In 2003 one reason I decided to support John Kerry’s health care plan, besides the inherent benefits of his plan, was that I feared this might be our last chance to solve health care problems without returning to much more intrusive ideas such as HillaryCare or government run health care programs. One election cycle later, we see many in the liberal blogosphere calling for a single payer plans. While the candidates, other than Dennis Kucinich, still do not support a single payer plan, some of the plans proposed this year do contain more mandatory government involvement than Kerry’s more voluntary plan.
Kenneth Rogoff, writing at The Economist, sees a similar trend, fearing that as health care costs become more expensive, more people will think “better red than dead” and back a greater role for government:
In addition to reducing mortality, new medical techniques can also have a huge effect on the quality of life. Roughly 250,000 hip replacements are performed in the US each year. Under-60 patients are becoming more important as newer artificial joints prove their capacity to withstand more active lifestyles.
At $6,000, the average cost of a hip replacement is only a thousandth the cost of what it supposedly took to implant a bionic arm, eye, and two legs on the fictional The Six Million Dollar Man in the popular mid-1970’s TV show. Of course, hip replacement patients don’t get superhuman speed, strength, and vision – at least not yet. If Tour de France officials think they have big problems now with steroids, just wait 10 years.
In principle, greater use of market mechanisms to allocate health care can slow or even temporarily reverse the rise in healthcare costs. But improved efficiency has its limits. Ultimately, the evidence suggests that societies spend ever-larger fractions of their income on health over time, in contrast to food expenditures, for example, which fall as countries become wealthier.
Spending pressures, in turn, lead to acceleration of innovation. This raises long-term wellbeing all around, but exacerbates short-term inequalities and frictions.
Arnold Kling responds by claiming to be exposing a health care fallacy, but actually repeats a common fallacy on the right that people can afford health care if we were only to eliminate unnecessary services. While there is some money spent unnecessarily, this represents a small proportion of health care dollars. Kling writes, “Getting a colonoscopy every five years after you turn age 50 may be a helpful precaution against colon cancer.” For most people screening colonoscopies are actually recommended every ten years, with screening at five year intervals being reserved for those with a history of potentially precancerous polyps and a higher risk of developing cancer. Terminating such screenings could increase health care costs if we wind up treating more people for colon cancer.
It is not only the expensive procedures which cause financial problems. Even the intensive routine care of diabetics which studies prove will reduce morbidity and mortality are expensive when the costs are totaled. Turning health care costs over to individuals as conservatives advocate will result is less preventative care and less routine care of chronic diseases, increasing costs in the long run. It is far more cost effective to assist individuals in receiving aggressive care of diabetes and hypertension at an early age than to pay for renal dialysis, coronary artery bypass grafts, and post-stroke rehabilitation or nursing home care.
