What's happening on health care?
A few weeks back, I noted that national health care seemed to be the only major policy programme that the left could basically agree upon. Now, I hear the stirrings of a push for national health care rippling through the liberal blogosphere like a rising storm wind.
If this movement actually takes off, I expect that we'll see a great deal of vehement argument between conservatives screaming that the liberals are going to screw up our health care system, and liberals arguing that conservative people are hardhearted bastards who want the poor to die. So before that happens, I thought I'd set down some quasi-reasonable thoughts about what we want from our health care system, what a single-payer US system would probably look like, and what the pro's and con's of such a system would be.
The first point to make is that our health care system is already screwed up. The practice of having your employer pay for your health insurance is lunatic. We should not be surprised at what we get when the person who pays for your health insurance is not the person who consumes it.
Of course, the fact that our health care system is already screwed up does not mean that it cannot be screwed up even worse. Pointing out that the current system has problems is not an adequate argument for wreaking massive changes in its structure.
So, the first question: why is providing health care so hard? Why are health care and education the only major areas of life that almost everyone expects to have provided by the state?
Well, for starters, everyone needs them, and they're expensive, and getting more so. Education and health care are both victims of something called Baumol's cost disease. Baumol's is what happens when productivity growth is slow in a given sector (usually a service sector).
In other sectors, where productivity is growing faster, some of that productivity increase (generally about 70% over the long run) feeds through into higher wages for the workers. Now, the low productivity sector has to compete with other industries for workers; that means that they need to raise wages too, even though productivity isn't increasing. The result is that the cost of the service goes up. As Mr Baumol famously pointed out, it still takes as many people to play Beethoven's Fifth as it did when he wrote it, but symphonies are now competing with Microsoft for workers, instead of medieval peasant agriculture.
Thus, doctors and nurses have to be paid the kinds of salaries that bright, scientifically literate college graduates would attract if they chose some other field. But it still takes as many nurses to bathe a patient as it did in 1850. (Some of this work is being pushed down onto Physicians Assistants and Nurse's Aids--but even those jobs are highly paid, compared to how little nurses used to subsist upon.) That means that the cost of medical care will slowly, inexorably, rise.
The situation is made much, much worse by the cartel-power of doctors and the various health care unions, who have considerable power to resist productivity-enhancing change.
The third-party payer problem is a huge issue. No one shops for the best, lowest cost alternative; consumers demand the best, while employers, who are footing the bill, demand the lowest cost. The result is predictible: insurance companies battle down doctor fees to save money, and doctors respond by running as many patients as possible through their office (I'd say that about half my doctors project a visible desire for me to leave their office as quickly as possible before I've even sat down), and doing more, more highly remunerated procedures. It's a mess.
The third-party payer system also runs up administrative costs on both the physician and the insurance side, since a phenomenal amount of time is spent wrangling over what is, and is not, covered.
Health care also has the problem that while most of it is relatively cheap, some of it is unaffordable for anyone except billionaires. Get a rare cancer or tangle with the wrong eighteen wheeler, and you can end up on the hook for a bill that runs well into the six figures.
Insurance is generally the solution for such issues, but many argue that the market for health insurance suffers from adverse selection, which I explain here (and link to an argument by Alex Tabarrok that it does not, in fact happen).
But the real problem for liberals is that where adverse selection does not happen, it is because the system has booted out people with expensive pre-existing conditions. This is not a structural problem in the market, the way the other things are--indeed, if there were a market that was willing to basically sell someone homeowner's insurance after their house had burned down, I would think of that as a glaring structural issue. But neither is it acceptable to many Americans.
Which brings me to the second question we have to ask: what, exactly, do we want out of our health care system?
My thoughts:
Quality: We want access to the latest high-tech treatments. In almost all cases, we are willing to spend any amount of (someone else's money) to produce even trivial improvements in our lifespan, or quality of life.
Choice: We want to be able to pick any doctor, drug, or treatment we want.
Security: We do not want any risk that we will not have access to standard medical care.
Innovation: Except for Leon Kass and some environmental activists, we want a system that will continue to deliver more of the medical marvels that have expanded lifespans and improved the quality of life of nearly every American in the 20th century.
Equality: At least a number of us do not want rich people to have a better chance to live, or live well, than poor people.
Low cost: We do not want to spend huge amounts, either of taxpayer money, or our own hard-earned cash, for these vital services.
Later: my thoughts on what an American single-payer system would look like. Meanwhile, I encourage you to chip in with your own ideas.
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