Everybody Rations?


Matt Yglesias writes that when it comes to Medicare, both conservatives and liberals want to ration:

What's being proposed is to try to deploy evidence about the effectiveness of different treatments to limit what Medicare will pay for, leaving people free to pay for it themselves if they want to. Conservatives who don't like this idea chose to metaphorically label this "rationing" but it's no different from what they themselves are proposing to do.

I don't think it's quite right to say that there's no difference. Those who favor vouchers or various flavors of premium support, like the overhaul proposed GOP Rep. Paul Ryan's recent budget plan, are proposing to give every individual a preset amount of funding and then allow them to spend it more or less as they please (frustratingly—and this is something that should be discussed more—Ryan's new proposal limits how individuals can apply their premium support dollar far more than his old Roadmap budget plan did). Vouchers aren't a guaranteed solution to rising federal spending on health care: They may end up being expensive because politicians refuse to go along with built in growth caps and end reset the vouchers' dollar values at high levels. But as Cato's Michael Cannon has argued, a voucher system does help limit incentives for medical providers to lobby for ever-greater spending.

Liberals, on the other hand, tend to want Medicare not to have a set dollar cap per patient, but to 1) limit what treatments are paid for and 2) limit how much providers are paid. But as we've seen to some extent with Medicare and to a very large extent with Medicaid, centrally-planned limits on provider reimbursements tend to drive providers out of the market and limit access to care. So one of two things happens: Either the reimbursement rates fall and access likely falls with it—or reimbursement rates don't fall, and spending doesn't actually come down.