Charles Murray Returns

In the coming weeks, you're going to hear a lot about Charles Murray's new book, In Our Hands.  Murray, you'll remember, is the crackpot conservative responsible for The Bell Curve, the racist, IQ-obsessed tract from the mid-90's that turned out to be little more than the thinking man's eugenicism.  He was, as Jason DeParle once described him, a social science pornographer: the Larry Flynt for a new breed of smut that that legitimized his audience’s most poisonous suspicions about race, class, and sex by wrapping them in a veneer of sober scientism.

The question has always been why folks take his ideas seriously.  The best I can come up with is the Murray discovered and skillfully exploited a fairly foundational flaw among journalists -- their generalist nature.  Most commentators are not wonks, and they're definitely not statisticians.  Therefore, when faced with one of Murray's opuses, they're dazzled by the array of statistics, multivariate regression analyses, and other impressive techniques he uses, the flaws of which the reviewers are often ill-equipped to assess.  Murray incapacitates them by talking over them, and few writers want to risk a humiliating display of ignorance by engaging his dense substance.  So there’s a lot of ambivalence as to his conclusions, but much enthusiasm for his boldness and intellectual courage, virtues that self-important commentators feel well-equipped to identify.

Murray's newest is a grandiose plan to liquidate the welfare state -- Medicare, Social Security, welfare, everything -- and plow the savings into $10,000 checks for every adult American.  This will, he argues, solve all our problems, from the purely economic dangers that loom on the Congressional Budget Office's projected horizons to the existential angst that afflicts our souls and hollows out our communities.  I'm not kidding, as you'll see if you read my review of Murray in the latest New Republic (which I'm writing this post in large part to plug).

I do, however, want to use my blog's blissfully unlimited space to go into some added detail on Murray's policy mistakes.  The base assumption of his plan is that he can halt the growth of health spending -- the primary driver of budgetary inflation -- by restoring all power to the individual, who will then bargain with private insurers and demand better care, lower cost, and snappier service.  His basic premise is that given the trillions floating around our government, the concept that we have any problems at all is absurd, and it must mean that government waste is subverting America's abundance.

The problem is, our country’s entitlement programs are models of bureaucratic efficiency.  Social Security spends less than one percent of its budget on administration; for Medicare, it’s two percent.  Compare that to the private health insurers, who blow about 14 percent on administration. Indeed, if you imposed the Plan immediately, it would cost staggering $355 billion more than the government currently spends.  Some efficiency.

Murray replies that the costs of entitlement programs will rise, while costs of the Plan won’t (save for those imposed by population growth). Therefore, by 2011, the Plan will be cheaper. But this is a trick. What’s driving entitlement costs is health insurance, and what’s driving health insurance is technological advancement.  Murray may think that “except at its frontier, health care should be getting cheaper,” but he doesn’t realize that when the frontier becomes standard, more people utilize it, and spending increases.  MRIs haven’t gotten a whole lot cheaper since they were introduced, but that have become a whole lot more widespread.

Murray’s answer is that the Plan will stop health care inflation, ushering in a consumer’s utopia of choice, competition, and rationalized end-of-life care.  “When health care is subjected to the same choice that people make about everything else in their lives – ‘Is it worth it to me?’ -- the health care industry will respond in the same way as other industries constrained by market forces, with better products and lower costs.”

But such starry-eyed free marketeering is belied by the fact that health care is not a normal market.  Take Avastin, a widely deployed colon cancer drug that’s been recently approved as a critical weapon against breast and lung cancer.  Its makers, Genentech, plans to charge $100,000 for it – double what they charge colon cancer users, even though the additional cost of producing the higher dosage is trivial.  They’re doing so because the market – because the patients, who have to pay much of the cost out-of-pocket -- will bear it.  They’re doing so because there’s no centralized bargaining authority that can tell them to stop.

In health care, an unfettered market is a cost driver, not a containment strategy, as it places extraordinary power in the hands of suppliers and, in the short-term, ailing patients need them more than they need patients.  What health care consumers lack are large bargaining authorities that can act as countervailing powers against the suppliers.  Murray seems to forget that, in other markets, its not consumers, but retailers, like Wal-Mart, who drive prices down.  In other countries, the government plays that role in health care.  But America is a suppliers market, and individual buyers suffer for it.

The numbers back up the contention: Private health spending has been rising faster than Medicare or Medicaid’s, and America spends more than twice as much -- per capita -- on health costs as any other system in the world, despite having no better health outcomes.  The Veteran’s Health Administration, which is fully socialized, provides the finest care in the country and does so at the lowest cost. They pay up to 80 percent less for pharmaceuticals than the new Medicare Drug Benefit, which is barred from bargaining except through private insurers. Get less, pay more – it’s become the American way, and Murray is nothing if not a patriot.

He's also a bit crazy, and I address his loopy attempts to sell the plan as a cure-all for American ennui over in my review, which you should all read.  In any case, as he reenters the media stream over the next few weeks, don't be fooled.  Murray's a charming guy -- I've talked with him -- and he's masterful in crafting an air of authority and a tone of reasonableness, but bad ideas are bad ideas, even when otherwise sane people don't know better than to take them seriously.