David R. Henderson  

Should Medicare Be Cut?

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Gains from Exchange... Do Labels and Good-versus-Evil...

One of the things that I thought I had in common with my free-market allies was our views on Medicare. But some postings from some friends on Facebook (and, because it's FB, I will respect their privacy and not name them) have made me wonder. Three different friends, two of them prominent national libertarians, linked to this article in the British publication, The Daily Mail. The article, by John Naish, is titled, "Sentenced to death for being old: The NHS denies life-saving treatment to the elderly, as one man's chilling story reveals."

The reaction all three friends had was shock: I assume it was at a callous government that lets old people go without government-subsidized health care. One commented, "This is our future if the Affordable Care Act is not defeated in court or repealed." Given that this person has been an outspoken critic of the Affordable Care Act, I think it's safe to say that he disapproves of what the British government did.

What did the British government do? Did it tell elderly people that they could not buy health care? No. They are free to buy health care on a thriving market. What the government did is simply set limits, telling them that they could not get health care subsidized by the government. And because the government is not the Easter bunny (I thought I'd get in the right spirit, given that I'm writing this on Easter Sunday), what this really means is that they could not get health care subsidized by taxpayers. In short, the government said it would not use force against some to pay for the health care of others.

The elderly people in Britain are not treated the same as the elderly and others in Canada. In Britain, you can buy private insurance or buy heath care directly, something that you can't do for most ailments in Canada.

With Medicare spending growing as it is likely to and becoming probably the main source of future large federal deficits, some federal government sometime will have to rein it in. And one plausible way to do so--not the only plausible way, but one plausible way, nevertheless--will be to ration care, to say, "We will not cover you past a certain age for this or that ailment." Will that mean that people will die who would have lived had they received care? Yes, it will. But the lesson we should take from this, if we care about freedom and our health, is not to blame the government for being unwilling to tax people for our health care but, rather, to plan for a future in which the government limits our coverage and we pay for our own.


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COMMENTS (22 to date)
andy writes:

Did it tell elderly people that they could not buy health care? No

Actually, I had a discussion with a medical doctor some time ago/ He told me about stories where the hospital is deciding to whom administer a drug and when not to do it - some drugs are extremely expensive ($1500 a piece) and basically they do what NHS does, only in the hospital.

I regret I didn't ask him, if he actually says to the patient (or, rather to his relatives): I have decided that the insurance company shouldn't be paying this; however if you want to, you can pay $2000 and we will try the treatment.

I think he doesn't. And, although it is much simpler in the case where you can avoid being the 'bad one' doing the decision and shifting the blame to 'the system', I don't think NHS actually tells the patients they have the option.

RPLong writes:

I agree with the thrust of this post, but it strikes me as being an incredible stroke of cruelty to tax away a large percentage of a person's lifetime income under the stated goal of subsidizing health care, and then refusing to subsidize it.

That is the inherent racket of socialized medicine. The system deprives us of our means of saving for our own future, and then turns a cold shoulder when we discover that we did not have the means to save adequately.

Please excuse the passion in my saying so, but the only people benefiting from this Ponzi scheme are the bureaucrats. They get nice, big pensions and get to publish thousands of pages of "cost-effectiveness research" in their government-guaranteed jobs, all thanks to the money we earn, which they tax away from us. Then we grow old, and they have nothing to say to us other than, "Sorry, there's not enough money in the fund."

I often marvel at how truly cruel the system is, when you think about it from a big picture perspective.

I live in a capitol city, and the opulence here is astounding - even lower-level bureaucrats are driving luxury cars and wearing expensive fashions, eating out every day, growing fat, "working" less than 40 hours per week. It starts to look like an episode of "The Tudors" after a while, or maybe I'm just cynical.

Ken B writes:

You should also prepare for a future where you will face ferocious political hostility for wanting to allow people to pay for their own care -- the dreaded 'two tier' system! Opposition to letting people buy health care is one of the driving forces in Canadian politics.

Americans often think I am kidding. I am not. Governments have shut down private clinics in Canada to prevent 'queue jumping.' Even newly opened clinics. There is a great deal of support for such policies.

John Palmer writes:

David,
Perhaps you'd be in greater agreement with me (also a FB friend!). I posted

... it wasn't just her tenacity that saved her father. It was also her willingness to spend her own time and money combined with the fact that in the UK a private option to the National Health Service is available. In Canada, the gubmnt does not permit a private option.... unless you are willing to pay to travel to some other country (e.g. the US).
Everyone needs to understand that health care, like every other good or service, is being rationed and will always be rationed. The only question is how will it be rationed? And so long as we refuse to let people pay for their own health care, we will have death panels, like it or not.

David R. Henderson writes:

@John Palmer,
Well put. Yes, I do agree if you mean by “rationing” what economists tend to mean by it. Some non-economists do have one legitimate objection to our extensive use of that word to cover market transactions: the connotation of a government agency making a decision for us.
But your last line is powerful and I agree totally: "And so long as we refuse to let people pay for their own health care, we will have death panels, like it or not.”
I think this is a case, as fellow Canadian Ken B evidenced above, where economically literate Canadians understood the issue better than some economically literate Americans.

Floccina writes:

I am continually pointing out to people that they are not "death panels" but "we an't paying for it panels".

The other thing I hat is were Democrats use the word "healthcare" when they should say "Health insurance".

Ken B writes:
they are not "death panels" but "we an't paying for it panels".
A distinction without much difference if no-one else is allowed to pay for it either.

Which is what single-payer implies.

Cliff writes:

"People will die who would have lived had they received care."

Ah, but lived for how long?

Radford Neal writes:

To echo what the first commenter said, my reading of this story is that the NHS doctor said that treatment was futile, not that it might work but wouldn't be paid for by the state. I think one can expect that in this situation doctors paid by the state will often be less than truthful.

PrometheeFeu writes:

I largely agree with you David, but I think you're forgetting two things:

1) As was mentioned above, the government taxed that man his entire life thereby reducing his ability to purchase insurance or self-insure. Given the lack of competition faced by the government, it is not unreasonable to assume the government is overcharging.

2) The government provision of healthcare has all sorts of secondary effects. For instance, when the government takes on the cost of something, that increases the quantity demanded AND the price. (which is then passed on to taxpayers) On the opposite end of the spectrum, money will be diverted away from things that the government is unlikely to pay for towards things that the government IS likely to pay for. That raises the price of procedures which cannot benefit from economies of scale.

So while I broadly agree that it is not a particularly free-market position to complain that taxpayers aren't paying for a particular piece of healthcare, the government provision of healthcare has so distorted the market that he has a legitimate complaint here: "You took my freedom and said you would take care of me as compensation, so now, you have a duty to actually take care of me."

And that is ultimately a problem with government-provided healthcare. It is the promise of a free lunch in exchange for freedom. But there is no such thing as a free lunch and in the end, a bunch of arrogant politicians get to decide what we'll eat and what we'll pay for it.

Laarry Willmore writes:

The Daily Mail article is hardly a strong indictment of Britain's National Health Service. The chemotherapy and surgery that saved this man's life was not done privately. It was done by the NHS, at taxpayer expense:

Though neither Michele nor her father had private medical insurance, the new consultant arranged for Kenneth to have the operation on the NHS at the Queen Elizabeth Hospital, Birmingham.

‘The treatment there was superb,’ says Michele. ‘Dad went for chemotherapy every week for nine weeks, followed by one month off. Then he went back in March 2009 and had the radical cystectomy.


Dan Weber writes:

All health-care systems eventually find themselves at the point where they cannot pay for everything, even things that would keep people alive. If they are lucky, it's before the system has bankrupted everything else.

But the pure emotional reaction to this is so strong and visceral that people love to whip it out when the opposition party considers any limits on government spending.

At least the Democrats are consistent because they think that the government ought to pay for everything anyway.

Daublin writes:

A similar example is the NHS treatment of premature birth. If the baby has less than about a 10% chance to survive, then NHS hospitals do not treat.

http://www.bbc.co.uk/news/health-12625253

http://www.dailymail.co.uk/news/article-1211950/Premature-baby-left-die-doctors-mother-gives-birth-just-days-22-week-care-limit.html


I would put the situation more strongly than rationing being "one plausible way" to contain costs. I would think it's the first order of business.

The disturbing part to me is not so much that a cost benefit analysis is happening. That seems unavoidable, and I deeply wish that it were more widely appreciated. The disturbing part is the analysis is done by a government bureaucracy. I think of the FDA, and I just don't see how these decisions are going to made very well.

PrometheeFeu writes:

@Dan Weber:

"All health-care systems eventually find themselves at the point where they cannot pay for everything, even things that would keep people alive."

Eventually? ;-)

Mark Brady writes:

John Enoch Powell, the famous Conservative politician, was minister of health, 1960-63. Later he wrote A New Look at Medicine and Politics (London: Pitman Medical, 1966), of which a new edition was published as Medicine and Politics: 1975 and After(Tunbridge Wells: Pitman Medical, 1976). This book is well worth reading and I strongly recommend it to anyone who is interested in the political economy of state provision of health care.

Tracy W writes:

Ken B: Canada is I think a special case. I've lived in NZ and the UK and in both countries it's entirely legal, and reasonably common amongst those with money, to buy private healthcare (you still have to pay taxes to the government-run system, which of course reduces your ability to pay). In both countries, I've purchased private health insurance as well, though the private insurers are eager for as much of your medical care to be done by the public system as possible.

I think the Canadian system is quite unusual, though I'm not aware of figures.

Marvin writes:

[Comment removed for policy violations. --Econlib Ed.]

Ken B writes:

Canada my well be a special case. It's also the society most like yours and the country whose health system is the most admired by the Left in America.

In the UK they seem to now have 'travel panels' as well as death panels


An elderly woman was ordered to find a new GP because the “carbon footprint” of her two-mile round trips to the surgery where she had been treated for 30 years was too large.

Justin writes:
...so distorted the market that he has a legitimate complaint here: "You took my freedom and said you would take care of me as compensation, so now, you have a duty to actually take care of me."

You took my freedom and promised me that you'd suspend the law of gravity, so you have a duty to actually suspend the law of gravity.

What the politicians promised simply isn't possible. It's a tragedy that it apparently took the elderly person an entire lifetime to realize this, but that's no reason to support the govt. throwing away more money to try and fulfill an impossible promise.

PrometheeFeu writes:

@Justin:

"You took my freedom and promised me that you'd suspend the law of gravity, so you have a duty to actually suspend the law of gravity."

That would sound suspiciously like your problem and not mine. Perhaps you should avoid making promises you cannot keep and be made to pay a very high price for defaulting on your obligations.

I didn't actually say they should pay for it. I simply said that he has a legitimate complaint. In legal lingo, I think there clearly is an injury. What the remedy should be (if one is available) is a separate question. By analogy, those who invested with Maddoff clearly have a legitimate complaint against him and are quite right to demand their money back. But that doesn't mean they will be paid back.

I think an appropriate remedy (not that it's likely to happen) is to seize the assets of every politician who ever voted for the NHS and disburse all that to the people who were injured. But give that that's not going to happen, telling the NHS to pay for his sounds pretty good. With a bit of luck, it will force the NHS, politicians and voters to face the realities of socialized medicine and do something a bit more long term.

Marvin writes:

The fixation on health care costs and services is misguided. The issue is not about rationing care but rather supporting a healthy population which has almost nothing to do with medicare or health care costs, but ensuring that people have access, i.e. liberty to produce and buy healthy food, and the liberty and freedom to live in an environment which is free of contaminants that cause cancer, heart disease and diabetes among other lifestyle sicknesses. Or, one can support the right of corporations and "free enterprise" to continue to poison the population claiming that this is the price of freedom or that corporations have only the best interests of their customers at heart and the population has always been fat and sick.

Tracy W writes:

Ken B - firstly, personally I'm a NZer. I've worked in the USA, but only for 3 months. I liked my time there, but I'm not an American and I'm not taking any steps to become one.
Secondly, that story just seems to be a weird case at the local doctor's surgery.

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