March 26, 2006
From the desk of Jane Galt:Health Care, Part III
A few weeks ago, Kevin Drum slammed this Michael Kinsley piece on universal health care thusly:
. . . Kinsley acts as if single-payer healthcare is some kind of radical theoretical construct that no one understands very well. Better to take things slowly.But various forms of single-payer have been in use in dozens of advanced countries for decades — including Medicare right here in the United States. There are few social programs we know more about than single-payer, and what we know is that in a well constructed program costs are lower, the quality of healthcare is better, the amount of healthcare is higher, private healthcare remains available to anyone who wants to pay for it, and people are generally far more satisfied than American healthcare consumers are. The problems Kinsley tries to scare us with flatly don't exist in the simplistic ways he presents them, and it's dishonest for him to pretend otherwise.
I don't think that's quite fair. We know what Medicare looks like; we know what single-payer looks like in other parts of the world. But that doesn't mean we know what it would look like here. Knowing what the federal system looks like in Germany doesn't give me all that much insight into the way it works here.
Likewise health care. We have different cultures, different national incomes, different social welfare systems, different employment laws, different environments (Europeans walk more and eat less). Perhaps most importantly, Europeans and Canadians got national health care at a time when medicine could do a lot less. It's a lot easier to deny people things they've never had, than to suddenly announce that we're eliminating private rooms in favour of open wards, and no one over the age of 70 gets hip replacements any more.
So what would a single payer system, or an HSA-based reform, look like here, rather than in the fevred imaginations of their most enthusiastic advocates?
I'm not against HSAs, but I can't say I think they'd do much other than slightly cut down on unnecessary lab tests, while providing a healthy tax subsidy for prescription sunglasses. The basic reason that American health care costs so much is that no one wants to tell anyone that they can't have any treatment that might possibly do them some good. A $5,000 deductible is not going to significantly alter that basic cost driver. It will mostly produce minor savings on clinical visits, but even those will be limited by the fact that almost no one goes to the doctor for fun. It might improve health care quality--when I was uninsured, and had to pay cash for my doctor's visits, I got outstanding service--but I just don't see them making a big difference in costs. The free market in dentistry has not made it all that affordable.
What about single payer? Let us, as Mr Drum suggests, take a look at the Medicare experience. Medicare is unable to engage in the most basic form of rationing--denying life-prolonging treatment to extremely old people who are likely to die of something in the near future. I don't say that we should deny such treatment--my basic feeling is that we're a really, really rich country, so what's wrong with spending a whole bunch of money trying to give Granny a few more precious days? But given that Medicare, which is essentially single payer for everyone over 65, is unable to engage in the least controversial form of health care rationing, I can't see how it would be able to, say, deny fertility treatments to single mothers. This is not true in other countries, for all sorts of reasons. But it is true here.
Nor do I think that single payer will be able to hold the line on wages and salaries . . . at least, not without disastrous results. The labour market for health care workers, from doctors on down, is largely a seller's market. Moreover, government programs are, if anything, even more prone to wage inflation than the private sector. That's because political institutions are extremely easily captured by their employees; they're the only organization where the employees vote for the bosses.
It is possible, even likely, that a government-run health care system would be able to batter cost savings out of suppliers of medical equipment, supplies, and pharmaceuticals. But that doesn't strike me as a good thing. The high returns on medical equipment and drugs are what encourage people to invent more such. Get rid of the return, and you get rid of the innovation. Generating cost savings on new technology in order to cover today's uninsured simply privileges one small group of unfortunates over the very much larger group of people, living now or in the future, who have diseases which we can't currently cure. The lucrative American market is currently the only incentive left for medical innovation; I am very much against destroying it.
Single payer advocates retort that pharmaceutical companies spend a lot of money on marketing, which is true, but irrelevant--forcing pharmaceutical companies to price at cost-plus will kill the research along with the marketing. Actually, if I were running a pharma company, and something torched my profits, I'd kill the highly speculative research before the lucrative marketing campaigns. If we want to stop pharmaceutical companies from advertising, or selling directly to doctors, surely outlawing those things is a much more effective way to manage it than slashing their profit margins and hoping that they cut only the things you want them to.
Others argue that the government can take over the research. Perhaps the government is necessary to fund basic research; I haven't studied the question. But looking at the defense industry, where the government is the sole purchaser and major funder of new technology, it's very, very hard to believe that applying a similar model to health care would result in greater value for money. Rather, it seems very likely to me that politically popular diseases would get an even more disproportionate share of funds than they do now. Pharmaceutical companies have to pay attention to things like the size of the market, and the strength of demand. Politicians pay attention to how loud the lobby is, which is why breast cancer and AIDS get research funding all out of proportion to the number of people they kill.
Ultimately, I think that a single-payer system would succeed in cutting costs only one way: by rationing new treatments, while providing older treatments indiscriminately. That doesn't seem to me like a desireable outcome.
But what about the uninsured, you ask. Don't you care?
Why yes, I do. My health care plan in the next post.
Posted by Jane Galt at March 26, 2006 09:08 PM | TrackBack | Technorati inbound linksI don't think the part about "better quality at lower cost" should go unchallenged. I've lived in two countries in which there was some kind of naional health care. Of the two, it appeared Germany was a little better in some ways, but it seemed to have something more like universal health insurance than a single payer system. Canada's health care system has lots of problems, enough so that the courts in Quebec have found the laws against private medical care unconstitutional because the national health care system was inadequate.
Since "better quality, lower cost" is a big part of the premises for the argument for applying single-payer here, it would seem the whole argument would be suspect.
Posted by: Charlie (Colorado) on March 26, 2006 11:03 PMJane,
The free market in dentistry has not made it all that affordable.
If you are not well above the median in income, then a proper operation of a free market should mean that you regard the cost of dental services as a sacrifice that you would rather not make. If you are at the median income and you do think that dental services are a no-brainer bargain, that would mean that the market is temporarily over-supplied.
To the extent that the costs of dental services are actually higher than a free market would produce, the likely culprit is insurance which induces dentists to raise the list prices of their procedures in advance of the inevitable discounts required by the insurance companies and, of necessity, acutally charged to the uninsured.
Regards, Don
Posted by: Don Lloyd on March 26, 2006 11:09 PMIf you are not well above the median in income, then a proper operation of a free market should mean that you regard the cost of dental services as a sacrifice that you would rather not make. If you are at the median income and you do think that dental services are a no-brainer bargain, that would mean that the market is temporarily over-supplied.
Ummm, citation, please? Why should dentistry, as opposed to (say) tree-trimming or groceries, be so priced? Median income has no bearing on proper pricing of a good or service. Arguably a medical service is such a personal benefit that it skews or even falls outside the widely-understood price/demand paradigm, but such a hypothesis must be proven, not assumed.
Posted by: Shelby on March 27, 2006 02:43 AMmy basic feeling is that we're a really, really rich country, so what's wrong with spending a whole bunch of money trying to give Granny a few more precious days
Q: We're also really really rich in young women, so what's wrong with spending a whole lot of them to give Granpa few more precious lays?
A: The answer is that the *state* is rich in neither young women nor money, and the state can only acquire either for purposes of redistribution by taking them forcefully.
Theft is no more acceptable than sexual slavery.
If Jane is in favor of giving someone else's granny a few extra days of life, she should, by all means, contribute to the cause. If Jane is in favor of giving someone else's grampa a few extra...experiences, she should also feel free to contribute to the cause. Beyond her own personal ability or desire to contribute though, she has no right to force anyone else to do so.
Posted by: TJIC on March 27, 2006 09:47 AMI don't say that we should deny such treatment--my basic feeling is that we're a really, really rich country, so what's wrong with spending a whole bunch of money trying to give Granny a few more precious days?
Well, I'm not going to go with TJIC's taxation = slavery angle, as I'm not That Hardcore a Libertarian, but...
That same argument applies equally to any service that anyone might want, even one admittedly of no long-term use, and enormously expensive.
It boils down to "the government can take a whole lot of money if it wants, so why not pay for really, really, really expensive things that make us feel nice, and anyway it's not like we're paying for it directly".
It is inevitable that one must draw a line somewhere, if one is not to have government health care consuming every possible dollar; the possibility of "a few days" at the end, of almost unvarying low quality and great expense, seems like a good line.
Heartless? Maybe, but so is taxing everyone within an inch of their lives to pay for those extra few days for everyone.
I'm not against some modest public health spending, but I'm certainly against the huge expense for a tiny and uncertain benefit that giving grandma "a few extra days" being paid out of the public purse.
A hundredth the expenditure on preventative care would be money far better spent... and increase overall happiness by more, as well, at a far lesser, and thus less distortionary, tax burden. (And while I'm generally not a fan of the utilitarian argument for spending, if we're going to have government spending on healthcare, which seems inevitable, that should be thoroughly utilitarian.
Posted by: Sigivald on March 27, 2006 03:44 PMWhen you say dentistry is expensive, what do you mean? There are many levels of dental care.
A basic cleaning will cost you the same amount as two oil changes on your car and they only have to be done twice a year. Fillings or pullings will cost the same as a moderate repair on your car. Full X-Rays are expensive but you only need those every 10 or so years, you only need minor ones once a year. If you take care of your teeth you shouldn't need any major work done.
Orthodontics are expensive because they have to withstand being in your mouth: a constantly wet place that is often filled with caustic and/or abrasive substances. You certainly don't want to skimp on those. You could just let you kid grow up with crooked teeth, unless their teeth are growing so badly it would be unhealthy to leave them as they are.
If you do need major dental work done, that qualifies as a major surgery. A slip-up by the oral surgeon and you have no feeling in half of you face, or worse, you have a heart-valve failure because of a bacterial infection.
Bringing this back around. Unless you have an emergency dental issue, you can shop around for price on dental work. You can even work out payment plans with dentist and oral surgeons.
Posted by: Xmas on March 27, 2006 06:55 PMShelby,
"Ummm, citation, please? Why should dentistry, as opposed to (say) tree-trimming or groceries, be so priced? Median income has no bearing on proper pricing of a good or service. Arguably a medical service is such a personal benefit that it skews or even falls outside the widely-understood price/demand paradigm, but such a hypothesis must be proven, not assumed."
I agree, dentistry isn't any different. Higher incomes can likely be correlated with lower subjective valuations of the monetary unit and lower price resistences Any free market will tend to produce prices that that must price someone out of the market, or else the prices are too low, likely because of excess capacity and competition.
Regards, Don
I get the impression from my brother-in-law (a dentist), that many foreign countries have relatively poor quality dentistry. The practice he used to be a part of had a substantial number of people who flew in from Europe and Asia just for treatment (people who were stationed in the US then went back home--the practice is located in Washington DC). As additional anecdotal evidence, there is also the stereotype of British and Japanese people having poor teeth.
Posted by: Sam on March 29, 2006 11:28 AMHow could anyone who has seen how public schools function in this country seriously consider giving the government a health care monopoly?
Posted by: Jim Bass on March 29, 2006 01:55 PM" Any free market will tend to produce prices that that must price someone out of the market, or else the prices are too low" ----Don Lloyd
How does one reconcile Mr. Lloyd's (true) comment about markets, with the "universal human-right" attitude toward "health care"? One way is by treating health care as a non-free-market entity.
The problem here is that the demand for medical treatment and services is virtually without limit. First we wish our pneumonia treated; then our depression; then our cholesterol; then our acne; then our erectile dysfunction. Where is the line between "right to health care" and purely discretionary services?
A further consideration: sometimes treating others improves our own health-risk, e.g. immunizations and containment of epidemics, treatment of schizophrenia or chemical dependency. Pure self-interest would suggest at least some responsibility for medical treatment of others than ourselves.
Posted by: wmbasow on March 30, 2006 09:39 AMComments are Closed.