Friday, July 24, 2009

Health care: what is not the issue?

I've been thinking more about health care reform lately, enough to finally form some ideas. The debate is so confused and carried on with such astounding ignorance of data, institutions and economics that it has been remarkably difficult to get to that point, at least for me.

As a beginning, it is useful to focus on what the debate is not about:

Should non-poor people pay for the medical care of poor people?

This is the first thing the debate is not about, though you would not know it from either the right or the left. The left often cites figures regarding how many Americans do not have formal health insurance as evidence that there are large numbers of Americans without health care while the right complains of working people having to pay for the health care of the irresponsible and improvident.

In fact, the costs of health care for those who cannot provide it for themselves, whether through bad luck or bad choice, is already spread across the rest of the population. First, poor single mothers, all children in poor and near-poor families, all (legally) disabled people and all old people (poor or not) receive government health insurance.

Second, for those without government health insurance, hospitals are legally required to provide care to all who show up at their doors. Depending on what state you live in, the costs of this uncompensated care is spread across either the remaining patients via higher charges (and thus higher prices for health insurance) or across a combination of the government and the other patients. On top of this uncompensated care there are numerous public (and non-profit) hospitals and clinics of various sorts that provide free or highly subsidized health care to the poor. Thus, even though there are many individuals without either public or private health insurance, there are really no individuals without health care in the US. That care will not in some cases be the same quality as what paying customers receive but it is there and it represents a substantial amount of resources.

I can still recall very vividly when I learned about the laws regarding uncompensated care at hospitals. It was just a couple of years ago at a seminar in the School of Public Health here at Michigan. I was astounded - and really felt like I had been lied to by everyone who ever repeated the statistic about the fraction of the US population without formal health insurance as if it were the fraction without access to health care.

So, to those on the right: the question of whether those with incomes and assets will pay for the health care of those without has already been decided in favor of doing so. I personally am fine with that decision at a general level.

The relevant discussion is about how best to pay for and organize the provision of health care for those who cannot pay for it themselves. One can make a good case that the present set-up is not a very clever or efficient or honest way to do it. It is worth having a discussion about better ways to do this. This is one of the serious policy issues that underlies the present debate, which is unfortunately obfuscated by both misguided moral fervor (see the next item) and by interest groups trying to redistribute resources in their favor under the guise of systemic improvement.

Should health care be a "free market" or should we have "socialized medicine"?

This is the second thing the debate is not about, though again one could certainly be excused for thinking it was about this after reading much of the discussion on both sides. On the right, you would learn that the current debate is about preserving a free market in medicine versus socialized medicine. On the left you would read moving posts about how we need to get rid of capitalist medicine because health care (unlike, apparently, food and shelter) is too important to be left to private firms.

The truth of the matter is that we do not now have anything close to a free market in health care. Government health insurance covers a large fraction of the US population already, while subsidies, mandates and regulations distort (and in some cases improve) the choices of the rest. At the same time, even the (to the left) sainted Canadian system maintains large private elements, and what is being proposed by the administration in the US does not reach the level of the Canadian system in terms of government involvement. Put differently, the various proposals under consideration are not "socialized medicine" in any meaningful sense just as the status quo is not a "free market" in any meaningful sense.

This does not mean, of course, that many of the ideas currently under discussion are not bad ideas, they are. But framing the debate as some apocalyptic battle between market and state distorts the truth and turns what should be in many respects a relatively dull technical discussion involving such strange and remarkable features as thought and evidence into a morality play. Moral enthusiasm, whether for liberty or for helping the poor (or both!), is a scarce resource and should not be wasted on what are, in the present context, largely technical issues.