Because we choose to

As I read through the rest of Bruce Bartlett’s blog post on health care that I linked to in my previous post, I came across a number of logical errors and stretches, which I find disturbing coming from a former Presidential policy adviser.

Here’s one logical sequence that I found rather weak:

Conservatives universally believe that whenever the government provides a service it will be vastly more costly than if the private sector does so. This is why they support the plan offered by Representative Paul D. Ryan, Republican of Wisconsin and chairman of the House Budget Committee, to essentially privatize Medicare. Conservatives believe competition will drive down health costs for the elderly.

But O.E.C.D. data show that Americans pay vastly more for health care than the residents of any other major country. In 2008, we paid 16 percent of G.D.P. in total health care costs, public and private combined. The people with the next heaviest health care burden were the French, who paid 11.2 percent of G.D.P. Indeed, at 7.4 percent of G.D.P., the governmental share of health spending in the United States is about the same as total health care costs in many other countries, including (as a percentage of G.D.P.) Luxembourg (6.8 percent), Israel (7.8 percent), Japan (8.1 percent), Britain (8.4 percent) and Norway (8.5 percent).

First, I cringe when anyone uses words like “universally”.  That’s a tip-off for a straw man argument and a debilitating bias.  To believe any group of people are in universal agreement on anything is naive at best.  And folks who use such words are prone to exaggerate their case and disband with objective consideration of the truth.

Second, the logic of Bartlett’s argument doesn’t necessarily flow.  It appears Bartlett’s argument is:

A. Conservatives believe government health care would be costlier than private sector health care.

B. The U.S. spends 5% – 8% more, as a percent of GDP, than countries with government health care.

C.  B proves A as false.

While B may prove A false, there are a number of reasons why B does not necessarily prove A to be false.  Accepting his argument without any other consideration demonstrates confirmation bias, which is the willingness to stop thinking once you get the answer you expect.

Here are a few reasons why B may not prove A false:

Reason 1: As mentioned in the prior post, U.S. citizens may be receiving better quality health care for their money.  If so, it’s not surprising that it costs more.

Reason 2:  It could be that current government spending is the cause of the higher percentage of GDP spent on health care in the U.S.  As Bartlett points out in his post:

…the governmental share of health spending in the United States is about the same as total health care costs in many other countries [with government-provided health care].

Reason 3: It could be that the Franken-system that is U.S. health care — the combined government, private sector and government mandates — contributes to the higher spending.

Government, at the Federal and state levels, has inserted itself into the medical care market in ways that drives up medical costs.   The tax advantage of employer-provided health insurance, emergency room must-treat mandates, state level coverage mandates and government coverage were all created for good intentions, but have the unintended consequence of driving up costs (and causing problems that too many people attribute to market failure rather than government failure).

One way these government distortions drive up costs is by weakening rationing of scarce medical resources.  Both free markets and centrally controlled systems ration better than this Franken-system that we have.  In free markets, individuals ration.  Committees ration in centrally controlled systems.  We don’t seem to like either very much, which why we have what we have.

Yet, no matter how badly we wish to avoid rationing, we can’t change the fact that medical care is a scarce resource.  So, we’ll either have to accept some form of rationing at some point or go broke.  Obama has proposed rationing by committee.  I think rationing by individual produces better results.

Remember the housing bust that we’re still recovering from?  That too was a rationing avoidance scheme.  We got the idea that the old rationing mechanisms for home ownership, like requiring folks to put 20% down (which demonstrated the ability to save and also helped reduce lending risk), were no longer necessary.  Home prices skyrocketed (sound familiar) and we went broke.

Consider Canada, which did not suffer a housing bust.  Their finance minister said, “some people are better off renting.”

Reason 4:  Now, let’s say reasons 1, 2 & 3 are wrong.  There’s another possible reason that we spend more on health in the U.S.   We still live in a free country.  We may spend more, because we choose to.

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