BrianGarst.com

David Leonhardt of the New York Times has discovered that health care is not a free and unlimited good. Some way or another, a certain amount of demand will not be met.  People cannot get all that they want because it is a scarce good and is restrained by the same laws of supply and demand – and physics – as all goods.

What is interesting, though, is that the New York Times suddenly finds denying care to be a great development. But isn’t this exactly what the left has long condemned insurance companies of doing? What they could not afford to admit before the bill passed they now find commendable: government is taking over the function of insurance companies as the primary mechanism for determining the allotment of care. For those of us who understand not only that government is least qualified for this role out of all possible institutions, but also that political power is uniquely corruptible, this is a frightening prospect.

It’s not that the author is wrong that we often times overuse health care. As a nation we tend to overtest, overtreat and just generally overreact to every possible physical ailment. What he fails to do is recognize the fundamental reason behind this: the patient is not the consumer. Current “insurance” is more like a medical prepayment plan, often taken out of our paychecks with little choice. At no point does the patient have to consider the costs versus benefits of expending resources on a particular test, because the resources being expended have long ago been forfeited by him. He lost them as soon as the government gave a tax advantage to businesses for providing employee insurance, making a dollar of health care compensation less expensive than a dollar of wages.

Leonhardt offers a “three-step process” so that government institutions can learn to “say no.” “The first,” he says, “is learning more about when treatments work and when they don’t.”  Next is giving patients more information and facts about treatments.  These two issues are closely related. The problem is that neither is solved by introducing government into the equation.

The question of information in health care is inherently problematic. Often times we don’t know what works best. Other times, what works best for one might not for another.  Yet other times, what we once thought worked best turns out to be quite harmful. This is simply the nature of the beast. Government is in no better position to deal with this than anyone else, and will necessarily run into the same issues, along with introducing its own inherent inefficiencies.

As for giving patients more information, that’s a laudable goal. But why do they not get more information now? Ultimately, it’s because it doesn’t matter.  Their choice simply isn’t important. The choice of insurance companies to approve or deny treatment is what matters to doctors, and so they are the ones who are most informed. This, again, will not be solved by government bureaucrats. It can only be solved by making the patient important.

Finally, he suggests “changing the economics of medicine, to reward better care rather than simply more care. Health reform doesn’t go nearly far enough on this score, but it is a start.” I agree completely. Where we differ is on how to accomplish this.

Replacing insurance companies with government will not fundamentally change the economics of the system, nor produce the reforms Leonhardt desires. It is simply not capable of it. Rather, it will make government bureaucrats the new bad guys instead of insurance companies. Real innovation in health care would mean empowering consumers with the choice on how to direct their resources, while consigning insurance to its proper role as that of mitigator against catastrophic financial risk. More importantly, it would return the responsibility to consume health care thoughtfully and diligently to the only person with the incentive to do so wisely: the patient.