Tuesday, May 06, 2003

Gephardt of Darkness

Part 3: “The horror, the horror!”

I’ve really said everything that I want to say about Gephardt’s specific proposal. But I’m making one more post under this title because (a) I needed an excuse to include the most famous quotation from Conrad’s Heart of Darkness, and (b) I wanted to make some general observations about attempts to provide “national healthcare.” Some of these observations have been inspired by comments below.

1. Healthcare and health insurance are not the same thing. As Amy observes, you can buy healthcare without having health insurance, and you can have health insurance that does not pay for certain kinds of healthcare. We must explode the myth that people who are uninsured -- or who have insurance that doesn’t cover certain procedures -- necessarily lack healthcare. Healthcare and health insurance are necessarily linked only with respect to low-risk high-cost events (i.e., catastrophic care) that generally cannot be covered except through insurance.

2. In general, people want two things when it comes to healthcare. First, they want it to be under their control -- i.e., they want choice. Second, they want it to be free. The problem, of course, is that you can’t have both (though you can certainly have neither). If you give people a choice about how much free healthcare to consume, a great many of them will consume as much as they possibly can. They will continue to buy healthcare goods and services long past the point where the benefits justify the costs. This is particularly true with regard to optional procedures designed to boost quality of life, such as acupuncture and massage therapy. But it’s also true of various aspects of other, more “serious” procedures. Given the option, people will stay in the hospital for longer stays, always choose the private room, take more pain medication, opt for name-brand over generic medicines, demand more frequent nurse visits, sign up for an extra month of physical therapy, etc. And while nobody chooses to have terrible conditions like, say, lung cancer or AIDS, they do choose how much to expose themselves to the risk of such conditions through their choices about smoking, drinking, eating, sex, and so on. When you insure people against risks, they tend to take greater risks; this phenomenon is known as moral hazard. The *only* way to assure that people purchase healthcare products if and only if the added benefits exceed their added costs is to face them with a price at the point of sale.

3. Trying to make healthcare free is a good way to make it more expensive. (Nice sound bite, eh?) Healthcare is costly to produce because it requires the use of scarce resources. Any policy attempt to make healthcare free to some group of people will eventually increase the real price -- you know, the money that actually gets paid by somebody because the doctors and nurses aren’t working for free -- by artificially inflating demand. If you’re unwilling to face people with a price for their choices, the only other option is to limit their choices via bureaucracy and/or queuing.

4. Liberals, listen up: Socialization encourages regulation of lifestyles. Why? Because as healthcare becomes increasingly expensive (see previous point), political pressure will mount to get costs under control. Once everyone is paying for everyone else’s care, your personal lifestyle choices are no longer just your own. The argument that your actions “don’t hurt anybody” no longer flies, because your risky choices affect everyone else’s expected tax bill. Note that in a private system, your insurance company or HMO might “regulate” your lifestyle by charging you a higher premium for risky activities, but you still have a choice -- one that you must pay for (and that’s just as it should be). But in system that’s socialized, you can’t opt out of coverage or accept a lower price, and therefore others will automatically be exposed to the greater costs associated with your actions. Indeed, the process is already well under way: notice that the tobacco and fast-food lawsuits are premised (in part) on public health arguments, such as the notion that unhealthy choices increase public expenditures on Medicare and Medicaid. Helmet laws are justified on grounds that motorcyclists burden the publicly funded emergency rooms. Arguments like these will only become more viable as the healthcare industry is subjected to increasingly intrusive regulations, and they would become positively irresistible under a single-payer system.

Gephardt has not proposed a single-payer system. But as I argued in Part 1, his proposal (and others like it) would exacerbate the problems in the status quo, thus creating a fertile political environment for further regulation. Each encroachment of the state into the healthcare industry increases the momentum toward establishing a single-payer.

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