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...
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