So I have been following Sick author Jon Cohn around the web as he becomes a bigger and bigger star, debating the likes of David Gratzer from the Manhattan Institute, and Michael Cannon from the Cato Institute, two free-market libertarians who oppose the concept of mandatory universal coverage for the U.S. health care system.
By contrast, Jon believes that we should expand Medicare or some form of government protection to at least all the uninsured and in fact he really wants some type of single payer system. His book is a cautionary series of tales in which he tells the awful stories of various ordinary people who because of inadequacies of access to care and lack of good insurance found bankruptcy, death and despair. It’s been likened already to Upton Sinclair’s The Jungle and it’s hit a nerve.
Gratzer, writing here in The New Republic and Michael Cannon, debating Jon at the Kaiser Family Foundation are really up against it when they make their arguments but they got off lightly when they disagreed with him.
You see, Jon Cohn is just too nice.
But I’m not. So I can point out what he never did in these contests. I’m not a libertarian but I used to be one. Hell, I even voted for Maggie Thatcher because I thought she was an anti-corporatist (using that word in its 1970s meaning). So like a fallen Mormon who knows what goes on inside the temple I can tell the dirty dark secrets of the free marketeers, and I’m happy to point out that two huge portions of their arguments are just unmitigated illogical crap. And they need to be called as such.
So here’s what Jon should have said.
First up: Gratzer’s contention that foreign healthcare systems do a worse job of actually treating disease than we do here. The basic problem is that the relationship between medical care delivery and health is very tenuous. But if the free marketeers want to go down that path then they need to prove that the huge amount more money spent per head here – we spend at least 50% more than the Europeans per capita – on medical care delivers results in actual improved health outcomes.
They can’t. So they seize on cancer – a nice and very emotive topic – and claim that if you look at the numbers in a certain way we do better here than in those terrible European countries. Now the way disease is treated is bound up in centuries of national culture, and any rational health economist from Victor Fuchs on down will tell you that the process of that treatment has very little to do with the outcome of the disease. So it’s a very silly argument.
But there is a much simpler way to get the free marketeers off the topic. It’s been known for a while that the U.S. is not as good at dealing with reducing foot amputation for diabetics as the Australians, Finns or Canadians. It’s nowhere near as good at keeping heart attack victims alive as the Danes, the Swiss or the Icelanders. But this doesn’t have to be an argument in which the universal health care proponents have to defend the evils of socialized medicine. Nope, the only question you need to ask the free marketeers is, “Why are you so happy to have a health care system that kills so many more people who have heart attacks, and amputates the feet of so many more diabetics?”
If they can’t defend that, they should exit the topic. And I won’t even rub it in by pointing out the new study that compares Canadian and American outcomes on 25 different measures and shows that on balance we do worse on more types of treatment and better on fewer here in the U.S than in Canada. (Oops, just did!).
Add to that: Ask the free marketeers to explain why they feel comfortable with a financing system that causes at least 25% of all the nation’s bankruptcies. Or, one might also ask why they espouse even greater cost sharing even though it’s been shown yet again this week that increased payment at the point of care reduces people’s likelihood of following their doctor’s advice?
The second broad argument made by Michael Cannon – and not for the first time – is that people should be given all the money spent on their behalf on health insurance by their employers or the government. Now, it’s a free market, right, so what they do with that money is I guess up to them. But the idea would be that they should purchase a low-cost high deductible insurance with a small portion of that money which would cover catastrophes like accidents or expensive surgery. The rest would go into a savings account to pay for everyday routine care such as doctor visits.
Now as I’ve explained at length, it’s OK if this is a strategy that large corporations like Intel use to reduce their healthcare expenditures and increase that of their employees. They’re all playing this game, and of course for most of these corporations, their employees can easily afford to pay a little bit more. Where this breaks down is if you look at the population of the nation as a whole, or if as Michael suggests, you did this in the whole of the Medicare population. That’s because – and this was brought up at the Kaiser debate – 20% of the people cost 80% of the money.
I’ve worked out the math on this before and it’s really not that complicated. If you give people money in their cash account which they don’t spend – because they are one of the low-utilizing 80% – then the money that remains in the cash accounts of the healthy at the end of the year is equivalent to the deficit that will be run up treating the 20% who need the expensive care. There are only so many ways around this and all of them involve a transfer of resources away from either the sick people (i.e. less care) or from those caring for them (i.e. lower payments to doctors and hospitals) or an extra infusion of cash from outside the health care system (i.e. higher taxes). For this type of solution to work everybody must be forced to put roughly 80% to 85% of their cash account into the insurance pool – in other words to pay high premiums. That’s not of course how high deductible policies work in the current market, and I see no signs of the free marketeers insisting that that’s how high-deductible plans ought to work in their ideal state.
So for this high deductible, cash account fantasy-land to play out, the free marketeers are therefore prepared to exclude those with poor health status, or even the suspected possibility of future poor health status, from the insurance program. After all, they’re the ones most likely to be sick and actually get medical services. Which again means somebody else is going to have to pick up the tab for those people when they do need care – as one libertarian at least, Arnold Kling admits. And who is the likely unwilling victim having to pony up that extra amount? It’s Johnny taxpayer of course.
So the question for the free marketeers is, “Why do you want to raise taxes in order to transfer money from the poor and sick to people who are already richer and healthier than average?”
I’m looking forward to the brave free marketeer who can answer these questions. Maybe Jon Cohn will lose his good manners and ask them.