Health Care Mythology

Dr. Clifford S. Asness has written a very interesting (and entertaining) essay on the common myths currently being thrown around in the health care debate. This essay is a must-read for anyone who wants a basic understanding of the debate today. (It is also available on his site in PDF format).

Although I encourage everyone to read the essay in its entirety (trust me, it’s more entertaining than my summary!), I’ll summarize the myths here:

Myth #1: Health care costs are soaring. In reality, although health care costs have gone up in the last 50 years, so has the return on those increases, namely, longer life, better medicine, safer procedures, more advanced research and technology, etc. You essentially get what you pay for. You cannot expect better, faster, safer without paying the additional costs for advanced research, equipment, training, etc. Granted, there are costs that can easily be eliminated with some long overdue tort reform. However, the word “soaring” is definitely a gross exaggeration, even taking into account all that. Given the option to go back to 1950′s costs provided you take the 1950′s medicine with it, I’m sure anyone in their right mind would decline.

Myth #2: The Canadian drug story. Sure, drugs in Canada cost much less. But, that’s essentially because we Americans are subsidizing their socialist collective bargaining prices by paying higher prices to compensate. It only works for Canada because they can leech off of our research and development (why do you think Canada has no real pharmaceutical companies of their own?). But, once introduce those socialist collective bargaining prices here in the U.S., there will be no one to subsidize neither Canada’s nor our drug program, resulting in all research and development grinding to a halt. Asness puts it wonderfully when he says:

We could go with the Canadian system and have super cheap drugs, if only we can find a much bigger, more medically advanced, freer country right next to us to make miracle drugs for themselves, and then we insist that we pay them only a bit above their variable cost for our share, and then they in turn agree to let us be their parasite. Mexico, would you mind helping us out?

Myth #3: Socialized medicine works in some places. Socialized medicine, in fact, has never really been fully tested. All along, it has always been relying on drugs, procedures, and technology developed by capitalist countries (you rarely hear about new drugs developed in North Korea, Cuba, Vietnam, or even Russia). So, how can anyone claim that socialized medicine works when it wouldn’t exist without everything it takes from capitalist medicine? Also, some of the places being touted as successes have demographics utterly dissimilar than that of the U.S. and, as their societies’ demographics change, they see the success slowly disappearing.

Myth #4: Socialized medicine is better because their cost/GDP for health care is lower. These numbers are very misleading for quite a number of reasons, including: the lack of accurate tabulation in big-government socialist countries; America’s subsidizing much of their share in the cost; the healthier lifestyles in some of those countries, especially when compared with ours; the “rationing” of healthcare to old-age citizens, leading to less health care expenditures at some poor old guy’s expense of a few years more of old age; and last, but certainly not least, our insane tort system.

Myth #5: A public option can co-exist with a private option. There are many things wrong with this statement.

First, a public option is virtually always never run in a vaccuum; it is run with its finances in very close coordination with your taxes, often with your taxes covering massive shortfalls in the operating expenses of this public venture. And, when the government is infusing millions of your tax dollars into this option to make it “cost less”, you’re essentially only paying for it from two pockets instead of one. In the meantime, though, straightforward private options would get undercut by this operating-in-the-red public option and fall out of the market one by one, until you only have one option left!  As Asness writes:

The first thing the government does is underprice the private system. You can easily be forgiven for thinking this is a good thing. Why not, cheaper is better, right? Wrong. They will underprice private enterprise by charging less to the purchaser of health insurance, not by actually creating it cheaper. Who makes up the difference? Well, you and your family do if you pay taxes, or your kids will pay taxes, or their kids will pay taxes. The government can always underprice competition, not through the old fashioned way of doing it better, they never do that, but by robbing Peter to pay for Paul. They are taking money from your left pocket and giving you a small portion of it back in your right pocket. They do it every day before breakfast, and take a victory lap for the small portion they return.

Second, if a public option is so great and will “keep the private companies honest”, then why don’t we forcefully introduce this into other markets as well? Why only a public option for health care? Why not a public option for buying a computer? For buying cars? (whoops, we sorta have that already.) For buying groceries? For buying office supplies? In fact, why not go the whole hog and just introduce all-out socialism to America?

Third, the few areas where we do have a public option co-existing with a private option are almost all failures. Look at the post office, losing money hand over fist. Better yet, look at public schools, beholden more to teachers unions and politicians than to the futures of the children they teach. Asness eloquently writes:

With a “public option” things inevitably would go the horrific way of our public schools. Instead of existing to please customers (patients and students, respectively) the “public option” in schools exists largely to benefit empowered stakeholders of the system (health administrators and unionized school employees, respectively), who will shamelessly pretend to give a darn about sick people and children. Watch the analogy play out if we go this route in health care. It will be like looking in a funhouse mirror and seeing a doctor where you used to see a teacher. All else will be the same.

Myth #6: We can have health care without rationing. Impossible. There are only so many doctors to go around, only so many CAT scan machines, dialysis machines, pacemakers, etc. to go around. Obviously, as sad as the fact is, rationing is simply inevitable. Once one opens one’s eyes and accepts that, it quickly becomes clear that the only question is: who or what should determine the rationing? And, once one arrives at that question, it’s rarely the case that the confident answer is “the government”, considering the nightmares that get quickly conjured up when thinking of the beaurocracy handling one’s own life.

Myth #7: Health care is a right. Wrong. Health care is made up of material goods and services provided by other individuals and companies. Without their goods and their services, you would have nothing. Free speech is a right because it doesn’t depend on taking something from someone. Not bring illegally searched or seized is a right because it doesn’t depend on taking something from someone.

Health care, on the other hand, relies on other people inventing and developing materials (drugs, machines, etc.), and providing services (research, training, surgeries, etc.). You have no “right” to that. Asness puts it beautiful when he writes:

Although it’s not the primitive issue, the constant improvement in health care gives another good example of why the “right” to health care makes little sense. Did you have a right to chemotherapy in 1600 AD?  You could have protested to Parliament all you wanted, but chemo just didn’t exist. Then, did you have a right to it the moment some genius invented it? You did not pay for the research. You did not make the breakthrough. Where do you get the right? How did it come into existence for you the moment somebody else created these things? I’m pretty sure you cannot have rights to material goods that don’t exist, and I am pretty certain that the moment some genius (or business, or even government) brings them into the world your “rights” do not improve.

Conundrums are easy to create. If a cure for all disease is discovered but it costs the GDP of Europe for each treatment, do we all have a right to it? Of course not. We can say we do, but it does not matter. We cannot have it (unless you agree with my forecast for Europe’s GDP and wait 50 years).

After debunking these seven myths, Asness goes on to hypothesize why these myths are often popular, despite some of their obvious fallacies. Some of it is deliberate (politicians wanting to aquire and retain more power), and some of it is unintentional, albeit stupid and lazy (people repeating things without thinking).

Asness admits to not having all the answers as to what we can actually do to fix the system, but, then, he never set out to write an essay on that. His objective, beautifully achieved, was to debunk the current tornado of myths swirling around out there right now.

Again, I strongly encourage everyone to read the essay in its entirety, and to check out Dr. Asness’s site, www.stumblingontruth.com.

Tags: Health care

This entry was posted on Wednesday, August 12th, 2009 and is filed under Featured, National Politics, Politics. You can follow any responses to this entry through the RSS 2.0 feed.