Health System Costs as Trash and Treasure

Last May, Canadian economist Robert G. Evans gave the Birnbaum Lecture to the Group Health Cooperative. From that lecture comes the following quote:

“Nothing is ever wasted,” he said. Every dollar “always goes somewhere, which is what makes it so difficult to bend the (cost) curve.”

Since I have a preference for the Farm to Market and Ranch Roads in Texas, my mind immediately made the connection to the trash and treasure shops I have encountered there. Their retail operation is based on the principle that one person's trash is another person's treasure. Their financial success is based on the owner's ability to gauge the potential buyer's view of a particular item as either trash or treasure. Most items do not have price tags just for this reason.

The inability of Americans to bend the rising curve of increasing health costs downward is exactly due to the fact that a cost that is labeled as a waste or inefficiency is someone's treasure that they will vigorously defend. Likewise, neither the person making use of health care nor the person prescribing it is aware of the price tag. In some instances, even an insurer's business office cannot give you a correct cost of pre-approved care, a striking example of incompetence by the people who are supposed to know.