Is the Data on the Rising Cost of Health Care Misleading?
AQR Capital Management’s Cliff Asness on the costs of health care.
- Duration 7:18
- Date Jun 22, 2012
AQR Capital Management’s Cliff Asness on the costs of health care.
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One big reason politicians said we need obamacare.
Was to rein in health care costs.
They are up 400%.
Over the last thirty years more than double the rate of inflation.
But my next guest says the data misleads we measure the wrong things.
-- -- -- through an investment front from one billion dollars to fifty billion so he's pretty good with numbers so.
How can see the cost of health care hasn't -- the amount we spend.
On health care has gone way up.
But the cost to something is the cost of the same thing through time what would you spend -- 1950s health care right now.
On how much you think you have to pay for it I don't think he's been very much and -- -- in the -- -- available -- -- -- -- -- -- it would cost that -- because we wouldn't -- -- it's -- -- -- not as -- how much would you spend spend for medieval barber to -- you.
What's happened is the quality of health care and medical techniques the new drugs the new procedures have gone way up.
That's state -- and this is real important that's a good thing not a bad thing the example I like to use is imagine.
Some company comes along and invents.
Cure for cancer.
Cost double all the other -- cancer treatment after adjusting for every affect cost double.
We're gonna spend more on health care.
Is -- someone who's gonna argue that's a bad thing.
It's just the wrong way to frame the problem doesn't Obama -- do some good -- -- it gives more people insurance.
Maybe -- makes it -- people did go have gone bankrupt paying for health care.
-- let's let's start without the coverage issue.
There -- a lot of things and hope we get to talk about it that are that are.
Health care system which maybe it is in a free market health care system but it's free -- that much of the world does not go -- it's not a free market -- sixty.
It's -- ready extremely infiltrated by the government when it comes to regulation when it comes to Medicare Medicaid.
General government pays half the bills it -- makes insurance companies pay most of the right exactly and I'll and I'll I -- say it now even with that the fact that our system is.
-- -- -- Which we do things a lot better than systems that that that are completely not -- we.
Are the place in the world that if you have something that is very bad you come.
When it comes to treating anything difficult -- -- place to go where do we have problems we have problems on cost.
And we have a brawl with coverage there are people in this country who don't get covered the two biggest examples in the two biggest reasons -- the very -- And people with the now famous pre existing conditions that make it prohibitive for them -- so we need obamacare.
-- will shock you but no we don't bomb.
We need to have a national debate on how much we want to help these people and that's a fair debate that but Obama -- sheets.
What Obama -- says.
Is let's not debate how much we should spend on helping people -- Obama -- says is we're gonna take people with preexisting conditions and we're gonna force insurance companies.
To provide them.
Coverage and then what we're gonna do is well -- go bankrupt if we do that.
Within fort literally force -- course everyone else in the country to buy that insurance companies product.
That is a crazy way.
Efficiency wise to cover people and it's at this honest way what it's a way of saying we're not gonna raise your taxes we're gonna make those evil insurance companies do what they should well done -- the first -- you got it exactly right and I hope that was sarcastic.
Because it is raising your taxes.
-- a lot of times regulation and law is a sneaky way to grow government -- it.
Raising taxes to spend more money is what everyone means by growing government but raising the cost -- something insurance companies.
Will not pay this we will all pay this we will all -- this through higher belts.
So it's just a deceitful way to hide in -- -- creates -- deceitful way to hide a tax increase this an honest way to argue for it they have our neighbors they -- -- companies is a trick.
It's it's it's a complete -- is really only one economic purpose to an insurance company.
It's not doing the paperwork.
It's assessing risk.
An insurance company that it is it exists to say.
Well John -- -- and in good shape in and -- could lose thirty pounds I should pay mom imposing more costs and insurance covered what's we've removed that function.
What's weird is that even if they repeal Obama -- -- mandate.
Part of it that Republicans want to keep that Bill O'Reilly wants to keep his.
Don't discriminate against people with preexisting conditions get Republicans are wrong.
-- Republican is that discrimination is a good part of ensuring Republicans have a bit of a disease they -- the thing that sounds the nicest they'll make you sound really mean if you're against.
And they go all right we love that one.
They're just wrong debate might explain why they're wrong they're wrong sound stronger wrong -- -- again well people with preexisting conditions.
Some of them did nothing wrong but the most did nothing wrong.
I'm good at most they would pre existing conditions did nothing wrong -- I hope I personally would like to help those people.
When we have a debate about this who knows where it's gonna come out if we have an honest debate about how much to help these people.
But -- country could decide to help them a lot.
The way obamacare does it by making an insurance -- pretend it doesn't exist.
Does two things it hides the call -- does many things that -- the cost but mostly it takes away the only thing an insurance company does for the world.
Which is tell me that John should pay less than cliff if we should -- could both afford it that's an insurance companies economic function go back to the go back to fire insurance.
You have one house that's that's rickety old timbers.
With with oil -- in the and in the middle oil soaked rags in the basement you have another built up to every modern code.
Nobody in their right mind on -- including a progressive would say they should pay the same amount in insurance.
Now in preexisting conditions it's a set a case it's not these people's fault.
But these -- some people are obese some people smoke.
Net -- is that that it wouldn't be looking at me know.
I'm I'm just doing FBI -- -- the moral argument gets a gets gets gets murkier when it's it's someone's fault it is the case that we -- all the way tourist company for rewarding them.
Person who exercise absolutely there's no reward to it.
-- and an economically charging everyone the same let's go back to another thing that's popular and Obama -- and some Republican support.
Keeping kids on their parents' insurance until they're 26 instead of twenty want.
Everybody likes that in a in a free market.
This should be to policies.
One -- you're 26 and one -- -- -- want.
Chief someone tell -- -- -- -- -- -- 21 if we decide again we desperately need to be charitable to some people.
We should it be it but we should beat in the sunlight.
We should be it honestly this is forcing all the cost to everyone everyone has to pay -- -- six even those who don't need it.
To help the -- want it and then that cost is hated that cost is big government -- -- tax and spend big government being run through obamacare is regulation.
But the illusion is that.
If we -- you to cover it until the kid is -- six we foresee to cover the pre existing conditions.
It's free and it's a good thing government gives you wealthy this'll this'll -- -- John but nothing's for -- Everything in the world is paid for by by somebody most of it is paid for by the middle class in America.
Politicians like to stand up and be nice wonderful saints with other people's money.
Nothing is -- thank you cliff pass that's more I don't.