Arnold Kling  

Morality and Medicare

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M.S. writes (for the Economist blog),


Mr Ryan's plan ends the guarantee that all American seniors will have health insurance. The Medicare system we've had in place for the past 45 years promises that once you reach 65, you will be covered by a government-financed health-insurance plan.

The key word here is promises. There is essentially zero chance that the government will keep its current promises. The author concludes,

I agree with Mr Ryan that the government needs to limit taxpayers' exposure to Medicare cost inflation. I think this plan is a fundamentally immoral way to do it.

Baloney sandwich. The term "cost inflation" means a pure increase in prices charged for the same services. Some of that takes place. But most of the rise in health care spending reflects increased use of expensive inputs, in particular fancy equipment and medical specialists.

There are always three ways to deal with the increased usage of premium medicine.

a) have government experts ration medical services
b) give consumers fixed amounts of money based on income and medical condition, and having them make their own decisions
c) tell people that neither (a) nor (b) is necessary

Remember that what everybody wants for themselves is unlimited access to medical services without having to pay for them. So the politics of health care push in the direction of (c). I am always ready to have the debate between (a) and (b). But instead, politicians and pundits attack (b) with (c). That is fundamentally immoral.

Pointer from Mark Thoma.


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COMMENTS (10 to date)
Leigh Caldwell writes:

I'd argue that a) and b) are too limited. There is a whole range of solutions which blend expert input (whether the experts are government-appointed or selected by consumers or insurers) with individual choices.

What's more, there are ways to reduce consumption of services without overt rationing: changes in individual behaviour, preventative medicine, changes in incentives to reduce moral hazard...

The field of health economics is a complex one and doesn't just come down to the two polar choices you have outlined. A key issue is that people don't fundamentally want, as you say, unlimited consumption of medical services. They want good health, which is not necessarily the same thing.

Of course, you're correct that politicians should not pretend we don't need to make any changes. But the three choices as you've framed them do not really cover all the alternatives.

effem writes:

How about compress margins throughout the value chain? The healthcare industry seems like a series of fiefdoms to me...most of whom earn well above their cost of capital. We may not have monopolies any more but oligopolies have become similary effective in this age of price signaling and erecting regulatory barriers.

It seems to me that economists always start with the assumption that the current margin structure is the proper margin structure as long as there is no monopoly. It's just too hard to analyze.

BTW, this is by no means limited to healthcare. Perhaps that's one reason we have record corporate profits and poor employment.

tom beebe st louis writes:

Isn't it a stretch to tie the various "entitlements" to a moral issue? Who says? Jesus? He said the rich must give to the poor to enter the kingdom of heaven. But did he say anything about Rome (givernment) giving to the poor.

Or, from another prophet:

There are eight levels of charity, each greater than the next.

[1] The greatest level, above which there is no greater, is to support a fellow Person by endowing him with a gift or loan, or entering into a partnership with him, or finding employment for him, in order to strengthen his hand until he need no longer be dependent upon others...

[2] A lesser level of charity than this is to give to the poor without knowing to whom one gives, and without the recipient knowing from whom he received the gift....

8 levels of Charity by Moses Maimonides

[Long quote elided. For the original translation, see http://www.chabad.org/library/article_cdo/aid/45907/jewish/Eight-Levels-of-Charity.htm. The variation of the translation that appears above is repeated in many online comments at other websites, such as in the comment section at http://townhall.com/columnists/edfeulner/2010/12/23/a_hand_up,_not_a_handout. --Econlib Ed.]

There is no moral justification for the immoral taking by force (taxes) from one citizen to give to another. Disagree? Show me the rationale!

Russ Seagle writes:

@Leigh, I would disagree with your assertion that people want "good health." If that were the case, more people would take better care of and make better choices for themselves in the first place.

Go to any hospital, doctor's office...or buffet, for that matter...and you'll find people who have chronically made poor choices and neglected their health while assuming that there will be a pill/cure/fix for whatever ails them.

I have an uncle dying of emphysema who has systematically done things throughout his life (and throughout his medical treatment) counter to good health. Given his situation, he still insists that every available medical resource be brought to bear, and at any cost. All this so he can have another cigarette while you and I pay his Medicare bill.

mark writes:

I also disagree with Leigh Caldwell's assertion about what people want. Russ Seagle's comment is right of course. We can look at substance abuse as another example, and obesity. There is a group of people who want good health indeed but they tend to be those who practice good health.

But also, a separate reason to disagree, I think that there is a basically infinite demand for better health - not "good health", but "better health" - from many consumers. Many are much less resigned to aging or other physical limitations on lifestyle than their parents or grandparents were. Anti aging treatments, impotence treatments, sports medicine, and so on. We can also note surrogate options for infertility. Look at the proliferation of the kinds of mental illnesses that can purportedly be diagnosed and treated. Look at all the physical and occupational therapy practices that have arisen. There is a lot more demand in the system than ever.

Ben writes:

I think if you look at peoples actual actions they don't want good health. Rather it seems like they want massive resources committed to health care regardless of it's marginal effectiveness. From a utilitarian point of view and an egalitarian point of view there is something suspect about the per-capita health spending being 7x higher for adults than children and it's probably worse when you look at old people vs children. Obviously old people get sick more but children give you the biggest bang for your buck because you are buying ~ 70 years compared to ~ 5 years if you save a life. From an egalitarian point of view, I think people who get dealt a bad hand and get sick when they are young and are at risk of death should receive higher priority than someone who has had a good 65 years.

David writes:

"I am always ready to have the debate between (a) and (b). But instead, politicians and pundits attack (b) with (c)."

Accepted, though worth noting that politicians and pundits also often attack (a) with (c) (see e.g. ACA debate). (c) is a very tough position to counter, so long as your audience doesn't know or care about actual budgeting.

Tom West writes:

All of which makes a single payer system like Canada's look like the only practical means of reining in costs (at least to some degree).

In such a system, you get (a) but there's no easily available other option to make it clear that the health care *is* being rationed, so it feels more like "the best that can be done".

Somewhat deceitful perhaps, but it does seem to work, and, given the electorate's general mien, it may be the only thing that *can* work. As long as there is any large and visible group of people getting very costly health-care, the general populace seems to expect the same for themselves.

R Richard Schweitzer writes:

Note the Heading: Morality and Medicare

Morality for almost all societal orders has generally been determined as the performance of obligations (both "to do" and "not do").

That Morality criterion does not apply necessarily to obligations imposed through the coercive powers of government mechanisms (here mainly taxation).

To hold otherwise is to assert that Morality can be legislated.

Establishing entitlements for some (whether by categories of age, perceived use to "society," actual service, "victimhoods," or whatever) requires imposition, or acceptance of, obligations on or by others.

Whatever morality is found in true obligations individuals may have to be concerned for others can not be translated into a some "constructed" form of collective moral obligation through legislation and the coercive powers of any form of government.

Legislation may generate immorality, but it can not create morality.

a writes:

[Comment removed for supplying false email address. Email the webmaster@econlib.org to request restoring this comment. A valid email address is required to post comments on EconLog and EconTalk.--Econlib Ed.]

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