Ration My Healthcare, Please!

In the odd world of political linguistics, the word “ration” has, over the course of a few short months, taken on the meaning of a pejorative of the worst sort when paired with “healthcare.” And, through Sarah Palin’s exegesis, healthcare rationing has taken on the menacing specter of “death panels” that will decided when to pull the plug on a beloved relative.

We need to better ration healthcare in this country, and disregard the political hyperbole. I say to “better ration” because we already ration healthcare through an imperfect market in insurance and hospital and physician services. You get the healthcare you can afford, be it through insurance payments or out of pocket expenses, or you rely on the regulated charity of hospitals and caregivers. Since most American have adequate health insurance subsidized by their employers, we don’t generally think of this as rationing, but it certainly is. And within the insurance system, rules about what is and what is not covered more clearly reveal the rationing going on.

Because of various incentives built into our healthcare system and how it is financed, we end up spending enormous amounts on unnecessary tests and procedures. We also spend a huge amount on end-of-life procedures—30% of Medicare spending is on patient in their last year of life.

The emotionally fraught immediacy of medical emergencies leads us to make irrational decisions, especially when they are unwritten by insurance. We should have panels to evaluate the efficacy and costs and benefits not of individual patient cases (the apocryphal “death panels”) but of treatments.

In our 30s we might rationally decide that it would not be worth a $300,000 treatment to extend our life for 4 months when we are 79, but come our 79th birthday we would likely feel otherwise. Thus, the distance of panels to weigh options more distantly and more rationally.

The philosopher John Rawls presents a thought experiment: how would we distribute resources and rewards in a society before we knew what role in that society we would fill. The idea is that behind this veil of ignorance, we could act most justly. Panels that would regulate health treatments could not exist behind a veil of ignorance, but the distance and scientific guidelines would provide a more rational basis than the distorted insurance market for the rationing that we do anyway.

A More Stimulating Stimulus

While the stimulus package is throwing billions and billions and billions and billions to keep folks off the unemployment rolls, state and local governments are laying off workers at unprecedented rates. It strikes me as odd for the newspaper headlines to trumpet the extent of stimulus spending while under the fold is news of the latest state budget cuts and firings. The New Yorker's excellent economics correspondent James Surowiecki attributes this to the emphasis we place on state autonomy in our U.S. flavor of federalism and on fiscal conservative activists efforts over the last couple of decades to impose legislative constraints on state and local spending--see his convincing argument in this New Yorker article. We should use a big chunk of the stimulus money to prevent government lay offs--this would be the quickest and easiest way to save jobs.

Indeed, I don't understand why we did not put more of the stimulus money into WPA-style programs. I read recently about what terrible shape the National Mall in Washington is in, and that Obama was going to ask for a couple of hundred million to spruce it up. Why not just hire a thousand gardeners and masons to start work on that tomorrow? San Francisco Bay being clogged up by a new invasion of Asian kelp? Hire a thousand workers to pull it up. And let's put a lot more money into moving professionals that now find themselves unemployed (from the tech, financial, and other sectors) to teaching.

Hot new video out from Merle Hazard: Bailout

The most financially savvy country crooner in Nashville, Merle Hazard's other incisive critiques of the economy may be found at www.merlehazard.com.