In the comments here it was recently suggested that healthcare rationing is necessary:
It’s important to realize that the excess cost growth problem is NOT going to go away without overt rationing, period. We can push it off for a while by reducing system waste (increasing system efficiency, if you prefer) but the reasons that HC costs rise faster than GDP are so fundamental that excess cost growth can not be stopped without draconian controls. As soon as efficiencies are realized, the system will once again revert to the excess cost growth pattern. Just as it has in the past.
I believe that I disagree with that assertion on definitional and historic grounds. “Rationing” means the allocation of a resource by fiat.
I’ve written here at some length on the different mechanisms for the allocation of resources and, yes, since healthcare is a relatively scarce resource, it requires some method for allocation. However, it doesn’t require rationing, i.e. government-forced allocation. Indeed, I think that I’d argue as long as the supply bottleneck on healthcare remains intact that rationing will ironically produce higher costs due to deadweight loss.
And, as I’ve said here repeatedly, that isn’t what happened. The foundation for the problems we have now were laid during the middle period of Medicare from roughly 1972 to 1979 when costs rose in excess of inflation without increased utilization. The prices just rose. That was only possible because of the supply bottleneck on healthcare and the price support for healthcare that Medicare represents.
Additionally, I don’t think that healthcare consumers behave the way the commenter suggests. Consumers want health; they are purchasing healthcare. Very few would elect two heart transplants or get two immunizations if the prices fell. There are many ways of addressing that discrepancy. One would be holding physicians accountable for results rather than just paying them for more healthcare. I don’t necessarily recommend this approach but it would tend to reduce over-treatment.
The influence of the supply bottleneck and the resource allocation problem are the reasons I’ve harped so consistently on increasing the supply of healthcare around here. When I say “increase the supply of healthcare”, I don’t necessarily mean increasing the number of physicians (although that might be part of the solution). To the extent that increasing the number of physicians would help I think that the number of internists or GP’s should be substantially increased.
No, I mean changing the role of the physician in healthcare to something that is more managerial and consultative in nature. That’s the strategy that has been used in dentistry for some time and it’s been successful there. What we need is more and better automation, more telemedicine, and more performance of simple and routine procedures by professionals with training and pay commensurate with those tasks.
I disagree. I see the market system as a method of allocating resources. A sysnonym for allocate is ration. And we currently do ration now, we just do it rather poorly, IMO. There are incentives to over use at just about all levels.
Now if you want to limit rationing to just government fiat, then you probably have a point. For one thing I’m not sure it will work. Canada has government rationing and they are in the same situation we are in…well not as bad in that their day of reckoning is further off, but they have a day of reckoning on their horizion too.
Think of this, if we could snap our fingers and have a pure free market solution would we have more or less health care? I’m thinking less overall. Costs would be lower and we’d have less health care. Now of course this is a dead duck politically, and only the most extreme free market types would want (i.e. I don’t!). After all, those with pre-existing conditions would be in big trouble. So some degree of subsidization probably will have to happen, I just favor moving in a more market based direction as opposed to the completely opposite direction.
The reason for this is that everyone else has moved in the direction of more and more government intervention/control and as a general rule it tends not to work. After all, this is what we have here in the U.S.; massive government intervention.
Regarding the supply bottlenecks you talk about, what are their sources? I’m suspecting government possibly due to rent seeking. When you write:
This just screams rent seeking to me…or more accurately that we aren’t doing this is due to rent seeking. I once got into an argument suggesting that nurses might be able to do what doctors do in some limited cases. The upside is that they’d likely charge less and thus make some aspects of health care more affordable (i.e. less costly). Its competition. Yes it would also mean more of certain type of health care, possibly the kind many progressives like to talk about: preventive care.
Steve-Have you written your health care proposals somewhere? When you are snarky you come across as a total free market guy. I do not see how wecan do that, but perhaps I have misunderstood you.
I think that whatever health reform package we get should employ market tools. These would include price transparency, ie prices should be posted everywhere and you should never have to wonder what something costs. Competition when available. In most areas and with many specialties it will not work because of geography or innate scarcity. There will never be many pediatric hematologists.
I believe we should open up markets and make them national. I do not believe this will help much, but it is worth a shot with limited downsides. We should have malpractice reform.
However, we need to find some way to get docs to practice best medicine and cost effective medicine. Current incentives reward doing more rather than less. he market is incentivizing me to do lots of expensive procedures. Insurance companies do not stop this at all.
You are correct that nurses can do many of the things docs do. That can also be part of the solution. There is politics, economics and practicality that will make this hard to sort out. Example. A rural community may have enough internist level care to support just 2/3 of a doc. The rest could be done by a nurse. However, you will not be able to recruit a doc for 2/3 the going rate. The way you supplement to full salary is to have the doc do lower level care to supplement.
Steve
Yes.