Arnold Kling  

The Future of U.S. Health Care

Do I Take Teasing Too Seriousl... Shiller Interviewed on the Sub...

The Washington Post reports,

Facing a severe budget shortfall, Rhode Island officials are seeking unprecedented authority to rein in Medicaid spending in a move that has alarmed Democrats in Congress and advocates for the poor.

Read the whole story. I think it offers a preview of what is in store for Medicaid and Medicare in the future. Faced with unsustainable spending, political leaders will attempt to cut benefits. This will lead to intense political conflict. In fact, my prediction is that political health care strategy going forward will be focused on trying to be the party that avoids blame for cutbacks in medical services under government programs.

Universal health insurance is a pretend battle. Cutbacks are the real battle. The pretend battle helps to divert attention from the real battle. That is why progressives cannot afford to win the pretend battle.

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COMMENTS (8 to date)
manuelg writes:

> Universal health insurance is a pretend battle. Cutbacks are the real battle.

Bravo. Twelve words that describe the political reality.

There is a less fundamental, but still significant, battle between the hospital lobby, the medical "insurance" lobby, the pharmaceutical lobby, the _sanctioned_ medical provider lobby, and the government bureaucrat lobby. They are all drooling over a gate-keeper/rent-seeker position.

With that pack of wolves snarling and snapping over my body, if I get a catastrophic illness (Satan forbid), biting down on the barrel of a handgun looks like an attractive option, in comparison.

Dave writes:


I am going to apologize upfront for being a bit off topic, but I can't find an email link for you on the site (perhaps I haven't looked hard enough).

I largely agree with your thoughts that I have read online and heard on EconTalk regarding why health care cost increases exceed general inflation. My question is this: Why is it that most (but not all) private insurance plans tend to offer low, fixed copayments for doctor's visits and drugs?

As I've heard you point out, most insurance outside of health insurance has relatively low premiums to cover unlikely, but expensive loses. This is not the typical case in health insurance. Is there a regulatory reason for this? Or is this what customers prefer? I want to believe that if health care was less regulated, then a freer market would tend to lead to greater price elasticity of demand for health care services and products, increasing price competition and patient restraint, and lowering health care costs for everyone in the insurance pools, but I'm not sure why that isn't happening already.

I'd appreciate to hear your thoughts on this some time. Thanks.

[Hi, Dave. You can reach Arnold or Bryan by emailing Ed.]

AP writes:

While what you write is true, it's important to remember that many people view universal health insurance as a means to an end. Specifically, switching to a unified health care system will cut costs.

Patrick writes:

I'd like to see a freer health care financing system, but I'm certain we wont get it because libertarians are failing to understand an important motivation for putting health care finance under political control: relief from the psychological burden of rationing care for family members.

We all know deep down that life doesn't have infinite value. But it's not nice to say that explicitly. If somebody says, "I wont spend my child's college fund to pay for grandpa's experimental cancer treatment because he's 74 and showing signs of dementia," they'll be pilloried. But if a government bureaucracy rations medical care, the same person can say, "Those bastards put grandpa on an 18-month waiting list. Aren't they AWFUL? Spend the college fund? We shouldn't have to! We paid for grandpa's care in our TAXES! Our health care system is BROKEN!" And the college fund is safe.

Social desirability bias is especially strong with regard to medical issues. Don't underestimate the value of having a faceless government bureaucracy to use as a whipping-boy.

Insurance companies can't ration care like that--they'd be sued out of existence. Only government can survive the lawsuits such rationing would precipitate.

I think the best case scenario is a "pay-or-play" system where people can buy into a cheap, government-run "insurance" plan featuring the brutal, heavy-handed rationing required to keep costs down. Hopefully, private insurance plans would survive, but I worry about that. You know what the usual suspects will say: "The rich people are buying up too much health care. We need to ration it more." Maybe we'll be traveling to private hospitals in Britain to get the care the government wont allow us to have here.

Have a nice day!

Robin Hanson writes:

Yup. I wonder how many people who fight the pretend battle understand its status as such?

Zach writes:


Intersting and novel perspective. I am a physician at Hopkins, and I'm of the mindset that until we can exlucde people from the system (sorry, your 90, you don't get any more PET/CT's and $100k/yr chemo), we'll never reign in runaway healthcare costs. So, your logical conclusion is that the only entity strong enough to do that is the government. Obviously lots of badness would go along with that, and I'm not a fan of socializeed medicine, but it does lay out an interesting silver lining. My fear would be that the politics of re-election and the AARP lobby would prevent much from being cut out, but I really find your psychological perspective of denial of care very insightful.

Jim Ancona writes:

Dave asks:

My question is this: Why is it that most (but not all) private insurance plans tend to offer low, fixed copayments for doctor's visits and drugs?

In a word, taxes. Health care premiums are deducted pre-tax, wheras you otherwise pay for doctor's visits and drugs using after-tax dollars. Does the move toward first-dollar coverage make more sense now?


Dave writes:

Thanks Jim, that does make sense. I'm sort of embarrassed to have overlooked that.

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