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September 19, 2006

Medicare Meets Mephistopheles

I spent last night at DC's best bookstore/coffee shop, Politics and Prose, reading through David Hyman's new book Medicare Meets Mephistopheles. Hyman is an adjunct scholar at the Cato Institute, and so his book, as you may have considered but not believed, literally takes as its conceit that Medicare is a demonic program sent to encourage all manner of deadly sins and, eventually, bring down the American republic. Spending so much time in the blogosphere, which vastly over-represents libertarians, it's occasionally easy to forget that libertarianism is a distinctly fringe ideology. Seeing them (jokingly) suggest Satanic origins for the massively popular and successful (if deeply in need of reform) system of health insurance for the elderly helpfully reminds.

That said, the book is actually quite good. I'd happily recommend it to anyone with a basic grasp on health care and a desire to learn a bit more about Medicare. Hyman is a felicitous and fun writer, and he conveys an impressive amount of history and data in as accessible and absorbable a manner as one could hope. I know how tricky it is to make health care a quick and gripping read, and I'm all for anyone able to enrich the debate and educate readers by doing so.

What's always fascinates when I read rightwing critiques of American health care is how similar our diagnoses are, but how diametrically opposed our treatments would be. For the right, more consumer risk is required in order to encourage wise treatment decisions on behalf of patients. That means, of course, that those who make poor decisions, or simply get really ill, face financial ruin. That seems crazed and cruel to me. While I do think the left needs to take financial incentives more seriously than it does, I'd go for many more carrots than sticks, and I'd want to separate out poor decisions and behaviors (never take a walk) from simple bad luck (cancer). HSAs and all the rest punish the illogically stricken as surely -- or more surely -- than they do the stupid. And I'm not even ready to punish the stupid. So much as I think it inadvisable that half of those with HSAs haven't deposited a cent, I've no interest in abandoning them to the consequences of that oversight.

Crossposted at Tapped

September 19, 2006 | Permalink

Comments

And I'm not even ready to punish the stupid.

Those who suggest doing so are blissfully unaware of their own membership among the ranks of the stupid, at least regarding healthcare.

Posted by: Stephen | Sep 19, 2006 1:33:15 PM

For the right, more consumer risk is required in order to encourage wise treatment decisions on behalf of patients. That means, of course, that those who make poor decisions, or simply get really ill, face financial ruin. That seems crazed and cruel to me. While I do think the left needs to take financial incentives more seriously than it does, I'd go for many more carrots than sticks, and I'd want to separate out poor decisions and behaviors (never take a walk) from simple bad luck (cancer). HSAs and all the rest punish the illogically stricken as surely -- or more surely -- than they do the stupid. And I'm not even ready to punish the stupid. So much as I think it inadvisable that half of those with HSAs haven't deposited a cent, I've no interest in abandoning them to the consequences of that oversight.

This pretty well captures my views, but I'm aware that the right sees their cruelty as in the service of kindness, of course. (I'll leave aside craziness.) It's not just a matter of encouraging consumers to make better decisions and thus keep costs lower, but also to make better care available in absolute terms through free market incentives. Many on the right could probably be persuaded that carrots that actually save money (subsidized preventative care, for example) will be winners all around. Can the concerns of the right to preserve market incentives be satisfied with the carrots and moderate sticks you might favor that would go along with an adequate medical safety net, though? (That's a serious question, not one I pretend to know the answer to.) If not, why not? What is the values or factual divide here, as you see it? (I'm hoping to get beyond cruelty and craziness. If you've already explained this in 2,500 words or less in some other place, please direct me there.)

Posted by: Sanpete | Sep 19, 2006 2:09:25 PM

The fundamental issue is that people tend to be lousy at evaluating healthcare. Ezra, didn't you post a study showing that how people evaluate the quality of their care is only tangentially related to how effective it is? I think that's kinda the golden bullet for taking down all this "consumer-driven healthcare" nonsense. The argument is that people will spend money more effectively when they have direct control of it. The reality is individuals with no medical training (i.e. the vast majority of the population) cannot effectively evaluate their treatment beyond superficialities - pleasant staff, clean waiting rooms, doctors who listen. Nice idea, but reality dictates otherwise.

Posted by: Kylroy | Sep 19, 2006 2:20:46 PM

Kilroy, why wouldn't your point translate (for the right) into a need for better consumer information, i.e. more advanced and easily accessible evaluations of health care providers by those with the knowledge required? A true market type might even argue that there is a natural market need for this (among consumers and insurance companies, for example) that should be primarily filled by the free market, and perhaps subsidized for the poor if necessary. I think it's a good point, but I'm not sure this is the fundamental one.

Posted by: Sanpete | Sep 19, 2006 3:29:48 PM

Based on the experience of the stock market, I am extremely leery of any sort of private "expert evaluator." In fields where non-specialized individuals are extremely reliant on expert advice, those experts tend to be wooed and courted and frequently outright bribed into saying companies are doing far better than they are. If there's a limited channel through which information flows, it takes comparatively little effort to poison the water (just to beat that metaphor to death). So we end up creating a new consultant class that is wide open to medical industry influence. The only way to limit this is to either rely on professional integrity (which has worked so well in journalism), or make them so fabulously compensated bribing them isn't worth it. And creating another high-salary layer in our medical system is the last thing America needs.

Posted by: Kylroy | Sep 19, 2006 4:19:02 PM

Yes, those are good points too, Kilroy. I'm less worried about bribery and influence than you are, as I think there are ways of controlling those that we should be more willing to use. There are difficulties inherent in evaluating health care, so it may be that what I have in mind wouldn't be as practical as one might hope, but I think it may be more open to proper advice in some ways than the stock market (where chance has famously outdone experts in some trials). Some of what you say could be a good argument for government involvement (on the I think valid view that it's less open to abuse), though your concern about a limited channel of information would favor a limited, open role with a market for analysis of public information. This is pretty much what we have with the stock market.

Let's suppose the problems with evaluating health care are as severe as for stocks. Don't the arguments that apply to keeping the stock market still apply to keeping a free market for health care? Would you replace the stock market with something else on this account? (I may be overlooking something obvious here.)

Posted by: Sanpete | Sep 19, 2006 4:53:56 PM

I would say the obvious thing you're overlooking is that nobody died from bad stock advice. Free markets are great at distributing goods but have a tendency to leave the poor with absolutely nothing. This is fine when the goods in question are luxuries (investments, ariline tickets, televisions) rather than necessities (food, clothing, healthcare). Free market health insurance works best when hospitals can refuse care to those who can't pay. A market is based on the exchange of goods, after all - if you give me nothing, I give you nothing.

But Americans seem to have this idea that people with injuries and severe illnesses should be treated rather than left to die in the waiting room, even if they're broke. This is the fundamental difference from the stock market - nobody feels people have an inherent right to invest, where most folks agree you have a fundamental right to not slowly die of blood loss in front of a hospital.

Posted by: Kylroy | Sep 19, 2006 5:08:40 PM

Kilroy, my question was too vague. What you say has of course occurred to me, and is a difference between some health care and the stock market in general. What I was wondering is if there is a difference regarding efficiency of the markets between health care and stocks based on the issue you raised of lack of consumer expertise. If not, then it seems to me that the point you raised isn't the fundamental one in understanding or settling the difference between the left and right on health care.

One might be tempted to regard the view of fundamental rights you mention as the fundamental difference, but I think most on the right are OK with hospitals being required to give emergency care regardless of ability to pay. It's the broader health care market where differences are more pronounced.

Posted by: Sanpete | Sep 19, 2006 5:47:29 PM

Re: Subsidizing health care for the poor

Means testing any entitlement is a great divide and conquer strategy. Through tax policy catering to the wealthy and powerful, the burden of caring for the poor is shifted to the middle class, whose anxiety about their own precarious living standards turns to anger directed at those further down the ladder. And so it goes.

At times, it seemes to me that our welfare policies are designed, not with compassion in mind, but to keep the poor out of sight so they don't offend our delicate sensibilities. Thus, we have Medicaid to avoid the unsightly presence of the infirm on our street corners, bothering the tourists.

Antonio

Posted by: Antonio Manetti | Sep 19, 2006 6:02:12 PM

I think there is enormous potential for unbiased, objective infomediaries to help patients sort through the risks, benefits and cost-effectiveness of various treatment options. Prostate cancer is an example that comes to mind where there are several treatment options including watchful waiting.

If that information source were readily available, combined with robust pricing transparency including the full cost (as opposed to the patient's share of the cost) of care provided by doctors, hospitals, imaging centers, labs, rehab facilities, etc., I think competition among providers would increase materially, costs would decline and resources would be allocated more efficiently and wisely.

Posted by: BC | Sep 19, 2006 8:55:22 PM

Ezra gets it right, but one additional thing I'd add. When it comes to making health care decisions, there are a lot of "stupid" people, even among the intelligent. More at Liberal Values:
http://liberalvaluesblog.com/?p=336

Posted by: Ron Chusid | Sep 19, 2006 9:23:59 PM

I'm reminded of crytic comments made by one fellow -claiming to have worked at the FDA - at the time the Thermosil vaccine discussions were going on : that what was going on strained belief. Just today I heard up in the land of supposed light and sunshine ( Canada )that doctors who didn't write sufficient scrip were likely to face review, discipline and possible loss of license.
There are so many ways to screw up public health care it's a testament to the creativity of man.

Posted by: opit | Sep 20, 2006 1:13:35 AM

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