Thursday, February 18, 2010

Do We Really Want the Status Quo on Health Care?

New York Times Opinion Editorial "Do We Really Want the Status Quo on Health Care?" (February 18th, 2010) bemoans the quality of health care in the United States, but does not adequately consider the possibility that America may be better off with less "free" healthcare than more.
Skeptics suggest that America’s poor health statistics are a result of social inequities and a large underclass. There’s something to that. But despite these problems, the population over age 65 manages to enjoy above-average health statistics — because it enjoyed health care reform back in 1965 with Medicare.
In fact, a hugely expensive, tax-payer funded Medicare plan may be sub-optimal. Perhaps, without such a plan, the elderly would save their money throughout life, anticipating medical problems as they age. Certainly, if they pay the full cost of their own healthcare, they will purchase less healthcare than if other Americans pay the full cost of their healthcare, but this doesn't imply that America, as a whole, is worse off. For example, because they pay such high taxes to fund Medicare, a middle-class family may choose not to purchase their own health insurance, causing their daughter not to go to the hospital when she develops a rash, and later to die of meningitis. What makes her health worth more to the author than that of the elderly woman's whose life was saved by Medicare?

Economists do not make such judgment calls because they are difficult to defend. Rather, they choose the surplus maximizing level of care to provide. Though there may be positive externalities to increased healthcare for all, one could easily see such gains outweighed by the huge inefficiencies of an unmotivated, incompetent government. There's no such thing as free healthcare.

Acknowledging the inefficiencies generated by the current system, the author continues:
At the present rate, by my calculations, in the year 2303 every penny of our G.D.P. will go to health care. At that time, we’ll probably get daily M.R.I.’s and CAT scans, even as we starve naked in caves.
Imagine what the author's calculations would deduce if people who could not afford M.R.I.'s were getting them too!

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