Rationing Healthcare
As David Leonhardt points out in his article today in The New York Times, rationing has become an evil buzzword in the debate over healthcare reform. Leonhardt correctly points out that we have rationing now, and that all of the anguish over rationing in a new system is just wasted heat.
I commend the article to you, and add my own $.02. Leonhardt mentions three forms of rationing taking place now:
- Employers have to decide how much of their compensation dollars go to health benefits and how much goes to other benefits and wages. The rapidly rising cost of health insurance premiums forces those employers to make a decision on allocating scarce compensation resources.
- When insurance premiums are so high that employers feel they cannot afford to offer insurance to their employees, and workers go uninsured, the allocation of resources away from those workers means millions of Americans getting fewer and less effective care.
- The high costs of providing care mean that doctors and other providers are hard pressed to provide the kind of integrated, thoughtful care that yields better health.
To this list I add (and move it to the top) – we ration care through price. High costs for care and for health insurance mean that some people don’t get what they need. Our semi-market oriented system of health care financing preserves a good deal of free choice and independence for those who can afford to pay. We often say that we treasure that free choice. For someone working a minimum wage job with no benefits, that free choice seems like a cruel hoax. As an economist I value the efficient way that markets allocate scarce resources. Unfortunately, due to a long list of market interventions and incentives, the healthcare market is not efficient at all, and some form of rationing, other than through price, is warranted.
I teach principles of economics courses and a course in the economics of healthcare at Southern Oregon University.
Very well put, Doug. However, in order to round some thing out, I might point to this line:
“Leonhardt correctly points out that we have rationing now, and that all of the anguish over rationing in a new system is just wasted heat.”
The problem here is the assumption to which economists are prone, that ‘wasted heat’ is an undesirable side effect, as opposed to an intentional political tactic. Essentially, the lobbies are pushing these talking points about rationing as hard as possible, not because it is legitimate, but because the reactionary elements will muddy the debate. The entire goal is to keep the debate in Congress for as long as possible.
at FiveThirtyEight.com analyzes the debate back in the Clinton years. Clinton’s big mistake seems to have been allowing the plan to work in Congress instead of using a bully pulpit.
LBJ, by contrast, knew what he was up against. He cracked heads, twisted arms, and pounded the Great Society down the throats of Congress to make it happen.
The lesson? Most of the talk of “socialist rationing” and “bureaucratic medicine” is coming from big Pharma and big Insurance to create exactly the sort of ‘wasted heat’ you’re describing. If enough heat can get wasted, the engine might never fire.
Very well put, Doug. However, in order to round some thing out, I might point to this line:
“Leonhardt correctly points out that we have rationing now, and that all of the anguish over rationing in a new system is just wasted heat.”
The problem here is the assumption to which economists are prone, that ‘wasted heat’ is an undesirable side effect, as opposed to an intentional political tactic. Essentially, the lobbies are pushing these talking points about rationing as hard as possible, not because it is legitimate, but because the reactionary elements will muddy the debate. The entire goal is to keep the debate in Congress for as long as possible.
This article at FiveThirtyEight.com analyzes the debate back in the Clinton years. Clinton’s big mistake seems to have been allowing the plan to work in Congress instead of using a bully pulpit.
LBJ, by contrast, knew what he was up against. He cracked heads, twisted arms, and pounded the Great Society down the throats of Congress to make it happen.
The lesson? Most of the talk of “socialist rationing” and “bureaucratic medicine” is coming from big Pharma and big Insurance to create exactly the sort of ‘wasted heat’ you’re describing. If enough heat can get wasted, the engine might never fire.
Arguing over rationing is not wasted heat. rationing is a fact of life with limited resources and is far better to keep it in private hands, instead of turning it over the the State.
Pushing ‘talking points’ about rationing is entirely valid because the points are true. Rationing by the state will be politically motivated instead of market motivated, and that is reason number one to oppose it.