependent on either their employers or the government for medical insurance. The policies also have stopped the development of association-based catastrophic insurance, whereby people with a long-term time horizon could buy lifetime coverage from fraternal and professional associations, from charities, or from churches.
The solution to the root problem of a lack of self-restraint is not to mask the problem with poppycock about a crisis in medical care/insurance. The solution is for Americans to save for the infirmities of old age instead of buying chrome wheels, $5 beers at sporting events, and granite counter tops.
America doesn’t have a medical crisis. It has a self-restraint crisis.
An author and columnist, Mr. Cantoni can be reached at firstname.lastname@example.org.