Few people would think that a ne'er do well brother would be justified into taking $50,000 from you to prolong his life (with p = 0.17) for another three months. (Bryan Caplan has made a similar point.?) So why do we approve of comparable transfers through the public sector?
Later, he gives a nod to me, presumably for my view that fee-for-service reimbursement will break down and that in the U.S. this is likely to lead to a voucher solution for Medicare, rather than the supply restrictions we see in other countries. However, unlike me, he does not think that what will emerge is a system of real health insurance, with high deductibles and co-payments. Instead, he thinks we will see managed care.
I think that what is implicit in his view is that we would rather outsource our rationing decisions than make them as individuals or families. Suppose that it is your aging parent who is offered the high-cost, low-benefit procedure and cannot afford it. Do you want to be under pressure to put up the money, or do you want the social norm to be that this decision is up to the managed-care provider?