Ideological Blinders

by Russ Roberts on April 22, 2005

in Health

Paul Krugman has discovered the problem with our health care system—wasteful competition.  In his NYT column (rr), he starts by raising a puzzle:

The
United States spends far more on health care than other advanced
countries. Yet we don’t appear to receive more medical services. And we
have lower life-expectancy and higher infant-mortality rates than
countries that spend less than half as much per person. How do we do it?

And then he answers it:

An
important part of the answer is that much of our health care spending
is devoted to passing the buck: trying to get someone else to pay the
bills.

It’s all part of that evil profit motive:

Think about how crazy all of this is. At a rough guess, between two
million and three million Americans are employed by insurers and health
care providers not to deliver health care, but to pass the buck for
that care to someone else. And the result of all their exertions is to
make the nation poorer and sicker.

Oh, for a single payer, centralized government-run system:

So we’ve created a vast and hugely expensive insurance bureaucracy that
accomplishes nothing. The resources spent by private insurers don’t
reduce overall costs; they simply shift those costs to other people and
institutions. It’s perverse but true that this system, which insures
only 85 percent of the population, costs much more than we would pay
for a system that covered everyone.

So if a single-payer system would be so great, why don’t we have one?  Those nasty ideological views a lot of us hold are keeping us back:

Why do we put up with such an expensive, counterproductive health care
system? Vested interests play an important role. But we also suffer
from ideological blinders: decades of indoctrination in the virtues of
market competition and the evils of big government have left many
Americans unable to comprehend the idea that sometimes competition is
the problem, not the solution.

OK, Paul, so here’s my question for you.  If you think a single-payer system is so great, would you be willing to go to Canada for any of your medical treatment?  Say you get a chest pain or a series of headaches that won’t go away.  Would you be willing to put your health in the hands of the Canadian system, that wonderfully efficient single-payer alternative to what we have here?  That system where you wait for your MRI or your angioplasty because time rather than money does the rationing.  I’ll even let you use drugs that were developed in America using that horribly inefficient decentralized profit-driven model you decry as being something akin to a set of religious beliefs. 

I know.  You’re wealthier than the average American.  You have good health care coverage.  But where’s the break point?  Of the 85% or so of Americans who are burdened by the wasteful inefficient system you decry as the product of a blinded world view, how many of them would prefer Canada to their current alternative?

And as for the other 15% without insurance, a lot of them would take the Canadian alternative because it’s inexpensive.  They’d be willing to wait the months for the MRI machine or the angioplasty procedure or the open-heart surgery because it would be free, or at least paid for by someone else.  I don’t blame them.  But what is the cause of the price difference?  Why is American health care so expensive?

(Pause while I adjust my ideological blinders.  Yes, they’re on.  Good.)

Never mind.  I don’t need those blinders.  I’ll just follow Krugman.  In his indictment of those wasteful insurance companies he quotes Dr. Atul Gawande:

And the costs directly incurred by insurers are only half the story.
Doctors "must hire office personnel just to deal with the insurance
companies," Dr. Atul Gawande, a practicing physician, wrote in The New
Yorker. "A well-run office can get the insurer’s rejection rate down
from 30 percent to, say, 15 percent. That’s how a doctor makes money.
… It’s a war with insurance, every step of the way."

Alas, Krugman didn’t quote anything else from the article.  It’s an article about the bizarre world of medical salaries and pricing.  It’s utterly fascinating and utterly depressing.  Even those without blinders might be surprised by how the government micromanages medicine.  Read it here.

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