I must confess that I do not really get what the fuss is over Greg Mankiw’s latest NYT column.
Greg
Imagine that someone invented a pill even better than the one I take. Let’s call it the Dorian Gray pill, after the Oscar Wilde character. Every day that you take the Dorian Gray, you will not die, get sick, or even age. Absolutely guaranteed. The catch? A year’s supply costs $150,000.
. . . So here is the hard question: How should we, as a society, decide who gets the benefits of this medical breakthrough? Are we going to be health care egalitarians and try to prohibit Bill Gates from using his wealth to outlive Joe Sixpack? Or are we going to learn to live (and die) with vast differences in health outcomes? Is there a middle way?
As Free Exchange says,
His overarching point is actually not that complicated: medical treatments cost money, and so figuring out who gets what is tricky.
Greg bills this as a reason health care will never be equal. What I see is a reason that health care will never be infinite.
Pills don’t just appear by magic. They are funded by research and currently profit seeking firms. If far and away the largest market for drugs was a universally covered public then drugs will be made for a universal public. Ones with an actual treatment cost of 150K a year wouldn’t be made.
Now, suppose that for some weird reason it was profitable to develop a drug whose actual treatment costs were 150K a year. And that this drug prevented all aging! What you would see is a radical transformation in society. A massive increase in work effort and an national an effort exceeding WWII mobilization to get this drug for everyone.
Consumption would collapse. Investment would rise sharply. There would probably be rationing of everything. The entire focus of the country and likely the world would be production of the Dorian Gray Pill (DGP).
I am guessing that in a relatively short time we would achieve pills for everyone in the US and then the world would turn to the trickier task of providing it for every alive. It would shape every political discussion and every international negotiation. There would be no other issue.
In short, Mankiw’s DGP example doesn’t make sense in the context of our current social and economic structure because such a thing would radically alter our social and economic structure. In a post DGP world it wouldn’t be about preventing the rich from getting access, it would be about striving to get everyone access.
Note: Jeff Ely beat me to the title but it was too good to give up.
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Monday ~ September 21st, 2009 at 8:15 pm
Richard H. Serlin
The drug I’d most like to see Greg Mankiw on is sodium pentothal.
On another note, Ezra Klein made a very important point on medical innovation (http://voices.washingtonpost.com/ezra-klein/2009/08/in_defense_of_experts.html ):
I posed a similar question to [MIT health economist] Finkelstein. If she had billions of dollars and wanted to supercharge innovation, how would she do it? Would she simply increase reimbursement rates for drugs? Would she give it to pharmaceutical companies? What’s the most efficient engine for medical innovation?
In reply, she pointed me to the work of Harvard’s Michael Kremer (another expert, sadly). “The two main things that people talk about,” she said, “are funding a lot of basic research — push strategies — and then pull strategies, where governments get together and define a prize for innovation on a particular disease.” In other words, funding innovation and scientific discovery in a direct and targeted fashion.
Monday ~ September 21st, 2009 at 10:31 pm
RickRussellTX
Arguments such as Mr. Mankiw’s are constructed specifically to polarize the discussion.
Ultimately, there are really only two poles here:
– People should be able to do whatever they want with their money (except in the constructivist sense of paying their fair share of military, courts and law enforcement), which means lots of people suffer from treatable illnesses, and many die in unpleasant ways.
– People should not be in control of the money spent on healthcare; it should be collected into a big pot and apportioned to provide the greatest good for those most in need, and the healthy will pay for the sick.
We needn’t live at either of these poles; we can envision all kinds of systems that would give people some freedom to choose between various health care options while also helping out, to a reasonable degree, those who are ill and unable to pay. We’re past the Frederic Bastiat level of discourse where a simple hypothetical will explain every situation.
Tuesday ~ September 22nd, 2009 at 1:11 am
happyjuggler0
Sigh. Mankiw’s point is simply that not everyone is going to be able to get “comprehensive health care”. Period.