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August 29, 2007
Single-Payer For Single-Payer's Sake?
One other bit of McMegan's post that bugged me was her elevation of single-payer as goal in and of itself, as if what interests reformers isn't the health of the populace or the sustainability of the system but the aesthetics of the financing structure. "Look at that funding mechanism," we'll one day whisper in awe. "It's just so redistributive."
You get this occasionally from libertarians, and it's always struck me as an availability bias error: Because the shrinkage of government is an end unto itself for them, they assume the expansion of government is an en unto itself for liberals. Liberals are just libertarians, but backwards, and without the "rtarian."
That, however, isn't true. Liberals want greater public involvement in health care because they've concluded the profit incentive doesn't create optimal outcomes in this particular case. You can't comparison shop during a myocardial infraction. You can't walk away from the table while on a gurney. You don't want to be in the position of second-guessing your doctors. You don't want your neighbors going bankrupt because they failed to adequately save in their HSAs, not suspecting they'd get cancer at 32.
Health care isn't like flat screen televisions -- if I don't have the former, I can die. If I lack the latter, I'll be watching Entourage in slightly lower definition. On the other hand, I really wouldn't want the government taking over the provision of flat screen televisions, as there the market works pretty damn well. The relevant variable isn't the economic theory, but the good in question.
The non-libertarian Megan stated this well a few weeks ago, when she mused that "the people I was arguing with knew their libertarian philosophy well and some econ well, but not, you know, how farming works. So they would prescribe the libertarian economist remedy of markets confident that understanding econ is sufficient to have an accurate opinion. I'd say, 'but the required assumptions simply don't hold', and get back 'but they must, because econ says'...I don't think that libertarians are impervious to evidence, but it has to be evidence in a form sanctified by academic economics. Evidence from the system itself (environment, law) was highly discounted."
And that's about it. Megan's arguing economic theory here, not health care. So I look at our health care system and say it doesn't work, and all these other ones work better (a point on which there's very little serious disagreement), and she says the economic theory underlying my critique is weak, and that government involvement in services has lots of drawbacks, and that wide redistribution isn't terribly efficient. This is true, but the alternatives, in health care, are substantially worse.
August 29, 2007 | Permalink
Comments
Yeah, it's a common disease amongst sane libertarians. Liberals love big government and think it can solve anything, the vastly expanded presidential powers asserted by this administration have their roots in the New Deal, etc. And I think your reversal explanation fits for these sane libertarians. Most internet schmibertarians, however, are simply arguing in bad faith; no fancier theorizing is required.
Though if liberals are just libertarians backwards, and without the "rtarian," wouldn't that make us... sebil? And is this a good or bad thing?
Posted by: mds | Aug 29, 2007 3:44:46 PM
The hidden hand (a.k.a., free market) should be seen as an OS -- the operating system of the economy -- upon which any checks and balances program, fair or unfair, may run with equal efficiency -- not presumed to work to the benefit of the greatest number automatically (as he who happily stumbled upon the idea for the first time, in a previous century, naturally glorified it).
The first program run on the "free market OS" when the industrial revolution happened along was THE RACE TO THE BOTTOM: fairly paid individual cloth weavers were replaced by hundred (?) times more productive steam loom operators who were, not just reduced to subsistence wages by the new (non) bargaining arrangements, but reduced to the lowest of the lowest subsistence: their families living on oat cakes three times a day because they could not even afford wheat bread.
The concept that the longest running drama of mankind -- who's going to eat whose lunch -- is going away because of the hidden hand is what psychiatrists might style as "magical thinking".
Posted by: Denis Drew | Aug 29, 2007 4:01:10 PM
I have to say, though, there's probably a GRAIN of truth in what McArdle writes about this. To see this, think about the way many liberals and people on the left view health insurance companies. Sure, there are all sorts of good economic arguments against their role in the health care system (these are arguments I buy, incidentally-- I support single payer). But is it really true that supporters of single payer don't take any pleasure from the thought that they will be eliminating or substantially reducing the profit centers of corporations that single payer supporters believe to be fundamentally evil?
I certainly believe that when you get to the far left, a lot of people feel that way. There is simply a dislike of the corporate form and that things that take power away from corporations are likely to be good in themselves.
McArdle's clearly wrong to ascribe more than marginal importance to this-- the arguments in favor of single payer really are supported by the evidence-- but I don't think she's completely off base here.
Posted by: Dilan Esper | Aug 29, 2007 4:10:12 PM
McArdle may be arguing from economic theory, but I have to say her understanding of economic theory sucks. She seems to have no understanding of the way market failures like incomplete information and adverse selection seriously weaken the case for free markets in health care. The underlying assumptions as to why free markets work best (complete information, perfect competition, and so forth) don't even come close to being true in the health care market. Yet I've never seen her acknowledge this. I think her knowledge of economic theory is actually pretty shallow and muddle-headed. You give her too much credit when you say she's arguing from theory; she seems to be arguing from nothing deeper than her ideological biases.
Posted by: Kathy G. | Aug 29, 2007 4:24:25 PM
Adding that, yes, of course the market assumptions like complete information et al. are never 100% true for any market. But there are markets where these stylized facts seem to be a rough approximation of reality, and markets where they are more like some kind of delusional fantasy. And in health care markets they are more like the latter.
Posted by: Kathy G. | Aug 29, 2007 4:30:04 PM
You see the same dynamic in global warming denialism - the idea that people are cooking up this whole "global climate change" scheme because they want to have a ready excuse to embiggen government and crush capitalism. I think you've identified the source of it well - the idea that liberals have some sort of inherent ideological attachment to government being big and controlling things.
Stupid, really.
Posted by: SDM | Aug 29, 2007 4:41:07 PM
One other bit of McMegan's post that bugged me was her elevation of single-payer as goal in and of itself, as if what interests reformers isn't the health of the populace or the sustainability of the system but the aesthetics of the financing structure.
Although I'm with you there, Ezra, you gotta admit liberals kinds sorta share some of the blame for the libertarian/conservative obsession with the words "single payer." And I think this is because, for so many years, liberals indeed did loudly extol and promote Canadacare and Britain's NHS.
Now, it is obviously the case that these days many of us look to a variety of possible national models to get us universally insured, and indeed Britain and Canada nowadays usually take a back seat to France or Germany or the Nordics. But yeah, mention one's belief that the government should guarantee universal healthcare access and one is immediately met with a zombie-like rant about British superbugs and Canadian hip surgery wait times.
Posted by: Jasper | Aug 29, 2007 4:44:03 PM
I challenge the whole idea that free markets should be expected produce a fair outcome even if information and competition are perfect. Uneven power -- the historical pursuit of the human race -- can render any such perfect market function pointless. I think a lot of the best known progressive economics professors would understand this better if they had to do their work for $35,000 a year if for some reason they lacked bargaining muscle.
Posted by: Denis Drew | Aug 29, 2007 4:44:46 PM
"Health care isn't like flat screen televisions -- if I don't have the former, I can die. If I lack the latter, I'll be watching Entourage in slightly lower definition. On the other hand, I really wouldn't want the government taking over the provision of flat screen televisions, as there the market works pretty damn well. The relevant variable isn't the economic theory, but the good in question."
Great. So let's reopen the debate shall we? Which goods are in fact dealt with better by Govt and which better by the market?
Can we start with education and farm subsidies? We can move on, if you'd like, to subsidies for corporate R&D, preferential immigration for low skill labour over high skill. Hey, we could even look at trade barriers and tariffs!
I, wingnut that some think I am, have no problem, as long as we do get to ask the same questions of "all" of what The State does. Anyone else up for a proper review?
Posted by: Tim Worstall | Aug 29, 2007 4:48:54 PM
You’re right to be annoyed by this, because you’re not one that believes this way. The problem is you’re biased in thinking every other liberal agrees and thinks through the matter in the same way as you do; they don’t. I guarantee there are those on the liberal side whose rational for single payer/UHC/etc. is a) Europe has it and b) the right thing to do. What’s the percentage of liberals that think this way? Not sure… how about a poll?
I’m fairly certain some libertarians believe less gov’t is always better than more; that smaller gov’t is an ends in of itself, instead of just a means to an ends. While I way not, I’d be sorely mistaken to believe every other libertarian thinks like me.
“So I look at our health care system and say it doesn't work, and all these other ones work better (a point on which there's very little serious disagreement), and she says the economic theory underlying my critique is weak, and that government involvement in services has lots of drawbacks, and that wide redistribution isn't terribly efficient. This is true, but the alternatives, in health care, are substantially worse.”
Our system is not market based and is far from the libertarian dream. It’s wrong to portray it as such. I think many libertarians have made suggested changes to it that would, in theory, help manage costs while providing greater access with high quality. If MM is defending the status quo, then I would disagree with her, but I’m not sure she is.
Posted by: DM | Aug 29, 2007 4:49:32 PM
Kathy G,
"The underlying assumptions as to why free markets work best (complete information, perfect competition, and so forth) don't even come close to being true in the health care market."
First off, you’re right. Our current healthcare market lacks these things. But isn’t this as much a function of current gov’t legislation and regulation rather than an intrinsic part of healthcare markets?
Posted by: DM | Aug 29, 2007 4:56:27 PM
"Can we start with education and farm subsidies? We can move on, if you'd like, to subsidies for corporate R&D, preferential immigration for low skill labour over high skill. Hey, we could even look at trade barriers and tariffs!"
Sure! Yes, no, in certain circumstances, depends on your priorities, and which ones?
Posted by: Ezra | Aug 29, 2007 5:03:48 PM
You can't comparison shop during a myocardial infraction. You can't walk away from the table while on a gurney. You don't want to be in the position of second-guessing your doctors.
This seems to be an argument for encouraging medically ignorant consumers. In my experience, not second-guessing your doctors is a mighty fine way to wind up really sick or dead.
So, is the argument that you don't want people to worry about their medical care?
Obviously, you can't comparison-shop in an emergency, but that's a pretty small part of the total medical expenditures. For all other expenditures, the optimal solution encourages not only high-value shopping for care but also being involved enough in the care that you have some idea what's being done to you and why. There are all sorts of ways that ignorance can harm you or cause you to be miserable. I don't see any reason why medical ignorance should be treated differently than any other form of ignorance.
Somewhat separate topic:
It helps to clarify the debate if you disentagle the following goals and treat them separately:
1) You want adequate insurance (i.e., you want to spread risk).
2) You want some way of driving prices down to a reasonable level.
3) You want to finance care for those that are truly unable to afford it.
4) You want good public health (low infant mortality, reduced sick-days, long average life span, etc.). Note that you maximize public health metrics by concentrating on the top 50 diseases/disorders/conditions/procedures and de-emphasizing all other care.
5) You want to provide strong incentives for unrestrictedly excellent care for any exceptional condition, at an unrestricted price.
Single-payer systems work OK on items 1 through 4, but they suck at item 5. Note that item 5 is something that the current system is really good at, because it provides a nice, juicy profit motive for medical research.
If you can come up with a system that can address all 5 goals and is actually legislatable, you've got a winner. Meanwhile, the whole idea of pushing some revolutionary, compulsory system through the Washington sausage-grinder just scares me to death.
Posted by: TheRadicalModerate | Aug 29, 2007 5:19:30 PM
TW, that debate has never closed. Republicans have consistently tried to privatize as much as possible. I don't think that it is particularly sinister, but I do think efforts to privatize any industry should probably be backed by some empiricism and not just blind theory about "how the world works".
DM, the problem is that MM is not only arguing for her own set of changes to the system, she is also arguing that universal health care would result in a worse health care system then the one we currently have.
Posted by: j | Aug 29, 2007 5:20:54 PM
Libertarians and other conservatives believe, in spite of a hundred years of history to the contrary, that liberals are closet socialists. Red-baiting is all they know.
Posted by: Bloix | Aug 29, 2007 5:24:21 PM
DM, are you arguing that liberals want Single Payer for Single Payer's sake or UHC for UHC's sake? MM's problem was that she assumed the former.
Also, single payer is not a universal in Europe. If someone was advocating for something because "europe does it," they'd end up adovocating for some hybrid model of public and private to ensure universal coverage. Your explanation does explain why gnerally liberals aren't advocating for an NHS-like system, since liberals aren't big Anglophiles. However, since we're all closet communists, what we actually want is for an iron-rice-bowl system of guaranteed jobs in nationalized state sector industries followed by patriotic worker songs sung in unison at the end of each work day.
Posted by: Tyro | Aug 29, 2007 5:37:54 PM
DM, no I do not believe government is to blame for the lack of perfect information. Providers are not completely receptive to price transparency, and prices for health care are naturally unstable because one does not automatically know the cost of treatment for each procedure or person. A one hour surgery on one person might take 3 hours on another person. More generally, diabetes for one person may cost alot more then diabetes for another person. I still believe and so do most liberal health wonks, that we need more transparency.
TRM, Ezra is not arguing for medical ignorance, he is merely acknowledging its intransigent existence. Markets also assume rational people who respond to incetives, and people who are in need of the majority of health care are often not in a completely rational state. Not all high dollar care is in an emergency setting, but most all high dollar care is in a stessfull setting. Also, medical ignorance is not simply a matter of inertia. Medical ignorance is often a matter of not having an M.D. and therefore having limited knowledge of a disease. I think the effort to make oneself aware of one's situation will most always be limited regardless of initiative or intelligence.
Also, who is "we" when it comes to number 5. I don't want rationing, but I don't want a system that encourages an unrestricted price, and I am unaware of system that provides such care, ours included. And our system isn't as good as you suggest at excellent care because it often lacks the preventative services that are the hallmark of excellent care. Lastly, for almost 50 million Americans, unisurance is dang near complusory, and that scares me to death.
Put me on the list of people who would gladly welcome a market oriented health care system if it provided a good health to everyone and had lower prices. The problem is we don't have that kind of system in place right now, and currently government assited remedies are the best and most plausible ways to fix the problems we have.
Posted by: j | Aug 29, 2007 5:42:18 PM
Tyro,
Yes, I think some do. How many? Not sure. Just as I would think some libertarians and conservative do not want this because they want smaller government, regardless of whether it makes sense or not.
I'm not saying you feel thise way, or Ezra does. Just that some on your team do. It's human nature.
Posted by: DM | Aug 29, 2007 5:42:29 PM
Actually, DM, I was asking WHICH one you thought liberals were advocating "because Europe does it"? Is it the single-payer model or UHC, in general?
Posted by: Tyro | Aug 29, 2007 5:45:59 PM
Ohhh, that as just a silly example to illustrate the point.
I doubt, as mentioned yesterday, that those I'm refering to care to make the distinction.
Posted by: DM | Aug 29, 2007 5:51:41 PM
DM said:
Kathy G,
"The underlying assumptions as to why free markets work best (complete information, perfect competition, and so forth) don't even come close to being true in the health care market."
First off, you’re right. Our current healthcare market lacks these things. But isn’t this as much a function of current gov’t legislation and regulation rather than an intrinsic part of healthcare markets?
No. The problems here arise from the nature of the goods and the actors in the market, not the market itself. High information costs, low-probability catastrophes, emergency circumstances, the inability to do without, geographic limitations - all of these are inherent from the nature of health care and from human mortality and fraility. While it's true that different legislation and regulations might provide more information and competition and thereby make the market somewhat more efficient, this really isn't the main problem.
Posted by: Kenneth Fair | Aug 29, 2007 6:01:03 PM
"Health care isn't like flat screen televisions -- if I don't have the former, I can die. If I lack the latter, I'll be watching Entourage in slightly lower definition."
So why is it that you argue doctors should only make 50k like they do in France then? If healthcare is really so valuable then you should pay more for it in relative terms than other goods and services.
On the other hand, if you feel healthcare is NOT an extremely valuable commodity relative to other goods and services provided in the US, then you should pay all the doctors 10k per year and it dont make a damn bit of difference what the consequences are.
Posted by: joe blow | Aug 29, 2007 6:31:10 PM
Joe blow,
No one wants doctors to make $50K, except perhaps as a starting salary. Very few liberals want primary care physicians to take a substantial pay cut (certainly not those operating in community clinics, etc.). The argument for lower incomes usually focuses on specialists, who are paid on average over $300K a year in the US, but about half of that in other countries. I'd be happy for the average specialist salary $150-200K....which is still over three times the average US salary.
In return, liberals who know what they're talking about are generally in favor of reducing the ridiculously high cost of medical education, so that doctors don't start so deeply in debt and feel like society owes them for what they just went through.
But physician incomes are not the biggest source of our inflated health care costs, as I think we all know. Better to focus on incentivizing prevention and de-incentivizing wasteful care (most of which goes to hospitals, labs and pharma, not docs)
Posted by: jd | Aug 29, 2007 7:19:55 PM
Note: physicians incomes dropped 7% from 1995 to 2003 while average income rose 12%. The doctors are too busy taking care of us to take care of themselves -- in a country where labor is too bereft of the need to bargain STRONGLY in the free market (and not just become a commodity that unconsciously prices itself ever lower and lower) to take care of themselves.
First, educate our labor that (sector-wide, like the rest of the world) collective bargaining is as important to fair wages as breathing -- then the nation will take care of doctors while they take care of us.
It is all about bargaining power folks -- and getting the American people to understand their desperate need for it.
Posted by: Denis Drew | Aug 29, 2007 7:54:37 PM
The French doctors probably don't have a single Franc in debt as a result of their education. Also, they pay far less in malpractice insurance, and the French government pays a large part of their tax. See here: http://www.businessweek.com/magazine/content/07_28/b4042070.htm
Posted by: slightly_peeved | Aug 29, 2007 8:04:24 PM
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