Welcome to the Emergency Room. Can I See Your Insurance Card and Polling Numbers, Please?

From Mickey Kaus:

Democratic blogger Ezra Klein appears to be positioning Dem health care reforms as a way to cut costs, on the grounds that a reformed system will be able to make "hard choices" and "rational" coverage decisions, by which Klein seems to mean "not providing" treatments that are unproven or too expensive--when "a person's life, or health, is not worth the price." Matthew Yglesias' recent post seems to be saying the same thing, though clarity isn't its strong suit. (He must have left it on Journolist.)

...

The "rational," cost-cutting, "hard-choices" pitch isn't just awful marketing--I don't even think it's accurate. Put it this way: I'm for universal health care in large part precisely because I think the government will be less tough-minded and cost-conscious when it comes to the inevitable rationing of care than for-profit insurance companies will be. Take Arnold Kling's example of a young patient with cancer, where "the best hope is a treatment that costs $100,000 and offers a chance of success of 1 in 200." No "rational bureaucracy" would spend $20 million to save a life, Kling argues. I doubt any private insurance company is going to write a policy that spends $20 million to save a life.  But I think the government--faced with demands from patient groups and disease lobbies and treatment providers and Oprah and run, ultimately, by politicians as terrified of being held responsible for denying treatment as they are quick to pander to the public's sentimental bias toward life--is less likely to be "rational" than the private sector.

That is to say, the government's more likely to pay for the treatment (assuming a doctor recommends it). So it's government for me.

He comes oh-so-close to getting it right, but then falls short.

Klein is right that the pressure will be to ration care -- we already see such rationing being seriously considered in Massachusetts (the model of choice for Democrats) under the weight of massive expenditures.

But Kaus is correct that if some high-powered and well-funded interest group gets behind a certain procedure, cost-effective or not, the government overlords of the program will likely approve it.   As a result, for example, no potential treatment for breast cancer will ever be denied given the proven strength of women's groups lobbying for breast cancer treatment (already, breast cancer research is hugely over-funded vs. other diseases given its mortality, due in large part to this powerful lobbying).

But it is not one dynamic or the other.  Both will exist.  There will be huge pressures to cut back somewhere, as costs skyrocket.  And there will be huge pressure from certain interest groups to fund treatment for certain diseases in unlimited amounts.  The result will not be, as Kaus posits,  that everything will be funded more than it is today -- the result will be that certain procedures and conditions with strong lobbying and political muscle will get funded more, with the difference being made up from cutting funding for conditions and procedures without a well-organized lobby.

Access to care will no longer be determined by money, but by political pull.  (Yeah, I know, it's Ayn Rand's world and we all just live in it).

  • http://galens.typepad.com/ Ben

    It's even worse than it looks. Other specialties will have to compete in the realm of lobbying to prevent losing their piece of the pie to a more vocal group, essentially wasting vast sums of money on infighting. Politicians will gain even more power by playing gatekeeper of resources to the highest bidder. We've already seen political contributions give an outstanding return on investment in all other areas, and health care will be no different. No wonder the government is anxious to jump in.

  • Dr. T

    "There will be huge pressures to cut back somewhere, as costs skyrocket. And there will be huge pressure from certain interest groups to fund treatment for certain diseases in unlimited amounts."

    In this system, the rules for coverage and rationing will soon resemble our federal income tax code. We'll have healthcare accountants and lawyers who figure out coverage loopholes. Physicians will become jujitsu experts when it comes to coding diseases and conditions: "Your condition isn't covered, but it's similar to this other condition that is, so we'll "overlook" a lab test and recode."

    We already have a bit of the above process with Medicare and Medicaid. When we have OmniCare, there will be a geometric rise in complexity and system-gaming.

  • ben

    Note: I am not 'Ben' above

    Coyote, missing from your discussion is non-price rationing, i.e. queuing. There is a half way house that governments exploit mercilessly in nationalised systems, which is to fund most procedures, but require you to wait years to get treatment. This is a clever trick - it shifts costs onto the sick and dying where they are harder to see, but still allows governments to say they care enough to provide the procedure.

    And governments are extremely clever with the numbers. New Zealand instituted a policy whereby nobody has to wait longer than 6 months in a queue. The government here then did one of two things. One is, after six months you will see a general practioner, not a specialist, and then go to the back of the queue again. Or, in extreme cases, you would wait six months in the queue and then cancel your appointment. You would have to start again. Policy met - nobody queued for six months. It could take 2 years to get a hip replacement. Hard to measure the tremendous costs that imposes on the patient who is waiting a significant fraction of their remaining life to be made well again. Political problem solved.

    There is also the problem of ideological capture. The New Zealand public health bureaucracy does not attract its fair share of capitalists. It is a haven of socialists. After the election of a left leaning government in 1999, the health system was overhauled. One of the innovations this brought was the near total abandonment of accounting systems. Cost and revenue statistics simply stopped being properly collected and processed, and senior managers in hospitals simply did not know what operations were costing. It would literally be the case that it was only at year end that hospitals would only then find out if they had made budget or not - and generally there were huge blowouts and occasionally resulted in health boards being sacked but usually in the government funding the shortfall. Moral hazzard, anyone?

    Why were accounting systems substantially curtailed as a matter of policy? Because it was felt, as it was explained to me by a researcher who led a large study on the health system, that accounting was a tool of business, and business has no place in the provision of healthcare. I kid you not.

  • ben2

    Note: I am not 'Ben' above
    Note 2: comments are not being posted. Attempt #2 here.

    Coyote, missing from your discussion is non-price rationing, i.e. queuing. There is a half way house that governments exploit mercilessly in nationalised systems, which is to fund most procedures, but require you to wait years to get treatment. This is a clever trick - it shifts costs onto the sick and dying where they are harder to see, but still allows governments to say they care enough to provide the procedure.

    And governments are extremely clever with the numbers. New Zealand instituted a policy whereby nobody has to wait longer than 6 months in a queue. The government here then did one of two things. One is, after six months you will see a general practioner, not a specialist, and then go to the back of the queue again. Or, in extreme cases, you would wait six months in the queue and then cancel your appointment. You would have to start again. Policy met - nobody queued for six months. It could take 2 years to get a hip replacement. Hard to measure the tremendous costs that imposes on the patient who is waiting a significant fraction of their remaining life to be made well again. Political problem solved.

    There is also the problem of ideological capture. The New Zealand public health bureaucracy does not attract its fair share of capitalists. It is a haven of socialists. After the election of a left leaning government in 1999, the health system was overhauled. One of the innovations this brought was the near total abandonment of accounting systems. Cost and revenue statistics simply stopped being properly collected and processed, and senior managers in hospitals simply did not know what operations were costing. It would literally be the case that it was only at year end that hospitals would only then find out if they had made budget or not - and generally there were huge blowouts and occasionally resulted in health boards being sacked but usually in the government funding the shortfall. Moral hazzard, anyone?

    Why were accounting systems substantially curtailed as a matter of policy? Because it was felt, as it was explained to me by a researcher who led a large study on the health system, that accounting was a tool of business, and business has no place in the provision of healthcare. I kid you not.

  • ben

    Why are comments not working?

  • ben

    Ok...why are larger comments not working?

  • ben

    Note: I am not 'Ben' above
    Note 2: comments are not being posted. Attempt #2 here.

    Part 1: Coyote, missing from your discussion is non-price rationing, i.e. queuing. There is a half way house that governments exploit mercilessly in nationalised systems, which is to fund most procedures, but require you to wait years to get treatment. This is a clever trick - it shifts costs onto the sick and dying where they are harder to see, but still allows governments to say they care enough to provide the procedure.

  • ben

    Part 2: And governments are extremely clever with the numbers. New Zealand instituted a policy whereby nobody has to wait longer than 6 months in a queue. The government here then did one of two things. One is, after six months you will see a general practioner, not a specialist, and then go to the back of the queue again. Or, in extreme cases, you would wait six months in the queue and then cancel your appointment. You would have to start again. Policy met - nobody queued for six months. It could take 2 years to get a hip replacement. Hard to measure the tremendous costs that imposes on the patient who is waiting a significant fraction of their remaining life to be made well again. Political problem solved.

    There is also the problem of ideological capture. The New Zealand public health bureaucracy does not attract its fair share of capitalists. It is a haven of socialists. After the election of a left leaning government in 1999, the health system was overhauled. One of the innovations this brought was the near total abandonment of accounting systems. Cost and revenue statistics simply stopped being properly collected and processed, and senior managers in hospitals simply did not know what operations were costing. It would literally be the case that it was only at year end that hospitals would only then find out if they had made budget or not - and generally there were huge blowouts and occasionally resulted in health boards being sacked but usually in the government funding the shortfall. Moral hazzard, anyone?

    Why were accounting systems substantially curtailed as a matter of policy? Because it was felt, as it was explained to me by a researcher who led a large study on the health system, that accounting was a tool of business, and business has no place in the provision of healthcare. I kid you not.

  • ben

    Part 2: And governments are extremely clever with the numbers. New Zealand instituted a policy whereby nobody has to wait longer than 6 months in a queue. The government here then did one of two things. One is, after six months you will see a general practioner, not a specialist, and then go to the back of the queue again. Or, in extreme cases, you would wait six months in the queue and then cancel your appointment. You would have to start again. Policy met - nobody queued for six months. It could take 2 years to get a hip replacement. Hard to measure the tremendous costs that imposes on the patient who is waiting a significant fraction of their remaining life to be made well again. Political problem solved.

  • ben

    Part 2: And governments are extremely clever with the numbers. New Zealand instituted a policy whereby nobody has to wait longer than 6 months in a queue. The government here then did one of two things. One is, after six months you will see a general practioner, not a specialist, and then go to the back of the queue again.

  • ben

    Seriously, what is up with comments? Multiple attempts not working.

  • http://galens.typepad.com/ Ben

    Excellent! My own army of clones!