Strengthening Constitutional Self-Government

No Left Turns

Saving The Health Care Welfare State (And The People On It)

I think Richard Adams makes a good point that a system that centralizes health care spending decisions across the age spectrum will over the long run tend to shift health care resources away from the old and very sick to other groups that might get more "quality of life benefit" as determined by somebody else.  I think that concern is valid, but I come at it from another direction.  Under any likely (or even very unlikely but possible) health care policy scenario, the government will still be paying for a large portion of end of life care.  Medicare might be restructured any number of ways (including vouchers), but most old people will still be depending on government dollars for their health care.  The key is balancing government's spending obligations, and changing the health care market so that the government can give the elderly access to high quality care without crushing the economy.

My favored approach is to try to bring down the cost of health care in general by forcing providers to compete for the health care dollars of consumers.  Various versions of this approach have been described by David Goldhill, Walter Russell Mead and Paul Ryan.  Health care providers would have to find ways to provide their services more cheaply than their competitors, which if the experiences of any other industry is a guide, will lead to business model improvement that will allow them to provide a higher volume of services at a lower cost per service.  Mead's description of the walk-in Walmart clinic where the medical personnel will have instant access to your electronic medical records and a constantly updated database of best practices is just one possible example.  Maybe we will see a partial return to older ways of doing things.  Maybe semiretired doctors will hang a shingle outside their door to see people for routine ailments.  The traffic might be low, but hey, they are at home watching tv anyway.  A system in which people spend their own money for routine care (in return for higher wages and a tax credit) could make this a viable model.  He could charge less (maybe twenty five bucks for a fifteen minute visit about something like a cold or ear infection) and since the transacton would be in cash, he would have little administrative overhead.  As a (very large) participant in this market-oriented system, the government would be able to buy more health care for its elderly dependents at a lower cost and make continuing their care much less of a burden

Obamacare moves in the opposite direction.  It cuts medicare while adding a new middle-class entitlement.  It virtually outlaws HSAs and turns health care into government mandated and partially government subsidized comprehensive health care prepayment.  Since government will force people into a system of health care prepayment (people will have to pay for their health care whether they need, want, or even use the services) there will be no incentive for consumers to shop and therefor no consumer pressure on providers to control costs.  The result will be both artificially high prices and overuse of services.  At some point the government will run out of money to pay for it all.  That doesn't mean that cost won't be contained, just that it will be contained in a brutal and stupid way.  Rather than improve productivity, the government will then ration the artificial scarcity that government policy created by denying services.  Whether the denial is done by career bureaucrats or elected officials, the process will be opaque so as to deflect blame from those who are being denied care (in every sense of the word).  There is a certain sensibility that argues this is the way to go.  One might argue that centralized "expert" direction of medical resources will lead to more efficient and fair distribution than expanding the confusing, wasteful market.  The distribution of medical resources from the soon to die (well relatively soon) also has its defenders.  In one unguarded moment, Obama was one of them.   


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