The Perpetual Health Care Crisis

There may be no public policy solution to health care.

Brian Doherty from the July 2005 issue

Lives at Risk: Single-Payer National Health Insurance Around the World, by John C. Goodman, Gerald L. Musgrave, and Devon M. Herrick, Lanham, Md.: Rowan & Littlefield, 263 pages, $22.95

Miracle Cure: How to Solve America's Health Care Crisis and Why Canada Isn't the Answer, by Sally C. Pipes, San Francisco: Pacific Research Institute, 219 pages, $14.95

Science writer Gregg Easterbrook once waxed perplexed over Americans' anger with managed-care Health Maintenance Organizations. "It's one thing for the public to loathe an industry whose performance is declining," he mused, "but the health care business is losing stature at a time when its performance is improving. By almost all measures, U.S. public health gets better every year. Americans are living longer than ever before, and heart disease, stroke, hypertension, AIDS, and most forms of cancer are steadily declining."

Easterbrook suffered from a category error that infects many other eggheads contemplating the hideous tangles of our highly regulated health care system: the conflation of health care with health. Health care becomes vital only for people who aren't healthy. Contemplate Easterbrook's list of things that doctors and hospitals don't prevent but only try (often ineffectually) to cope with after they strike. Generally speaking, the more health care you consume, the less healthy you are. The biggest consumers of health care tend to be people in their dying days, tenaciously and heroically holding on to life, but by no normal standards "healthy."

The same dynamic applies to the relation between our consumption of health care systems--the use of governments and other big institutions to manage and manipulate the provision of medical care and health insurance--and the health and wealth of our polity.

Lives At Risk: Single-Payer National Health Insurance Around the World, by John C. Goodman, Gerald L. Musgrave, and Devon M. Herrick (all associated with the National Center for Policy Analysis, a Dallas-based think tank), and Miracle Cure: How to Solve America's Health Care Crisis and Why Canada Isn't The Answer, by Sally C. Pipes (who heads the Pacific Research Institute, a San Francisco�based think tank), limn the barriers to the pursuit of fiscal (and sometimes actual) health created by enormous and complicated health care systems. Both provide ammunition for one side in a policy war that is still raging more than a decade after the failure of ClintonCare. It's the war over whether American health care policy should march toward markets, choice, and individual control and responsibility, or deeper into the territory of top-down rationing, price controls, mandatory coverage and payments, and myriad other restrictions on how we buy and sell health care services and insurance.

The books are mostly devoted to positively comparing the American system (while recognizing its many flaws, most of them regulation-related) with the single-payer alternatives much beloved by American progressives. Pipes mainly holds up Canada for comparison; Goodman and his co-authors throw Britain, New Zealand, and some details from Europe into the mix as well.

Goodman and company's book does an especially good job of casting doubt on the common belief that more government control of health care will prove more rational, productive, and fair than our current market-state mix. Lives at Risk shows, for example, that under single-payer systems the amount of preventive care someone receives is still related to class; that rationing from the top down leads to preventable death and misery as patients languish on waiting lists; that single-payer systems control costs by denying services rather than providing them more efficiently; and that enormous gaps in availability and quality of services between well-off majorities and poorer minorities continue, with resources aimed at the needs of the politically powerful middle class rather than the poorest and sickest.

Looming over these collections of facts and figures are highly charged conceptual questions about health care as a public crisis. Whichever side you take in the battle over public vs. private provision, you are apt to frame the issue in terms of cost: We are (or soon will be) spending more than we can reasonably afford on health care.

But who are "we"? My decision, or my need, to spend my money on health care may be a personal problem; it may even become a personal crisis. But it only becomes a public policy crisis when we are all on the hook to pay for everyone else's care, as we largely are in a world of Medicaid, Medicare, and other forms of cost shifting to the insured. That phenomenon is largely a matter of official government spending--America provides $34.5 billion a year of free health care for the uninsured, outside the Medicare system, according to the Urban Institute--but it also reflects the unorganized cost-shifting that results from those who receive hospital care and don't pay their bills, leading to higher prices for those who do, or whose insurance does.

The authors of these books aren't plumping for a perfectly libertarian world with no forced mechanism for shifting costs. As Pipes writes, "the question is no longer whether governments should subsidize the purchase of health insurance, but how?" But they do suggest techniques for achieving the reigning American policy consensus--that everyone's health needs be taken care of, at least minimally, through state action--more affordably. Pipes, for example, wants a world where insurance's tax-deductibility is personal and portable, not attached to our jobs; a world where we personally profit from keeping health insurance and health care costs contained; one where Medicare recipients could shop among competing private insurance plans, as most federal employees already can.

Goodman et al. follow a similar path of emphasizing consumer choices and incentives as a means to keep costs low and quality high. They also lay out how we need to change public policy incentives so we are benefiting, or subsidizing, those who self-insure (or, put another way, punishing or taxing those who don't), while making sure that the amount of the subsidy does not exceed the social value of having them insured. (This, they posit, can be comfortably modeled as the amount we currently spend on free care for the uninsured.) That amount, to complete the long policy circle, should compensate those giving free care to the uninsured. It's still a complicated, state-heavy system they advocate, one with government making many judgments and performing many manipulations to ensure no one goes completely without health care, regardless of ability to pay.

The authors also document that the much-bandied "crisis" numbers for the uninsured don't necessarily indicate widespread and continuous inability to afford insurance. One-third of America's uninsured live in households with more than $50,000 in yearly income. Only 2.5 percent of the uninsured remain so for more than three years straight. Almost half of the last eight years' growth in the uninsured has been in households earning more than $80,000 a year, while the uninsured rate among the poorest has been dropping.

Although these books focus on the faults of single-payer health care, they also consider the problems with our own unwieldy combination of markets and state dictates. Government at all levels in America directly pays for 45 percent of health care spending, with Medicare paying one-third of all hospital fees and 20 percent of doctors' fees. The government also influences health care through malpractice tort law; complicated and deep regulation of hospitals, drug makers, the medical profession, and insurance companies; and tax policies that link medical coverage with jobs (resulting in "insurance" that's more like a discounted prepayment on predictable expenses than a safeguard against unexpected risk). The upshot is a system whose flaws can hardly be attributed to overreliance on free markets.

A comprehensive understanding of that system is not only beyond the purview of these books, but also beyond the capacity of merely human minds. As both books show, the problem of scarce resources cannot be solved by government fiat. No amount of wonkish policy manipulation will create a paradise in which everyone gets all the health care he needs.

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