(For Tim:) I'm Not Buying Free Health Care

Looks like this election cycle, health care is going to be the primary domestic issue. It is one that gets at the very core of what is just and what is American. it is an issue that almost everyone has a strong opinion on, but (unlike say, abortion) one where there is room for dialogue. For those reasons, I am writing what may turn out to be the first in several posts that seriously contemplate the issue of universal health care. So there is no confusion: I'm against it.

Whether we have a public or a private health care system (or a mixture) is basically a question of equity versus efficiency. One can ration health care (and one must, because it is a scarce resource) any number of ways, but the two ways most prevalent are by need or by value.

Universal health care systems ostensibly are about allocating according to need. For instance, a person poor enough to be unable to afford health care may get a deadly, though curable, disease and need a doctor's attention more than a rich person who is getting surgery to correct annoying but not debilitating knee problems. Public health care systems would likely choose the more serious disease over the less serious knee trouble. It seems unfair to many if not most people that the rich person gets his knee problem fixed while the poor person dies. In a need based rationing system, the person who needs the health care most gets it, regardless of ability to pay. If you want to see this, you don't have to go to Cuba, your local emergency room is a perfect example.

Then there is rationing by value, the way a free market system works (which incidentally is not the system we currently have in health care in the United States: government regulation and what may be anti-competitive practices in the insurance industry [I don't know for sure if there are anti-competitive practices, but the current outcomes seem consistent with a lack of competition] distort the market a great deal). In a value system, the person who values the Doctor's time more, as evidenced by a willingness to forgo alternatives (i.e. pay for the health care instead of something else), gets the health care. A market is established and suddenly providers have a profit incentive to be more efficient, to provide both better and faster health care than competitors. Better health care attracts more customers, and faster health care allows providers to service more customers. This is efficiency. Don't forget rich people get cancer just like poor ones (though I do not foreclose the idea that some ailments affect poor people disproportionately, but the treatments developed for different, but perhaps similar "rich people diseases" would be useful and effective in treating "poor people diseases").

Which do we value more? I value efficiency, or more precisely I value EFFECTIVENESS; even if it means that Diamond Jim Millionaire sees the doctor before I do, I'm happy to reap the downstream effects of richer people spending on health care once I do see the doctor. However, I won't deny the sense of injustice that I (yes, even I) felt in the film John Q when that cute little boy couldn't get a heart transplant just because his father was poor. So I am keenly aware of this tension between equity and efficiency, but my argument is summed up thusly: if you focus entirely on equity you lose the great benefits of efficiency (effectiveness).

Now, you may be thinking, "That parenthetical about health care in United States not being a free market was a useful dodge," but actually it wasn't. It was an attempt to establish common ground. I know there are problems with health care; however, I don't think our problems are so much a market failure, but are instead the result of a hindered market. Nonetheless (and here's why it's not a dodge) even if out market is imperfect, it more closely matches the kind of value based health care I was talking about. You have doctors competing for customers who can pay(because they are insured) and becoming more efficient for all (even the uninsured consumers who end up in the emergency room).

Now my argument is premised on the assumption that value based health care results in more efficient health care than does need based health care. Sure I can draw all the analogies I want to justify this (computers, education, almost anything!), but in order to honestly deal with this assumption I have to look at the health care industry itself. Primarily, I will examine the quality of health care in the U.S. compared to other countries, focusing primarily on effectiveness. From this I make the inference that we have a higher quality of health care (FOR THOSE WHO GET IT) because our value based system is more efficient. If that is not rigorous enough for please tell me what would be and I will try to comply in the future.

Generally speaking the quality of health care in the untied states (FOR THOSE WHO GET IT) is respected worldwide [Right Column, Page 11] (though things can always improve!). This study suggests that in the Untied states the quality of health care exceeds that of other countries [see charts, pages 3, 4, 5, 12]. (this naturally excludes emergency rooms where the care is rationed based on need--emergency rooms are required by law to see any patient regardless of ability to pay). Americans seems satisfied with their health care: The chart on page 93 indicates that 72% of patients think hospitals are doing a good job, and 84% were satisfied with their last visit to the doctor. Notice also that the lowest area of satisfaction cited has to with insurance.

Even articles critical of the U.S. Health Care System seems to show that we have a high quality (effectiveness) even if we are dissatisfied with other aspects of out health care system:

The U.S. system ranked first on effectiveness but ranked last on other dimensions of quality (Figure ES-1). It performed particularly poorly in terms of providing care equitably, safely, efficiently, or in a patient-centered manner.

We seem to be doing pretty well on innovation too. According to this article that appeared in that not-so-fervent protector of markets, the New York Times (I had to link to a blog post to link to the text of the article--NYTimes makes you pay for certain archives):

When it comes to medical innovation, the United States is the world leader. In the last 10 years, for instance, 12 Nobel Prizes in medicine have gone to American-born scientists working in the United States, 3 have gone to foreign-born scientists working in the United States, and just 7 have gone to researchers outside the country.

Indeed almost all dissatisfaction and criticism of health care in the United States that I could find had to do with ACCESS not QUALITY. The only problem is if you just mandate access and fix prices, as in a single payer system, you reduce incentives to invest in innovation and maintain quality. we lose that edge. "But wait one second, Pinky," I hear you say in your skeptical of the market tone of voice, "isn't a lot of the fantastic medical research in the United States funded by public money such as grants?" Yes, but remember, the grant provides only the cost of research the incentive is in the patent which will bring you profit. (Sometimes just glory, but I'll bet most of the time profit is quite enough incentive!).

What about U.S. life expectancy? It seems true that the U.S. population consistently has a shorter life expectancy compared to other developed countries. If health care is all about prolonging life, then surely this fact indicts my premise that U.S. health care is more effective, right? Wrong. Sure health care quality and effectiveness will have an impact on life expectancy at the margins, but we cannot forget all the other things that contribute to a national population's average life expectancy. Perhaps things like crime, suicide, auto accidents have something to do with it. Then there's population size, geographical diversity and racial composition (yes different races have different life expectancies!). And let's not forget the big one: LIFESTYLE. The fact that our diabetes rates are rising is not because our hospitals suck, it's because we are fat and lazy. Universal health care is not going to change that.

People are so eager to get to a fairer system they forget that the quality of health care in this country is at an amazing level. It find it not only intellectually unpersuasive but also dishonest when people try to portray American health care quality as substandard (often ignoring the difference between emergency and nonemergency care--I cannot stress that point enough--or including access, a real problem, as a measure of quality) in an effort to bring us efficiency folks into the equity side. The problem is not the quality of what we get; the problem is who gets it (or more accurately who doesn't).

So what do I suggest instead? I'll probably develop this in a later post, but a deregulation of the insurance industry might be a start. Similarly, if you MUST have the government subsidize health care, you should do it in a way that keeps competition. I support school vouchers, so maybe health vouchers would be a way to go.

Look for Part 2 where I discuss the economics of 2 tiered systems (the more likely result in this country anyway), and why they are just as bad (even in France!).