David R. Henderson  

Go Quietly, Old People

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My review of bio-ethicist Daniel Callahan's new book, Taming the Beloved Beast: How Medical Technology Costs Are Destroying Our Health Care System, was posted on-line yesterday. In it, Callahan advocates rationing health care to the elderly, not allowing them to get some health care even if they're willing to pay for it themselves.

Some excerpts:

A few pages later he advocates forbidding certain "marginal" benefits, which he admits could be life-saving, to be covered -- not only by Medicare, but also by private insurance. Again, to prevent private insurance from covering these benefits would require coercion. Interestingly, one of the people who would need to be coerced is Daniel Callahan.
Early in the book, he tells quite humorously about the 10 diagnostic scans and tests he had at his last physical, the total cost (he means "price") of which was $5,500. His tale of how far the doctor went is hilarious. My comment:
So, in spite of decades of his own learning and observation, which led him to conclude that far too much is invested in medical technology for the elderly, and despite his statement that "I have an obligation at our moment in history, and at my stage of life (age 79), to make use of as little expensive technology as possible," he did not follow through. Bioethicist, heal thyself.

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COMMENTS (14 to date)
FC writes:

Have some sympathy. Callahan is old and clearly no longer of sound mind. The Federal government should hire someone to make medical decisions for him.

Tom West writes:

In it, Callahan advocates rationing health care to the elderly, not allowing them to get some health care even if they're willing to pay for it themselves.

So, in spite of decades ... he did not follow through.

If he is claiming that it would be better for society as a whole to not spend this money on the elderly, then the anecdote is *supporting* his position that one not be allowed to pay for certain medical care for oneself.

Essentially, he provides a first-hand example that you cannot expect people to voluntarily take action that, while better for society as a whole, is counter to their own self-interest, no matter how well they understand the situation. Thus the need for legislation.

One can disagree with his policy suggestions, but this example supports his case (if you accept his premise), not weakens it.

Joshua Macy writes:

It strengthens the case that you could only achieve the result through coercion, but it weakens the case that it's desirable to do so. In order to view the decision he made as a mistake you have to discard the considered judgment of the person in fullest possession of the facts of the individual case and a complete and thorough understanding of the issues involved and the arguments for withholding treatment. In other words, you have to assume what needs to be proven and use that to argue that he fell short.

David R. Henderson writes:

Dear Tom West,
You make a potentially good point: it's the standard point people make, quite rightly, about externalities. I think what swings it the other way is his statement, "I have an obligation at our moment in history, and at my stage of life (age 79), to make use of as little expensive technology as possible." My point is that he didn't act as if he had that obligation.
An externality example: Let's say I get on the road to drive to work in the a.m. in Los Angeles. I impose a few seconds of cost on potentially a few thousand other driver. That's an externality because I don't take that cost into account in choosing when and whether to drive. I advocate private ownership of freeways with concomitant congestion pricing. Even many economists who don't advocate private ownership do advocate congestion pricing to internalize the externality. But I would never say--and I don't think they would say--that we have an obligation to drive to work off-peak. The analogy can't be perfect because when you spend your own money on health care, there's no externality (other than a pecuniary one.) But the point is that if one says he has an obligation--and it's not just a throwaway line in a bar, but an important part of an argument in one of his important life works--then, as long as acting on it is peaceful, he should act on it.
Best,
David

Robert Johnson writes:

It seems like you could just use prices to ration health care, if people directly paid for the health care they consume. I know that's nothing like an original argument but I didn't see it here.

I think that plenty of people, faced with the trade-off between spending a fortune on prolonging their life for a few months or leaving that money to their heirs or to charity, would prove to be very generous to posterity.

The problem is that we don't use our own money when we buy health care.

David R. Henderson writes:

Robert Johnson,
Good argument, but if you've read this blog a lot, you've seen your point here a lot. Arnold Kling often makes that point.
Best,
David

Tom West writes:

It seems like you could just use prices to ration health care, if people directly paid for the health care they consume.

The trouble with that approach (and using money as the mechanism for rationing) is that it assumes need and ability to pay are proportional. Price works as an excellent means of allocation of resources, and it can be argued there is no better way, but if we're trying to allocate a scarce resource (be it gas, water, or health care) on the basis of 'need', then it has this one fundamental weakness.

David R. Henderson writes:

Tom West writes:

The trouble with that approach (and using money as the mechanism for rationing) is that it assumes need and ability to pay are proportional.

That proportionality would be an amazing coincidence if true. Tom and I agree that it's not true, but I've never assumed it--for medical care, housing, or anything else.

Best,

David

Jeremy, Alabama writes:

"Cost of a medical technology" is driven down by new technologies.

Thus, advanced medical technologies are paid for by gouging the rich who can afford it, and meanwhile those people who can't, benefit from previous-generation technologies that have become cheaper. Lasik is a great example.

This cycle has become so rapid that it would be insane to destroy it, but this is being threatened. All socialized schemes try to manage costs by discouraging expensive new therapies. This is the worst possible outcome for everybody, but it might be "fairer".

RL writes:

"Tom West writes, "The trouble with...using money as the mechanism for rationing...is that it assumes need and ability to pay are proportional."
-----
I don't see that at all. Medical markets, like all markets, work at the margin. If you have pneumonia and you're poor, you might get penicillin, while if you're able to pay for a more expensive cephalosporin with slightly better features in terms of effectiveness and side effects, you might opt for that.

If you're less affluent and need to be hospitalized, you might pay for the smaller room with less amenities (some hospital rooms now look like hotel suites.)

If you need a non-elective surgery you might get it now if you're able to pay or later if you need to save up.

Most importantly, if you're paying out of pocket, and so is everyone else, prices will drop, much of what is done now by cartelized physicians would be done by those with less extensive training, lower costs, lower prices, but equally good outcomes.

How is any of this different from buying vital-to-life housing or clothes or food?

Neil Baxter writes:

Of course, one thing not considered here is the elasticity of 'need' and 'ability' to pay. For one thing, the term 'need' is commonly used very loosely. It is one thing to say I need a knee replacement and another thing to say I 'need' a knee replacement to survive. Let us separate wants and needs. Secondly, I may 'want' a knee replacement, but the amount I want it is very flexible in the hierarchy of my values. If there is medicare and I assume that everyone else pays, then my want very quickly becomes a need, if I am paying myself, then my 'need' may rapidly turn into a 'want', because I also 'want' one last trip to Europe before I die with my good knee. And, my ability to pay is similarly flexible. I may 'need' a knee replacement and if everyone else is paying for it, my ability to pay is near infinite, but if I have to pay for it myself, I have to determine which of my 'wants' I am willing to fore-go to have my new knee. Who is best to judge my needs, wants, and abilities to pay? - of course, I am - not the state, and not a million experts.

Robert Johnson writes:

RL and Neil Baxter make the point eloquently.

As far as no proportionality between 'need' and 'ability to pay', I too would like to see poverty eliminated. But the problem of poverty is, at least in some ways, distinct from the problem of how to decide how much health care to produce and consume. And that's the other point: it isn't that health care is in short supply, it's that we need to decide how much health care we want as opposed to other desirable things.

John Fast writes:

Tom West wrote:
If he is claiming that it would be better for society as a whole to not spend this money on the elderly, then the anecdote is *supporting* his position that one not be allowed to pay for certain medical care for oneself.

I claim it would be much better for society as a whole if all of Daniel Callahan's health care in particular were terminated immediately.

Tom West writes:

With respect to my previous comment, I have to say that the term 'rationing' in the American health-care context is not particularly accurate as you can continuously grow the amount of resources by simply spending more.

I reacted to the idea of using pricing as a means of rationing, even if 'rationing' was not particularly accurate in this context.

I should have saved my comment for a more apropos example were there are actual shortages with little hope of short-term relief. (Of course, to undermine my own argument, another reason to use price to essentially ration a scarce resource is to induce others to enter the market later).

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