Arnold Kling  

Tyler Cowen on the Future of Health Policy

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He sees a future of managed care, funded or subsidized by vouchers. He elaborates here.


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?


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TrackBack URL: http://econlog.econlib.org/mt/mt-tb.cgi/3179
The author at Remains of the Day in a related article titled Tyler Cowen on Managed Care writes:
    Tyler Cowen's article in this past Friday's NYTimes brings the "unacknowledged monster lurking in the room" to the center of the healthcare debate: managed care. For all the complaints, managed care does not seem to hurt actual health care outcomes,... [Tracked on March 16, 2010 1:44 PM]
COMMENTS (10 to date)
steve writes:

As a physician who does a lot of end of life care, my general impression is that most people are not emotionally or informationally prepared for these decisions. The default will be to just go with the proposed procedure. It would take a huge cultural change to have people make these decisions.

Steve

Steve Roth writes:

>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?

The latter. The former sounds hellish.

Same is true for taxes versus charity: I don't want to survey the whole economic and moral landscape of the world annually. I want to participate in a social contract that has been worked out, fitfully and with great difficulty, over decades and centuries.

Wisdom of the crowds. Where do I send my check?

Joe Kristan writes:

I give people more credit for being able to make tough calls.

People make similar choices all of the time. Do we move Grandma into assisted living? It costs more than her apartment, but she's having trouble taking care of herself.

Do we take away Grandma's car, even though that means we have to drive her more places? Is it time for one of her kids to pay her bills?

We make such choices when we move relatives out of the hospital and into hospice, even though it acknowledges that the end is near.

These are hard choices, but making choices is what adults are supposed to do. They don't all do it well, but overall they do it better than a government franchise or bureau.

Seth writes:

"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?"

I'd much rather have the decision and I think we would be much better prepared for the decision if we had to deal with it.

"As a physician who does a lot of end of life care, my general impression is that most people are not emotionally or informationally prepared for these decisions" -Steve Roth

Sounds like there's a market opportunity in getting them ready just like financial planners do with helping people save for college education, retirement and host of other things.

Tom West writes:

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.

Given the opposing view here, it sounds like a case for democracy. Let the people decide whether they want that responsibility.

(I predict managed care buy a landslide.)

Doc Merlin writes:

This is a bit rambly, but I have to say I disagree with both of you.

Healthcare being a very strongly normal good, I don't see a voucher system or any tax pay-ed for system being sustainable in a realm with high technological progress. It will slowly eat up more and more of government expenses taxes (and government expenditure) will increase to unsustainable levels.

Private self-rationing will work, but public voucher system or managed care will not.

It is simply a matter that the richer we get, the more healthcare we will demand, and the more healthcare technology expands, the more % of our GDP will go towards it. When this is private spending it is sustainable because of creative destruction, but if its paid for with taxes it will be unsustainable. Either the system will destroy creativity (the way it does in many state managed health insurance countries) or it will destroy fiscal soundness.

steve writes:

"These are hard choices, but making choices is what adults are supposed to do. They don't all do it well, but overall they do it better than a government franchise or bureau."

In most situations, yes. In a true market oriented situation where both parties in the deal can walk away, yes. All I can say is that a lot of these decisions are made at a time when emotions are very raw. Everyone on blogs is smart and very rational. In real life, patients are scared shitless much of the time. The issues are complex and there are seldom definite answers. Medicine is largely the art of applying large scale statistics to single events. Most of these decisions are made by older people, often with little medical sophistication.

I am not saying these problems cannot be overcome. I am saying it would take a huge cultural shift.

Steve

MernaMoose writes:

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?

It makes you wonder if this isn't the real reason socialist thinking continues in today's world.

But how do you make this anything but a package deal? Either you face the music as to what your health care costs, or you don't.


...he does not think that what will emerge is a system of real health insurance...

Whatever emerges here in the US, I predict it will resemble a train wreck more than anything else. Because our democratic system is unable to tackle hard problems in even semi-rational terms. Is anybody under the illusion that this is ever going to change?

Our political system is in a race to the bottom. You can always win by sinking to the level of your opponent. You can usually still win by sinking a little lower.

R Richard Schweitzer writes:

This is probably like Cicero on Carthage:

What is the Constitutional Authority for Congress to appropriate funds for healthcare benefits, to establish entities to provide administrative services ......?

Daniel Tran writes:

"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?"

I agree with MernalMoose said thatit's "socialist thinking". In the moral senses, it seem right to help you parents when they got older to honor you parents as the 10 Commandment says.However, watch carefully that will happen to the private healthcare provider, they will run out of business because of government intervation. Tax will increase rapidly to give healthcare to everyone. Don't all American employees have their own health care provided. Don't we already have Medicare to provide the poor and older people. Besides that, the country will run deeply in to debt deficit that sink us into the bottom of the pit and we are in trillions of dollar in debt right now. The future of young generation will suffer because of this plan to pay debth and give away our freedom away. This plans is totally disaster to Americans not helpful at all when we are in recession.


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