Saturday, January 22, 2011

This Stuff Always Sounds So Much Better When Someone Other Than I Says It

From a Mike Stopa op-ed piece in the Boston Globe:
The death panel notion persists, however, because it denotes, in a pithy way, the economic realities of scarcity inherent in nationalizing a rapidly developing, high-technology industry on which people’s lives depend in a rather immediate way. G.K. Chesterton once wrote that vulgar notions (and jokes) invariably contain a “subtle and spiritual idea.’’ The subtle and spiritual idea behind “death panels’’ is that life-prolonging medical technology is an expensive, limited commodity and if the market doesn’t determine who gets it, someone else will.
But, as I've harped upon before, it's worse than that. The marginal cost for an extra year of life for the elderly is declining, not increasing. That's actually bad news from a cost-containment standpoint, though. Back when an infinite amount of money got you no extra life, it was pretty simple. Now that mere hundreds of thousands of dollars can buy you a couple of extra years, it's a slam-dunk to want the extra time--as long as somebody else (like Medicare) is paying for it.

The amount of money spent per Medicare recipient has to be capped somehow, or the system will simply collapse. You can do that by denying certain treatments (the "death panel" approach), or you can do it by capping lifetime or per-year benefits.

Guess which one will promote more medical innovation?

Back to Stopa:
To the extent that ObamaCare ultimately succeeds in imposing uniformity on basic health care, it will likely lead to the creation of secondary markets for providing insurance against various health eventualities and access to “heroic’’ procedures to extend life. Water runs downhill and it’s a good thing that it does. First, we need to have people buy the expensive medicines and experimental technologies. Europe has discovered this as its regulated system of medicine has driven its pharmaceutical industry farther and farther behind that of the United States. Capping costs kills innovation.

But, in addition, Palin is right. Death panels are an inevitable consequence of socialized medicine. The law of scarcity demands them.

A mature discussion of health care must recognize basic economics so that we can think ahead on how to satisfy the demands of those who are not satisfied with base-level care.
Maturity--what a concept.

Brief update: I just noticed that I've allowed the words "Palin is right" to enter my blog, even if they were in a quotation. I'm not sure what to do about this.

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