At War With Ourselves

The theme here today at The Glittering Eye seems to be our contradictory objectives. In his column at the Washington Post Robert Samuelson correctly points out how contradictory, even perverse, our goals with respect to health care are:

At a gut level, we know why health care defies logical discussion. We personalize it. We assume that what’s good for us as individuals is also good for society. Unfortunately, this is not always true. What we want as individuals (unlimited care) may not be good for the larger society (overspending on health care).\

Our goals are mutually inconsistent. We think that everyone should be covered by insurance for needed care; health care is a right. Doctors and patients should make medical choices, not meddlesome insurance companies or government bureaucrats; they might deny coverage as unneeded or unproven. Finally, soaring health spending should not squeeze wages or divert spending from important government programs.

The trouble is that, in practice, we can’t meet all these worthy goals. If everyone is covered for everything, spending will skyrocket. Controlling costs inevitably requires someone to say no. The inconsistencies are obvious and would exist even if we had a single-payer system.

Here’s the bottom line:

We are left with a system in which medical costs are highly concentrated with the sickest patients. (The top 5 percent account for half of all medical spending.) This creates a massive resource transfer, through insurance and taxes, from the young and middle-aged to the elderly. (Half of all health spending goes to those 55 and over, who represent just over one-quarter of the population).

And yet, we govern this massive health-care sector — representing roughly a third of federal spending and nearly a fifth of the entire economy — only haphazardly, because it responds to a baffling mixture of moral, economic and political imperatives. It will certainly strike future historians as curious that we tied our national fate to spending that is backward-looking, caring for people in their declining years, instead of spending that prepares us for the future.

That is emphatically not the case in the UK, France, or Germany. As I have previously documented here intergenerational health care spending is much more equal elsewhere than here. It’s almost as though the presence of the Medicare subsidy encourages more care than would otherwise be the case.

Here are Mr. Samuelson’s prescriptions:

We need a better allocation of burdens: higher eligibility ages for Social Security and Medicare; lower subsidies for affluent recipients; tougher restrictions on spending. But this future is impossible without a shift in public opinion that legitimizes imposing limits on health spending.

My preferred course would be slightly different. I would change the incentives that lead inexorably to more treatment. The expectations in the health care sector need to change.

2 comments… add one
  • Jimbino Link

    Buying at Walmart or Amazon gets ever easier and cheaper. There are no complaints that there are so many things you just can’t buy. The opposite is true with our Healthcare-Insurance complex.

    We need to enlist Walmart, Amazon or maybe Uber to run our healthcare system. After all, they publish all their prices, don’t rely on insurance to pay for anything, respond instantly to marketplace price signaling and constantly improve their products and delivery.

  • steve Link

    “I would change the incentives that lead inexorably to more treatment. ”

    Yes! It is not just the prices. Always remember prostate cancer. There are at least 4 methods of accepted successful treatment, all with about the same success rates (and complications). The costs vary by at least 500%. Insurances pay for all of them. That is part of the price component. Then remember back surgeries and knee arthroscopies.

    https://www.nytimes.com/2016/08/04/upshot/the-right-to-know-that-an-operation-is-next-to-useless.html

    Steve

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