Arnold Kling  

Medicare and Overfishing

Can Billions of Parents Be Wro... This Looks Important...

Vermont Public Radio reports,

[Robert] Kuttner says the first red herring about single-payer health care is that it limits choice for the patient, and if you want proof look at Medicare.

Indeed, Medicare does very little to restrict patients' access to medical services. Let me explain that with an environmentalist analogy: overfishing. Saying, "We don't need to have any restraint on the use of medical services. Look at Medicare" is like saying, "We don't have to worry about the fish population. Look at all the fish we just caught."

Five hundred years ago, unrestrained fishing probably was ok. But over time, as the human population grew and our fishing technology improved, it became possible to wipe out entire species of fish. At some point, you need restraints--if not regulations, then property rights that create incentives for conservation.

Similarly, when Medicare was started in 1965, you could give people unrestricted access to the treatments then available. But over time, with the Medicare population growing and technology changing, the stress on the system is increasing. At some point, it will be unbearable. We are already approaching that point.

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The author at Health Care BS in a related article titled AND SPEAKING OF RISIBLE CLAIMS ABOUT MEDICARE writes:
    Yesterday, I highlighted an exceptionally goofy Health Affairs post in which Merton Bernstein reiterates the usual tired talking points about Medicare, including the preposterous claim that Medicare has lower admin costs than private insurance. Another... [Tracked on April 24, 2009 11:44 PM]
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Political Observer writes:

Kuttner is quite naive if he doesn't believe that Medicare limits choices for patients. Medicare through a myriad of actions limits those choices both directly and indirectly.

The indirect method is when Medicare sets unreasonably low reimbursement rates for health care providers. As a result, many providers simply refuse to see Medicare patients. Now of course Medicare did not tell the beneficiary that they cannot go to their doctor. Instead the Doctor has decided not to serve that patient because the cost of doing so is greater than the derived revenue. The end result is that the Medicare insured have less choices for services.

Medicare also prescribes what drugs and courses of treatment that it will actually pay for - which again limits choices. In other cases Medicare will only pay for a course of treatment or medical supply for a limited amount of time. Once that time expires, the Medicare insured must now pay for that service at 100% of the cost.

Off course private health care may also impose limits on what is covered, how much is covered and who you can see for services to be reimbursed. But at least the individual has a choice as to what level of coverage they deem appropriate for their needs.

Medicare on the other hand holds out a promise of being all encompasing in providing health care coverage and then through multiple ways restricts the covered participants access to those services. But in this case the insured have no other choice.

Arthur_500 writes:

In addition to the changes in volume of population we have changes is society as a whole as well as increases to the programs.
Medicare was never designed to provide some of the coverage it provides today. Today it covers disability medical care that it was never intended to provide.
People used to take more responsibility for their lives. For example, if you lost a job you could beg, borrow, steal, find a new job, or move to a new location. Today there is unemployment that worsens local unemployment because people don't move, have no need to beg or steal and sit around waiting for a new job.
The same is to be said for medical care as people consider it a right. Today if you are injured or sick you go to a hospital and receive if you deserve it. This is a major shift in people's attitudes towards personal responsibility and affects the manner in which people think about healthcare in general.

hacs writes:

Can billions of people be wrong (all wealthy countries but USA + developing countries + a share of poor countries) and only a share of the US citizens right with relation to universal health care?

I don't think so...

Walt French writes:

Quite the curious analogy.

When I go to my doctor, I don't freeze and later, eat him. 15 minutes later, he's as good as new. I doubt I have much impact at all on his reproductive success; if anything, I enhance his grandchildren's ability to pass on his genes by a marginal increase in his earnings.

More demand for medical services, more earnings power to the provider. Perhaps even to counter the trend away from GP to specialties such as Cosmetic Surgery, which is reputedly heavily impacted by higher demand for the latter. Wider demand for quality, effectiveness-sensitive health care, ought to produce more of it.

It's really quite interesting to see an economist, a free-market fan at that, propose that the pricing mechanism doesn't provide incentives to allocate resources if there's the teensiest imperfection.

The well-known 18th century counter-example, the "dilemma of the commons," has served as a reminder of how incomplete markets (these days, e.g., for clean air & water, because the polluter enjoys the profits from his activity while neighbors enjoy primarily the costs) can fail to allocate resources optimally for society. For current failures of markets, we have cap-and-trade, cartel agreements or, as with my air quality or the California Salmon fishery, regulation, to ameliorate the problem where we haven't installed a market-based solution. Surely, Kuttner is not proposing that the solution to health services is MORE regulation.

Medicare may have imperfect pricing due to oligopsony, but one might suppose that corporations' dedication to oligopolistic competition would be at least as worthy of this blog's commentary as to its impact on Welfare. In any case, we'll have a much more concentrated Federal purchasing power than I've heard discussed by any politician before we approach the concentration of power that e.g., communications companies or financials enjoy.

Rick Caird writes:

Hacs and Walt French both make pretty poor arguments. Hacs claims we should have national health care because everybody else does. There are two quick answers to that one. First, didn't your mother ever ask you if your friends jumped off a cliff, would you? Second, take a gander at where the advanced medical procedures, diagnostic equipment are developed, and new pharma products are developed. Well, I suppose if you believe we have all of those we will ever need, we could end the development process, but I don't think that is true.

Walt French, curiously, misinterprets the whole pricing mechanism. Under a single payer system, the doctor is not free to set his own rates. The single payer does. So, the only incentive the doctor has is to cram more people into the available hours. That hardly seems to be a method of instilling more quality of care into the system. Walt also seem to believe the supply of doctors and other medical facilities is infinite.


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