WSJ: "all medicine will be rationed"

The Wall Street Journal editorial board goes back to the future in the fight against health care reform with this remix of Betsy McCaughey's false claim about the Clinton health care plan:

ObamaCare so dramatically expands government control of health care that eventually all medicine will be rationed via politics.

But unlike McCaughey, whose claim that people would not be able to purchase health care services outside the Clinton administration's proposed system of managed competition was demonstrably false, the WSJ is making a slippery slope argument that can't be disproven. Nonetheless, it's absurd. Does anyone outside the WSJ think that "all medicine" in the US will be rationed?* Note that doing so would require government to bar people from privately contracting for medical services. That is extremely unlikely to happen regardless of whether the health care plan in Congress passes or not.

Later in the piece, the WSJ goes on to make the point that cost controls on spending in Medicare and the public option are inevitable:

As Congress's balance sheet drowns in trillions of dollars in new obligations, the political system will have no choice but to start making cost-minded decisions about which treatments patients are allowed to receive. Democrats can't regulate their way out of the reality that we live in a world of finite resources and infinite wants. Once health care is nationalized, or mostly nationalized, medical rationing is inevitable—especially for the innovative high-cost technologies and drugs that are the future of medicine.

It's certainly also possible, as the WSJ implies above, that similar limitations will be placed on regulated private health insurance plans at some point in the future. However, these scenarios still fall short of supporting the claim that health care will have been "nationalized" or that "all medicine will be rationed via politics," both of which imply total government control of the health care sector.

Comments

[Rob]

Brendan's anodyne response to the WSJ concern seems to be that almost certainly people will still be able to contract privately for medical services. However, I thought the whole point of this exercise in health care reform was that it's unacceptable for people to have to pay for desired medical services out of their own pockets. If the reason the WSJ is wrong is that in the future those few who can afford it will be able to contract privately for medical services, it seems that we've gone through the looking glass. Paying out of your own pocket for desired medical services: it's not a bug, it's a feature!

The editorial board's concern about ultimate rationing of medical care seems to flow from several propositions:

A new "health choices commissioner" will decide what counts as "essential benefits," which all insurers will have to offer as first-dollar coverage. Private insurers will also be told how much they are allowed to charge even as they will have to offer coverage at virtually the same price to anyone who applies, regardless of health status or medical history. . . . Over time, the new mandates will apply to all contracts, including for the large businesses currently given a safe harbor from bureaucratic tampering under a 1974 law called Erisa.

If these propositions are incorrect, I hope Brendan will take them on. If they are correct, then the editorial board's anticipation of the future landscape of medical care doesn't seem so absurd as Brendan claims.

[David]

This is a quibble. Brendan doesn't dispute that the House bill makes promises it cannot remotely keep. He doesn't dispute that sick people will not get the care they expect. He doesn't dispute that the cost of private health insurance will skyrocket and private health insurance will disappear. He doesn't dispute that this law will be destructive on every level—for the health-care system, for the country's fiscal condition, and ultimately for American freedom and prosperity.

He merely points out that wealthy individuals may be able to pay for their own health care outside of the goverment system. So, the WSJ ought to have written, "ObamaCare so dramatically expands government control of health care that eventually all medicine will be rationed via politics, except for those wealthy enough to pay for their own private health care." I agree with Brendan's correction, but it's not very important in relation to the points made in the WSJ article.

[Jinchi]

eventually all medicine will be rationed via politics

You always have to read the fine print of the conservative argument.

They already believe that medicine will eventually be rationed no matter what we do. They are perfectly happy for that rationing to be done by the insurance companies.

It's the via politics part that they object to.

Throughout this debate, there has been the presumption on their part that there is simply nothing that can be done to control the rising costs of health care and that there is a fundamental limit to the total amount of health care available. Therefore, if some uninsured kid gets covered by the new legislation, that means less health care for your Grandmother.

[David]

There's a difference between government rationing and economic limitations. As Jinchi points out, medical care will always have finite limits, as does every other good and service. E.g., some foods, such as abalone, cannot be available to every American, because there isn't enough to go around.

However, that's not what's generally meant by "rationing". "Rationing" is when the government decides how to allocate the abalone.

Jinchi, you may not be aware that some have considered the impact of government health care on the total amount of health care available. E.g., Megan McCardle (a Democrat) predicts that health research will suffer, so there will be fewer advances in medicine. Others predict that the lower doctor fees will reduce the supply of high-quality physicians. That sort of thing is already occurring, as more and more doctors are shunning Medicare.

[rone]

"However, I thought the whole point of this exercise in health care reform was that it's unacceptable for people to have to pay for desired medical services out of their own pockets."

Rob, that is the most patently disingenuous thing that i've seen you write here. That doesn't even deserve to be called a strawman.

[Jinchi]

"Rationing" is when the government decides how to allocate the abalone.

I disagree. Rationing occurs when the distribution of a scarce resource is limited to allow equitable distribution. It does not require government intervention. Stores with a limited supply of a product will often limit one-per-customer, and if you find yourself adrift on a lifeboat with limited water you'll undoubtedly ration that too.

Insurance companies, likewise, ration medical services, completely denying coverage for some procedures, access to certain doctors, denying coverage at all for those with pre-existing conditions, etc. Hospitals and other medical providers do the same during a crisis. It's called triage.

That is exactly the kind of "rationing" the WSJ is talking about

we live in a world of finite resources and infinite wants. Once health care is nationalized, or mostly nationalized, medical rationing is inevitable—especially for the innovative high-cost technologies and drugs that are the future of medicine.

Let me state that I find this definition of rationing absurd (Just because I can't eat infinite hamburgers doesn't mean that somebody is rationing food). And I don't see any evidence that access to health care will need to be rationed other than in a time of great crisis.

But in any case, what they are complaining about is the world we live in, not some dystopian future. It has nothing to do with whether the government controls health care or not.

[David]

I take your point, Jinchi. In part we're just addressing semantics, that is, the proper definition of the word "rationing". Your POV is valid, but it's different from the conservative/libertarian POV.

I read a lot of libertarian-leaning conservative stuff. These people consider it worse to have resources allocated by the government than by some other means. For these people, weak and limited government is almost synonymous with civil liberties. They point to the Bill of Rights. It was mostly designed to limit the power of government in various areas. ("Congress shall make no law...")

Getting away from semantics, you say you don't see that access to health care will need to be rationed other than in a time of great crisis. The evidence is that Medicare and Medicaid are already unsustainable at current benefit levels. Even if the government takes on no additional health care obligations, they will be forced to reduce care under Medicare and Medicaid. There simply isn't enough money to maintain the current care level.

If the government does take on additional medical care obligations, the crisis and cut in benefits will be that much more significant.

[Jinchi]

Even if the government takes on no additional health care obligations, they will be forced to reduce care under Medicare and Medicaid.

Even if I agreed with you here, this still doesn't fit any reasonable definition of rationing. What you are describing is a limit to the coverage provided by Medicare and Medicaid, but there is no prohibition on people getting that health care through other means.

And again, this is the current state of the health care system. Insurance companies routinely change the terms of coverage (including denying coverage entirely). The only difference is whether you pay your premiums to the government or to private industry. Why would anyone be happier to be denied essential coverage by an insurance company?

[David]

Why would anyone be happier to be denied essential coverage by an insurance company?

Why? Because government is all-powerful. E.g., suppose a health insurance provider is badly run in some way. Maybe it stops covering something it ought to cover. Maybe it permits too much fraud. Maybe it has burdensome administration, which requires hours and hours of extra work by doctors and patients. Maybe it's flat-out corrupt.

If a private insurance company suffers from any of these problems you may be able to switch to another company. But, if the federal government is screwed up (and once they've driven out private health insurance), you're stuck.

An example is the US Post Office. Its costs go up and up, while service deteriorates. One reason is that employees are paid a lot more than they would be if doing comparable work in the private sector. A private company that paid employees too much would lose out to competitors. However, the Post Office has a monopoly on letter delivery, so they don't have to fix their problems.

Another problem with government control is politicized decision-making. E.g., GM now has to tailor some of its decisions to powerful politicians. That means less focus on efficiency and quality.

Yet another problem is that government can force you to buy insurance from them, as Social Security and Medicare do. If a private insurance company adopted Nancy Pelosi's cockamamie scheme as their operating plan, few customers would voluntarily choose that company. OTOH if the United States government adopts Pelosi's poppycock, we could be requred by law to buy into it.

[Jinchi]

Because government is all-powerful.

You're talking about the U.S. government here, right?

If a private insurance company suffers from any of these problems you may be able to switch to another company.

This simply isn't true. Most Americans have no choice at all in their provider. Millions more can't get insurance at any price.

An example is the US Post Office. Its costs go up and up, while service deteriorates.

What's your problem with the US Post Office? I can send a letter anywhere in the country for 44 cents and it arrives in less than 3 days. They handle the overwhelming majority of mail in the country and a huge percentage of the worldwide total. I've never had a letter or package lost by the USPS, (but I have had a package stolen off the back of a UPS truck).

Why haven't private companies taken over the market? Because they don't provide the same level of service.

GM now has to tailor some of its decisions to powerful politicians. That means less focus on efficiency and quality.

GM drove itself into bankruptcy, so I doubt they were focused on efficiency. And quality was never their hallmark. This wasn't a hostile takeover by the government. Similar takeovers (of banks and savings and loans) typically end up in quick return to private status once the government cleans up the mess.

If a private insurance company adopted Nancy Pelosi's cockamamie scheme as their operating plan, few customers would voluntarily choose that company.

Insurance companies don't seem to agree with you on that point. But, if you believe it, then you should have no problem with the public options that are currently in the legislation. Nobody has to voluntarily choose the government plan.

[David]

Jinchi, fortunately we elect our government. However, once in office they are indeed all-powerful in the field of medical care. They can require or prohibit any kind of insurance or any kind of care.

Many employed Americans have only one company plan, but the company itself can change carriers if they're being badly served. If the law were changed to permit interstate health insurance, choices would expand substantially. And, that cost the taxpayers would nothing.

Jinchi, yes the Post Office does an adequate job, but they were better and cheaper in the past. At one time, many cities had 2 deliveries a day. It's illegal for private companies to deliver mail. In fact, there was a fuss a while when they went after a child who was earning a little money delivering Christmas cards.

Regarding GM, every corporation is focused on efficiency. GM's inefficiency is substantially due to high employee wages and benefits and restrictive work rules. GM didn't go into those contracts to throw money away. They were forced to by the unions.

I think private health insurance companies could compete with a government plan, as long as two conditions held:

1. the government plan isn't subsidized
2. the government allows private companies the freedom to compete as they wish.

This is just how California workers compensation insurance is designed. Private companies here have long competed on an equal footing with the State Compensation Ihnsurance Fund.

Unfortunately, neither of these conditions will apply under the contemplated health reform plans. In particular, the various bills contain lots of provisions that will make it more and more difficult for private health insurance companies to survive. (IMHO there are already too many government requirements on private health insurance. That's one reason why so few companies sell health insurance.)

[Jinchi]

However, once in office they are indeed all-powerful in the field of medical care. They can require or prohibit any kind of insurance or any kind of care.

But these bills don't do that.

You're complaining about a bill you think might be passed someday (despite all evidence that the US Congress has no intention of doing so). There is also the hurdle of judicial review that they'd have to get past.

I think private health insurance companies could compete with a government plan, as long as two conditions held:

1. the government plan isn't subsidized
2. the government allows private companies the freedom to compete as they wish.

First of all, the bills submitted include subsidies that can be applied to government or privately run insurance. This is obviously true, since the subsidies remain whether or not a public option is in the final bill. So they continue to be on the same footing.

Secondly, private companies can compete as they wish within certain regulations (e.g. they cannot defraud the customer) just as any other industry can.

[David]

Jinchi, I confess I haven't read the House bill (or any other bill, for that matter.) So, I'm basing my opinions on what I assume it says.

State Premium tax is one example of likely government advantage. Unless the government company pays the same tax as private compaies, they'd have a competitive advantage. I assume that the House bill doesn't call for such a tax.

Cost of capital is another example of government advantage. Private companies are required to have large amounts of capital so be sure that they'll be able to pay their claims. I'm assuming that the House bill doesn't require the same capital for the Public company, because the government would guarantee the payment of its claims.