Arnold Kling  

My Rejoinder to Michael Tanner

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Cato's Michael Tanner writes,


There is no doubt that Americans spend more on health care than any other country. But why is that necessarily a bad thing? There is no “right” amount to spend on health care or anything else. The United States spends more on athletic shoes than any other country. No one speaks of the athletic shoes crisis.

...Where Arnold is right is in pointing out that those decisions are currently distorted by our third-party payment system.

...If consumers were spending more of their own money on health care, would total spending go down? Probably. But, then again, I don’t care — and neither should the rest of us.


We agree that consumers should be spending more of their own money on health care. The disagreement seems to be over how we should feel about our current health care system.

One way to view our health care system is that it is "the best in the world" and the most market-oriented in the world. Yes, there is this little problem that for 85 percent of their health-care spending consumers are insulated from cost (a number at the high end of the range of advanced industrial countries, but not significantly different), but let's build on what we have.

So we might have a great health care system. But I doubt it. As I explained in yesterday's essay, I started out where Tanner is when I began working on my book. But I ended up in a different place.

I think of the American health care system not as a free-market system but as a government-designed contraption constructed to vacuum money out of the pockets of consumers and into the pockets of health-care providers. A lot of this contraption is built into state regulations of health insurance and provider licensing. The Federal government adds an important layer, by encouraging "employer-provided health insurance" (i.e., vacuuming wages into prepaid health plans). In addition to the tax advantage of employer-provided health insurance, the Federal government effectively allows employers--but not health insurance companies--to engage in health insurance commerce across state lines.

The main impetus for "universal health care" or "the right to health care" comes from provider lobbies, who are worried that there are some consumers who are not getting vacuumed enough (the uninsured). I think, though, that they over-estimate the "problem" (opportunity) of the uninsured, and single-payer health care might ultimately vacuum less resources into health care providers' pockets than our current system.

My guess is that Americans would be healthier if they took on more responsibility for their own health and made less use of medical procedures that have high costs and low benefits. Crisis of Abundance shows how to accomplish the first half of that, and then whether the second half happens is up to consumers.

Tanner and I are both libertarians, and Healthy Competition (written by Tanner and Michael Cannon) also points out ways to make the system more market oriented.

Our difference is tactical. Tanner wants to put libertarians on the side of saying, "The American health care system is the finest in the world. Don't mess it up with a socialized system like everyone else's."

I think that tactic is vulnerable to charges that people in other countries are healthier, charges which very well may be true. I would rather be in the position of attacking our vacuum contraption than defending it.


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