Questing for Atlantis

In many ways I’m building off of and reacting to Megan McArdle’s explanation of why she is opposed to national health care (If you haven’t read it, I highly recommend going, reading it, and then coming back here to read this post).

Megan’s case, as I understand it, is centrally driven by the concern that if government becomes the primary, or more likely only, purchaser of drugs it will kill the market for medical innovation. Personally, I think she’s right on this. Even so, it’s not why I’m opposed to the government getting (even more) involved in healthcare.

But the root concern is the same – what incentives will guide government action. In my case the concern is most heavily realized in the issue of rationing.

Now, before you tune out in disgust, my worry isn’t that of Sarah Palin’s “death panels,” some faceless bureaucrat pulling the plug on grandma. The simple economic reality is there are not unlimited medical resources and they have to be rationed somehow. Under the current system that rationing, for the most part, boils down on market terms. Beyond the very basic fundamentals you get as much care as you and your family are able/willing to pay and/or go into debt for.

Let’s be honest. That’s a shitty system. It’s cold. It’s heartless. It has gross inequities. And it’s a fair sight better than the alternative.

That’s because the alternative isn’t an end to rationing. It’s a rearrangement of what drives it. Like it or not, when government becomes the arbiter of choice rather than the market, decisions cease to be driven by market forces and are instead driven by political pull. Try imagining a healthcare system where every health complaint is now a political interest. Do you think they’ll prioritized around necessity and importance? Or will it be around which ones have the best lobbyists and marketing?

Actually, you don’t have to think about it. There’s already an example. It’s called the National Cancer Institute and is a part of the National Institute for Health that Ezra Klein and his parade of experts have lauded in his dispute over innovation with Megan. In 2007 it spent $572.4 million on breast cancer research. In the same year it only spent $226.9 million on lung cancer research. And this is in spite of the fact that lung cancer kills more Americans every year than any other cancer (in fact, according to the Lung cancer Foundation of America it kills more people than breast, prostrate, colon, liver, melanoma, and kidney cancer combined).

It all comes down to politics. Breast cancer is easy to market and sell. Lung cancer isn’t. Everyone loves boobs and it’s fun to have things like “Save the TaTas” and pink ribbon events. On the other hand lung cancer is considered a smoker’s disease and these days it’s fashionable in America to hate smokers.

Healthcare is too important to let it be decided (even moreso) by these kind of popularity contests. Medical choices need to be driven by the diffuse force of the marketplace, where incentives should be, if not immune to this sort of problem, at least a lot more resistant to them.

Now, this doesn’t mean I don’t want reform. Like I said, the status quo has a lot of problems and I think there’s a lot than can be done to fix it, such as expanding HSAs, removing the bias towards employer-provided insurance, and health-status insurance, to name a few. But that’s not the point of this post, so I’ll leave my thoughts at that for now.