29 October 2009

More on Landsburg

The Economist | Free Exchange | Thoughts from the armchair
There are good alternatives to insurance. For example, as David Goldhill points out in a magnificent Atlantic Monthly article called “How American Health Care Killed My Father”, we could take, say, half of what’s currently being spent on insurance and Medicare and use it to give each American family close to a million dollars to put in a health savings account. We’d probably want to couple that with insurance for catastrophic events that cost more than, say, $50,000.

Or, less radically (and therefore less effectively, but at least it’s a start) we could restructure medical insurance to look more like car insurance—where nobody asks how you spend your claim check. If you’re diagnosed with colon cancer, then instead of paying $X million to doctors and hospitals, the insurance company would pay $X million directly to you. That way, at least some of us would shop around for better prices and forgo treatments we don’t think we need—lowering demand and making medical resources easier for everyone else to afford.
I think the extent to which Americans have been suckered into terrible financial arrangements should disabuse us of the notion that the typical individual is any good at informing himself and rationally choosing between complex alternatives. And in a world where Oprah can bring Jenny McCarthy on television and convince thousands of households that vaccines are unsafe, I strongly question the idea that Americans have any clue what treatments they actually need, and I'd note that poor health decisions can impose real costs on others.

I wonder, too, why some economists think that it's efficient for households to spend the considerable amount of time investing in the medical knowledge that would be required to make educated treatment decisions. Shouldn't we want to see specialisation? Is a world in which medical costs fall, but households stress over medical texts at night trying figure out which colon cancer treatment they should use really one we want to live in?
(1) The only "poor health decisions" that must impose costs on others are related to communicable diseases. Everything else is society choosing to pick up the tab for other people's poor choices. This is easily avoidable.

Furthermore, this is a conflation of health care and health insurance. The matter of communicable diseases is not only a very small part of our health-care spending, it is mostly taken care of through non-insurance-related means, like requiring school children to be immunized. Even if we kept the insurance regime we have now, or substituted any of the variously socialized insurance-like plans people have been suggesting, people could still choose to forgo any of the various health procedures that you want them to have.

(2) The anonymous Economist author is making one of the oldest and more arrogant fallacies used to support paternalistic government intervention: "Surely we can't trust everyone to choose wisely. Therefore we must not allow anyone to choose at all." This is triple distilled bullshit. I am angered on so many levels by someone telling me that he needs to bind my hands because he thinks our neighbor is an idiot. I refuse to address it further.

(3) The final paragraph is pretty incoherent. For one thing, Landsburg admitted that only some people would take advantage of the ability to shop around, but even that would be a net gain since no one else would be any worse off. For another, you could use this same argument to say that we should have specialization in the choosing of all products. Why make the investments needed to choose your own groceries? We need specialized grocery-choosing bureaucrats to do that for us. Why choose your own car? Let's just have a specialized car-choosing task force.

We need the option of making our own decisions, not only because that's the essence of freedom, but because no bureaucrat, at an insurance company or a national health service, can account for individual preferences. I refer you to The Use of Knowledge in Society for the definitive take on this matter.

In addition, you don't need fancy medical knowledge to shop around for medical procedures any more than you need to be an architectural engineer in order to hire someone to put a new roof on your house. Shopping around is a matter of degree. Perhaps you really dig in and learn about roofing an interview several roofers in depth, perhaps you call around for quotes, perhaps you hire a general contractor you trust and tell him to take care of it, perhaps you just hire the first guy you find in the phone book. Right now when it comes to our screwed up health insurance system everyone is just hiring the first guy they find in the phone book, so to speak.

Introducing a pricing mechanism into health care procurement would not remove specialization, but it would allow people to choose which specialists to trust.

No comments:

Post a Comment