"Next Thursday, I will be debating Robert Kuttner in Burlington, Vermont. To be precise, 4-5:30 p.m. on April 23 in the Grand Maple Ballroom of the Dudley H. Davis Center on the University of Vermont campus.
The hypothesis I'm going to offer is not definitive, and is not meant to be. But my read of the evidence is that at the root of our health care problem is an almost pathological aversion to making hard choices -- an aversion that has, in its steadiness and implications, become the most consequential choice of all....There is no budget. We don't want one. We're profoundly uncomfortable saying that a person's life, or health, is not worth the price of a particular procedure.
What we want is unlimited access to medical procedures without having to pay for them. What we get is extravagant use of medical procedures with high costs and low benefits. This is unsustainable and it will stop. The debate should be about how the cost-benefit trade-offs and rationing will take place. I will argue that most health care spending should be paid for out of pocket, with insurance reimbursement only for very large expenses over a multi-year period. With consumers paying out of pocket, they will take price into account in making their choices, and they will self-ration. The alternative is to have government officials make the choices about what treatments people are to obtain. I do not think that this is a one-sided debate, in which one position is clearly better than the other. But I hope that Kuttner and I can have this debate, rather than go off into red herrings like drug company profits."
Me:
This sounds like a good debate because you and Kuttner are both excellent. My view conforms with Milton Friedman's about health care in this interview he did with Kuttner:
"RK: But, you know, physicians incomes relative to other highly skilled professionals are relatively lower in the western countries that have universal health insurance, so I think it is kind of indeterminate.
MF: We have the worst of all of all worlds on that score
RK: I couldn't agree with you more. We have the worst mix of government and private, I could not agree with you more.
MF: We ought to have much more private or much more government. ( NB I AGREE COMPLETELY- DON )
RK: Well, to the extent that government is involved at all it ought to be doing a better job than its doing now. I am entirely in agreement.
MF: But there is no formula for doing it. Every area where the government gets involved, whether its education, whether its medicine. If government were to take over the industry of running retail grocery stores, that would be a major problem. The post office is a problem. And if Medicare and Medicaid had never been passed, it may well be, probably would be, that expenditure on health would have gone up, maybe to seven, eight, nine percent of GDP, because as we get to be a richer country, it's a product that people want to have more of. And there is nothing wrong with that. In fact there's nothing wrong with medical spending being 20 percent of national income.
RK: If people want it, sure.
MF: But what happens when the government takes over, spending goes up while the government involvement grows, but when the government takes the whole thing over, then spending goes down. Look at what happened in Great Britain or in Canada, they spend much less, That's because of government rationing. Allen Wallace once wrote an article about the effect of government taking over an activity, and he pointed out that spending goes up while they're taking something over, then it goes down afterwards because that's where they can get money for another venture.
RK: Well, I guess the basic disagreement is that I think there are more sectors of the economy than you do that for a variety reasons aren't either self-regulating in terms of how they operate, or get the right resources.
MF: I think the real difference is that you have more confidence in government than I do.
RK: No, I don't have necessarily have confidence in government, but I think rather than just concluding that the remedy for healthcare not being a good subject for the free market, is just to say well that's too bad, I think you've got to work harder at having the government to do what is has to do better. And I think, ironically enough, the Federal Reserve is one of the proofs of the pudding, because that, after all, is part of the government, and it has learned some things over 70 years.
MF: Wait another 10 or 20 years. I trust the government to behave like a government."
I would like us to choose one way or the other. The hybrid approach is a disaster. My own view is like Charles Murray's view, and that is that we should have a guaranteed income out of which universal health care insurance is paid.
"Lopez: At one point you talk about possibly increasing the grant size if you estimate on health-care-cost needs turned out to be off? What’s to say that in implementation the grant size doesn’t skyrocket?
Murray: The passage you’re talking about was intended to anticipate critics who present elaborate data to prove that my $3,000 allocated annually to health care is not precisely right. I’m close, but I don’t want to spend the next year arguing about whether the right number is $3,300 or $3,500 instead of $3,000. In effect, I’m saying to the reader: “Okay, for purposes of reading the other chapters in the book, assume that the grant size is their number for health care plus $7,000.” The debate about the Plan shouldn’t get sidetracked over a few hundred dollars, because small dollar differences are irrelevant to the main argument. Suppose, for example, that the right figure for the annual health care allocation is as high as $3,8000 instead of $3,000. All that means is that the projected costs of the Plan cross those of the current system in 2015 instead of 2011. "
I just thought I'd mention it since no one besides me is going to. Otherwise, as I say, we should choose anything but a middle of the road hybrid.
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