The deficit commission proposals are bringing forward a lot of conversations that I would have thought needed to wait. In that sense I have been pleasantly surprised. Regular readers know that I am skeptical of the general practice of trying to head off problems long before they occur.
Nonetheless, there is useful conversation to be had. Ezra Klein notes on cost control
On the bright side, conservatives have now found a better way: "If the left embraces the Domenici-Rivlin approach to Medicare, I’ll dance in the streets," Reihan Salam writes. For those who don’t know, Reihan is an excellent dancer (not to mention freestyle lyricist), and so this is an attractive prospect. But if you look hard at Domenici-Rivlin, it’s hard to see what makes him so happy..
[It’s] a credible way to cut costs. But it’s vastly more aggressive than anything in the Affordable Care Act. So here’s my question: What’s the theory of American politics by which Domenici-Rivlin can be implemented, but the much milder cost controls in PPACA cannot be?
Which is precisely why I am skeptical of any voucher based program. When the vouchers fail to cover health care costs people will simply vote to increase the vouchers.
More fundamentally, because health care is still privately chosen some people will choose to buy outrageously expensive procedures. Those procedures will become known and then the general public will demand that they also get to buy these procedures. The cost of the procedure will then raise the cost of health care and the public will demand that the size of its vouchers be raised.
The only way ultimately to keep a cap on health care spending is to prevent these procedures from being created in the first place. That is, to crush the general market for health care innovation.
This is obviously an extremely high risk strategy as we may end up crushing procedures that could have done a lot of good. One would have to trust that such procedures could slip through the cracks as it were. Or, be delivered by government sponsored research.
I am not overly confident about either of these sources of success.
If I were dictator I would be inclined to abandon public funding of health care all together and replace it massive wage subsidies to the poor and allow them to purchase whatever they wanted.
Actually that’s not true because removing such a popular entitlement is a good way to lose your position as dictator. Even totalitarian governments must ultimately bend to public pressure.
This is the crux of the health care problem. Health care isn’t just another good. Health care has a special psychological meaning to people. Its not simply a service that the poor might not be able to afford. Taking care of our sick and wounded is among the deepest of human emotional obligations.
The obligation feels so deep that for much of human history people have been willing to buy questionable medical services because they wanted to do everything they could for the sick and wounded.
I argue that we still live in such an age. There are a few truly revolutionary medical innovations such antibiotics, vaccines, sterilized instruments, anesthesia, etc. However, the majority of medicine is not particularly effective.
Still, the fact that a procedure exists induces me to want to spend enormous amounts of money on it even if my resulting satisfaction is no different. Whether the procedure exists or not my loved one is going to die and that is going to be a horrible experience.
Indeed, many procedures won’t even prolong this horrible event with any level of certainty. There is a chance that if the procedure works we might get some more time. Often, however, we will have no more time.
This implies that I am getting very little. Only a chance that the inevitable will be delayed by a short bit. Yet, I am deeply compelled to spend almost anything on that chance because the pain of loss is so great.
In this world the creation of more procedures makes me worse off, not better. I go more broke. I spend more out of desperation. I grasp at more straws. All in an effort to delay that which our current technology cannot significantly delay.