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Posted at 9:49 AM ET, 02/25/2011

Everyone likes lists

By Ezra Klein

The 11 things you'll learn about economics if you read 20 of the profession's most influential papers. Here's my favorite:

9. The average bill for surgery in Birmingham, Alabama, in 1953 was $99.

By Ezra Klein  | February 25, 2011; 9:49 AM ET
 
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Comments

When I was born in 1956 the entire hospital bill was less than $100 and my father paid it in full with a check before they would release mom and me.

Posted by: AuthorEditor | February 25, 2011 10:19 AM | Report abuse

Ezra,
Could you put that in context that makes it more informative and allows us to compare it with something we know?

What was the daily wage in Birmingham in 1953? How many days work did that $99 represent.

The 'factoid' belongs with Politico, not with a policy wonk blogger.

You can do better than that.

Posted by: grooft | February 25, 2011 10:28 AM | Report abuse

--*The average bill for surgery in Birmingham, Alabama, in 1953 was $99.*--

Twelve years later, Medicare was passed.

Posted by: msoja | February 25, 2011 10:37 AM | Report abuse

Yes, 1956 -- when a hospital bill might have been $100 -- was prior to the implementation of Medicaid... as was the cited paper (http://www.aeaweb.org/aer/top20/53.5.941-973.pdf).

It's truly interesting to graph the cost of medical treatment year-by-year.

Posted by: rmgregory | February 25, 2011 10:43 AM | Report abuse

"What was the daily wage in Birmingham in 1953? How many days work did that $99 represent."

The minimum wage was $0.75 in 1953. We'll assume that the minimum wage was roughly 40% of the median wage then, or $1.875 per hour. That's $15/day for an 8 hour day for a median wage worker.

http://www.laborlawcenter.com/t-federal-minimum-wage.aspx

So the bill could be covered after 6.6 days of work.

Using the same analysis for today ($7.25 min, $18.125 median), the median person earns $145 per day, and in 6.6 days will have earned $957.

The bill amounts to 2.6% of pre-tax wages.

Posted by: justin84 | February 25, 2011 10:49 AM | Report abuse

It's a factoid. It's interesting but not an argument in and of itself.

There are a million things which happened between 1953 and now in the medical field that increased costs. If we're going to just post things which happened after 1953 and imply that there's causation for increased costs, I'm going to state confidently that Dungeons and Dragons was invented after 1953. Interesting!

Posted by: MosBen | February 25, 2011 11:06 AM | Report abuse

It would be helpful to know what the "average" surgery costs in Birmingham today, and how the costs compare after taking 58 years of inflation into account.

We all would expect a gigantic number, but I imagine the current average cost might be somewhat lower than anticipated, because very minor surgical procedures (removing a cyst, stitching wounds, etc.) greatly outnumber major surgeries.

This is a factoid that is not very interesting until there is at least some context with a means for comparison.

Posted by: Patrick_M | February 25, 2011 11:24 AM | Report abuse

--*This is a factoid that is not very interesting until there is at least some context with a means for comparison.*--

Wrong as usual, Patrick. What's extremely interesting is that at a level of somewhere around $99, busybodies, meddlers, and looters managed to conjure a need so great that the federal gummint had to stick its fat nose in and gin up Medicare and Medicaid, against all kinds of warnings, and as a result, even the briefest hospital stay is beyond a great many people.

Further, with every government intervention it will only get worse, until all the other-people's-money is spent, and collapse ensues.

Posted by: msoja | February 25, 2011 12:24 PM | Report abuse

msoja, yes, it's as simple as medical care being $99 and wonderful and then government meddlers get involved and costs skyrocket. There are no other contributing factors worth considering. It's wonderful to live in such a simple world, no?

Posted by: MosBen | February 25, 2011 12:39 PM | Report abuse

--*There are no other contributing factors worth considering.*--

Yes, yer right. Liberals had to destroy the black nuclear family, too.

Posted by: msoja | February 25, 2011 2:32 PM | Report abuse

Jesus, dude. Are you unable to have even a basically honest discussion? Are you so far up your own @ss that all you can say is nonsense?

Posted by: MosBen | February 25, 2011 11:02 PM | Report abuse

"Jesus, dude. Are you unable to have even a basically honest discussion? Are you so far up your own @ss that all you can say is nonsense?"

Is there anything factually wrong with msoja's assertions? Those assertions being:

1. Third party payment (particularly government as the third party) significantly drives up prices, utilization, and total cost of whatever sector it is applied to?

2. Social welfare programs undermined the institution of marriage, particularly for African Americans.

You could say 1) is incomplete, in that government favoritism towards comprehensive insurance plans, which made it impossible for catastrophic plans run by fraternal societies to compete, was also very important. But in general, I don't see anything factually wrong.

Just imagine comprehensive insurance applied to another sector - say, automobiles. Imagine you had a $1,000 deductible and 80% co-insurance to use when buying car, or when you got it fixed up, checked out, etc. Your insurance might let you buy a new car every 5 years / 75,000 miles.

Cars would only compete on quality, and never on price. A Honda Accord might cost $80,000, and be optioned like an S-Class Mercedes. Tires would all be run-flats, and probably cost $500-$1,000 each. No one would need to learn anything about automobiles, nor would there be any reason to cross check one mechanic's diagnosis or price with another.

It would be argued that the cost of automobiles was far beyond what the average family could afford, and automobiles are necessary to get around in most of the country, so we need universal auto insurance. Conservatives who wanted higher deductibles and for people to pay for the small stuff would be informed that we needed free checkups every few months, because they could prevent a costly engine change later, which might cost $20,000 (with everyone understanding that $20,000 repair as making their own insurance more expensive). Of course, with insurance, most people wouldn't worry as much about shopping for cars with great reliability, and as such reliability would likely be lower.

Studies would show the uninsured had to deal with unreliable used cars, were more likely to go bankrupt because of auto expenses, etc.

Posted by: justin84 | February 26, 2011 8:56 AM | Report abuse

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