Monday, July 14, 2008


OK. I realized after some lengthy comments on my last post that I wan't exactly clear in getting my point across. There were definitely some holes in my statements as I read them again. So this is the advanced version of why centralized healthcare in the US will fail:

1. Cost shifting- As was rightly pointed out to me, cost shifting doesn't bankrupt the economy in and of itself. It really is always less efficient, but there is much cost shifting in the modern US, and its mere existance hasn't destroyed the economy. However, what it doesn't do is lower the cost. People occasionally bring up administrative costs or duplicate tests. Compared to a government system (which largely shifts the costs to physicians as opposed to eliminating them), there is no reason to believe that these will change that dramatically. The problem with healthcare is simply that it costs too much. As healthcare approaches 20% of all US dollars, shifting the cost to "the rich" or subsidizing "the poor" will do little to stop it from running the rest of the economy over like a bulldozer. Giving the government the money first will simply mean that the money will spend more time out of the economy and then inefficiently be spent.

2. The US is not Europe. Europe is actually a conglomeration of numerous different types of universal healthcare systems. Here is the truth. Most European countries ration care. Some services aren't provided, they don't have enough equipment, or people who meet certain criteria are excluded. This is how their systems stay afloat. This rationing is somehow seen as more moral because it is more "equitable," but I doubt that people who can't get lifesaving cancer drugs or wait long periods for imaging agree. More importantly, Americans wouldn't stand for it. We can't let 95 year old ventilator dependent with advanced dementia granny die after she becomes septic from one of a million bedsores. We're a long way from rationing.

3. Without rationing, prices escalate. That's already what happens now. If we could spend $1 billion dollars to keep someone alive for 1 extra minute, is it worth it? Most would say no. The use of finite resources involves the constant weighing of cost and benefit. Our current system doesn't do that. We essentially expect everyone to be entitled to everything. Using other people's money, everyone wants everything done. This is actually bad for society. Using the example from number 2, a family that wants everything done for granny may have second thougths if they were presented with the $5000/day bill. As an example, many people in my area are being priced out of housing by the cost of property taxes. This is the equivalent of taking all of those taxes for an entire year from a family each day to keep granny on the ventilator. Without rationing, prices will continue to climb. If someone else is always buying dinner, everyone's always at the steakhouse. This puts Subway out of business, and the low cost options disappear in a sea of ever rising steak prices, due to the unlimited demand driven by people who's personal stake in the rising prices is trying to get as much steak as possible until the system collapses. Every double read film or "just in case" CT scan that comes along to avoid a lawsuit adds to this misery.

4. Americans will not accept government rationing, and it will not be feasable for the government to ration as a political point. Americans only can't afford healthcare now, because they expect everything. They will still expect it in any kind of universal system. We will thus see a system in which the government will cut payments, trying to spread out the money over an ever increasing sea of people. With cut payments, will come a reduced supply of hospitals, doctors, technology, etc... There will be no "rationing," but the waits will grow. Physicians, who will be largely the vicitims in this system, will be blamed for caring about money (ie keeping the business open and making an actual profit). The government will point the finger. Meanwhile, costs will continue to rise as everyone tries to become more (not less) expensive in order to claim that they deserve a larger percentage of the money. This is sort of the same concept that always drives beauracracies to grow.

5. If we are going to ration anyway, we might as well use the market, as the market atleast promotes efficient resource utilization. May some people be excluded? Yes. Will some people also be excluded in the universal system? Yes. People who's treatments are not covered exist all over the place. The government simply adds inefficiency. They will either ration less efficiently than the market or go bankrupt for lack of rationing.

Our resources are finite. We can't give everyone everything. It doesn't matter whether we have a single payer, a socialized system, a subsidized system, a mixed system, etc... Without changing the entitelements and spending less money, we will go bankrupt. Centralizing the system will not fix the problem.