and practical philosophy.
Ladies and gentlemen, Megan McArdle:
There are two entirely separate questions here. The first is that we would like everyone to have all the health care they could ever possibly consume, but we can’t. This is true of other goods, like food and housing. I find the process of figuring out what to produce, or provide, fascinating, which is why I am a business journalist. It is especially important in medicine because of the somewhat unique market. Whether the government is paying, or private companies are, there will continue to be core tensions between what the doctors want, and what the people writing the checks will approve. Right now, Medicare and Medicaid handle these problems somewhat differently–they simply slash the reimbursements until some providers refuse to take their patients. But if the government comes to dominate health care payment, that problem will become more explicit. One way or another, we’re going to have to confront the fact that we can’t all have everything we want–and that not having everything we want, in this case, probably includes suffering and earlier death for at least some people.
The second problem, which makes a less stirring Sunday supplement article, is that this allocative process can get badly screwed up when the government gets involved. To take one small example: we have a comprehensive national health care plan for seniors. Yet we have a shortage of geriatricians, the one specialty that you would think would be booming. Why? Because Medicare sets a single price for the services of geriatricians, and it is low. Since the field is not particularly enticing (though arguably it really should be, since geriatricians have extremely high job satisfaction compared to many more popular specialties), very few people go into it. It’s one of relatively few specialties that consistently has most of its slots and fellowships unfilled.
I’ve already discussed what I think will happen to new medical technology and prescription drugs under a more comprehensive government system. For the same reason: prices are very useful things. And contra the liberals who keep saying I am maintaining this belief in the face of overwhelming evidence, we in fact have overwhelming evidence for two things:
1. National health care systems control the prices of inputs, especially the prices of inputs produced by corporations: medical technology and drugs.
2. Price controls lead to shortages and other suboptimal results that decrease the general welfare, even though they may very well benefit some specific people.People talking about how Europe is not paying its “fair share” of drug development costs have the problem wrong. Drug companies charge what the market will bear. Drugs wouldn’t be any cheaper here if Europe dropped its price controls. What we would have is more drugs. But this is a hidden cost. And governments almost always prefer hidden costs to explicit ones. It’s just electoral logic.
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