Monday, September 21, 2009

Mankiw Arguing That Rationing Is Inevitable

TW: Republican economist Mankiw makes a legitimate point- rationing especially in an age where medical technology is creating better and ever expensive treatments is inevitable. But then he makes an implication- that universal care should be avoided. He does not directly say it but he strongly implies it.

Understanding as we have discussed in detail here that many folks including the elderly and poor already receive the equivalent of universal care, I find his implication reprehensible. It is this logic that leads to middle class, working Americans bearing the price for the rest of the country. These working folks face recission and increasingly unaffordable health care alternatives while the elderly, poor, those associated with the military and wealthy attain world class care. Everyone should be brought into the "U.S. health care system", then the very tough decisions made in terms of what our society can afford. Squeezing out the non-poor, non-elderly, non-healthy from the system is not the answer

From Greg Mankiw in the NYT:
"...like millions of middle-age men, I take my little [statin] pill every morning. Here is the question I ask as the pill passes through my lips: Is it worth it?

And that is, indeed, how I thought about the decision when my doctor recommended the treatment. One thing I did not consider was the price. Like most consumers of health care, I was insulated from economic concerns. I knew that the insurance company — and, indirectly, all its policyholders — would pick up most of the tab. This arrangement, encouraged by the tax system, ensures that I get the benefit of the pills while paying little of the extra costs they generate.

An optimist might hope that my doctor, or someone higher up in the health care hierarchy, made a rational cost-benefit calculation on society’s behalf. To figure out whether my treatment makes sense, one would have to weigh the cost of the drug against the benefit of an extended life. And to do that, one would have to put a dollar value on my life — the kind of calculation that makes everyone but economists squirm.

Not long ago, I read that a physician estimated that statins cost $150,000 for each year of life saved. That approximate figure reflects not only the dollars patients and insurance companies spend on the treatment but also — and just as important — an estimate of how effective it is in prolonging life. (That number is for men. Women have a lower risk of heart disease.)

...Imagine that someone invented a pill even better than the one I take. Let’s call it the Dorian Gray pill, after the Oscar Wilde character. Every day that you take the Dorian Gray, you will not die, get sick, or even age. Absolutely guaranteed. The catch? A year’s supply costs $150,000.

Anyone who is able to afford this new treatment can live forever. Certainly, Bill Gates can afford it. Most likely, thousands of upper-income Americans would gladly shell out $150,000 a year for immortality.

Most Americans, however, would not be so lucky. Because the price of these new pills well exceeds average income, it would be impossible to provide them for everyone, even if all the economy’s resources were devoted to producing Dorian Gray tablets.

So here is the hard question: How should we, as a society, decide who gets the benefits of this medical breakthrough? Are we going to be health care egalitarians and try to prohibit Bill Gates from using his wealth to outlive Joe Sixpack? Or are we going to learn to live (and die) with vast differences in health outcomes? Is there a middle way?

These questions may seem the stuff of science fiction, but they are not so distant from those lurking in the background of today’s health care debate. Despite all the talk about waste and abuse in our health system (which no doubt exists to some degree), the main driver of increasing health care costs is advances in medical technology. The medical profession is always figuring out new ways to prolong and enhance life, and that is a good thing, but those new technologies do not come cheap. For each new treatment, we have to figure out if it is worth the price, and who is going to get it.

The push for universal coverage is based on the appealing premise that everyone should have access to the best health care possible whenever they need it. That soft-hearted aspiration, however, runs into the hardheaded reality that state-of-the-art health care is increasingly expensive. At some point, someone in the system has to say there are some things we will not pay for. The big question is, who? The government? Insurance companies? Or consumers themselves? And should the answer necessarily be the same for everyone?

Inequality in economic resources is a natural but not altogether attractive feature of a free society. As health care becomes an ever larger share of the economy, we will have no choice but to struggle with the questions of how far we should allow such inequality to extend and what restrictions on our liberty we should endure in the name of fairness."


In the end of our day of philosophizing, however, we face a practical decision:

Who gets the magic pills, and who pays for them?

http://www.nytimes.com/2009/09/20/health/policy/20view.html

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