Cora and I have discovered this past week that economics theory is simple, but that this theory can be modified or influenced by so many factors that economics then becomes very complicated. If we pick up where we left off in the previous article, for instance, the steps to define a "production possibility frontier (PPF)," or the point at which a nation's economy is most efficiently producing its goods and services, Cora and I are on top of what that means. But, if we add variables to that equation, then the possibilities provided by that "frontier" seem endless.

One example we might use to explain the production possibility frontier is included in the service sector, not in production. Health care, including health insurance, seems out-of-reach for many Americans because of the cost, and Cora and I wondered what happened to make this situation so severe. According to the Kaiser Public Opinion Spotlight on Health Care Costs:

"A substantial minority of adults report delaying or skipping needed health care because of cost. Nearly three in ten adults (29%) say that they or a family member has avoided filling a prescription, has skipped recommended medical tests or treatment, or has cut pills or skipped doses of medicine because of cost. A majority of these (56%) assert that their condition worsened as a result."

If we define health costs as a product within the American PPF, and America isn't producing the quantity or quality of health care at reasonable cost, then - according to the PPF - resources are being managed inefficiently and society as a whole will diminish as a result. But, for health care to be provided at a reasonable cost, something else must be sacrificed to bring that health care cost down. This is where the PPF becomes tricky, as the alternate solution to help provide any product or service at a reasonable cost depends on timing, politics, national choices (macroeconomics) and individual choices (microeconomics).

Cora and I will delve into two national problems concerned with health care:

1. New bills are often introduced that offer reasoning behind a national health care program that might provide individuals with health care. The bills are usually defeated for several reasons, including the perspective that many people hold where they don't want to pay for the health care costs of others and to fund such a program might mean a tax increase.
   
   
2. According to the Agency for Healthcare Research and Quality, (AHRQ), the U.S. spends a larger share of its gross domestic product (GDP) on health care than any other major industrialized country. Health care costs now consume 16 percent of the nation's economic output. This figure is up 3 percent from 2000. This means that, according to the PPF theory, poor production and management are affecting cost, and that the inability to offer reasonably priced health care has affected this nation's society.

Health care costs arise from research, development, hospital care, private care, and medications. Decisions to help cut health care costs include those arguments on whether to cut AIDS research, for example, or cancer research. Both of these diseases and many more often seek funds from individuals as well as from the government to continue their research and development phases. Hospital care, or private care, ranges from outpatient visits to a clinic/hospital or to a private doctor to long-term care in a hospice or old-age home. Costs are defrayed by individual donations and from grants given by public and private sectors, including the government.

Finally, medications appear to be the real culprit behind health care costs, at least from individual perspectives given in several reports similar to the Kaiser Public Opinion. But, it seems a mystery as to why these costs are so high (even the government seems mystified). In response, the government and other entities have pushed for a "preventive care" approach to life, where the individual becomes responsible for life choices that would help eliminate the need for some instances of hospitalization and medications.

In other words, Americans are asked to live a healthy life as a balance to rising costs in health care. If we apply this formula to the PPF, Cora and I discovered that this is a poor way to manage health care, as most individuals aren't following the advice given. It seems that - given the law of scarcity (see previous article) - most people would rather eat a candy bar than an apple, because the candy bar may be more convenient, it may taste better, and it may provide a better "reward" than an apple.

This may be why the government is becoming involved with "fast food politics," but another reason may be that some fingers have been pointed at how the government has allowed the food and drug industry to get by with some strange marketing tactics ("organic" gummy bears, for instance, are still empty-calorie candies). If you type "U.S. government fast food" into a search engine and look at the news items, you'll discover that this topic is a hot one in America. Cora and I believe that this ongoing reporting and discussion will continue to unveil some of the reasons why Americans are so sick, overweight, and inclined to remain that way.

We especially enjoyed one article called, "Supermarket Sleuth," published by Salon. In this article, Katharine Mieszkowski interviewed Marion Nestle, a professor of nutrition, food science and public health at New York University. Nestle also authored the book, "Food Politics: How the Food Industry Influences Nutrition and Health," and she's about to publish another book entitled, "What to Eat: An Aisle-by-Aisle Guide to Savvy Food Choices and Good Eating." We hope that you'll read the Salon article as well, because Nestle brings some interesting points to the table. I believe that Cora and I will behave a little differently the next time we shop for food?and for equities in the super-market sector?

Until Then,
Linda Goin