Megan McArdle vs. Paul Krugman On Consumer Driven Health Care

See People, or Rules? Excerpts:

"I found it very odd to see Paul Krugman complaining that "patients are not consumers" as if "consumer" were some sort of horrible, low-status role that should never taint the sacred realm of health care. In my economics classes, "consumer" was not a value judgement; it was a descriptor. A consumer is someone who consumes, just as a producer is someone who produces and a distributor is someone who distributes. So I was a bit befuddled to see an economist arguing that "The idea that all this can be reduced to money -- that doctors are just "providers" selling services to health care "consumers" -- is, well, sickening. And the prevalence of this kind of language is a sign that something has gone very wrong not just with this discussion, but with our society's values." Patients consume health care resources. Providers provide them. And the system through which labor and resources are allocated in our society remains money--an arrangement that I'm pretty sure that Paul Krugman doesn't want to change."

Krugman says it does not work, citing Medicare Advantage's high cost. But McArdle says it has more benefits. She also shows that the US is low in consumer driven health care since the consumer himself is not spendig that much of the health care dollar out of pocket here (less than 15% in the US, other countries are higher).

"...while consumers may be stupid, rules are often stupid too. Evidence-based medicine is certainly a good idea, but we are nowhere near being able to generate solid rules that a) cover all major possibilities and b) provide the highest chance of survival for the money. People are incredibly complicated. This makes outcomes hard to measure--and solid guidelines hard to develop."

"But even if we had the kind of data we'd need to develop a comprehensive set of rules, the problem remains: rules are stupid. You need to leave room for individual discretion. And individual discretion on the part of doctors and hospitals is a loophole you could drive a truck through.

Nor do I think the possibility of reducing costs through individual discretion is quite as impossible as Krugman makes things sound. Sure, a lot of decisions are life-or-death last minute things. But a lot of them aren't."

"It's all very well to say that people shouldn't have to make those decisions on the basis of money. But that's all the government is going to do. Sure, there are some procedures that people just shouldn't have (like a lot of back surgery). But a lot of this is value judgements: hip replacements for elderly patients, expensive chemotherapy that may extend life by a few months, more convenient dosing schedules or better side-effect profiles for brand name drugs. Unless we simply rely on across-the-board reimbursement cuts--which would be moronic on every level--the government is mostly not going to be deciding which treatments are effective; it's going to be deciding which treatments are cost-effective. We haven't taken doctors out of the business of selling health care to patients; we've just added a middleman.

Now, maybe you think that the government is smarter than the consumers it's speaking for. But how does the government know what you value most: an extra three months of life when you have cancer, or an extra five years of walking after age 89, or an extra $4,000 right now?

I think that people who favor a central board probably put more faith in technocrats than I do..."