The John Stuart Mill approach to Health Care Reform

(Guest Post by Matthew Ladner)

JSM once noted that if government would simply require an education, that it might save itself the trouble of providing one. He could have added trying to provide one at enormous cost, but let’s not quibble over details.

This was the approach to the Romney reform in MA, but that reform ignores the fundamental problem with our system: third party payers create a powerful incentive to ignore costs. The Romney plan did not address this central problem.

If you don’t believe it, give me an unlimited line of credit with your money at a Vegas casino and watch me transform into a gambling fiend.

The New York Times published an important piece suggesting a brilliant compromise: the government should mandate insurance, but only catastrophic insurance.

This would introduce supply and demand back into most of the health care market, which is precisely what is needed in order to curtail costs and thus prevent the continuing loss of coverage (which is a symptom, not the disease).

Government policy (both in the tax code and from Medicare and Medicaid) is directly responsible for the out of control costs we have experienced. Having quasi-socialized the health care system but without gaining monopoly power to dictate terms to health professionals, politicians have created a culture of “anything goes” in health care.

Paul Tsongas said it best “America is the only country that pretends that death is optional.”

The government, in essence, has created a health care culture which rejects the very essence of a government run plan, which is bureaucratically rationed care. Notice the scrambling to pretend that there are “no death panels” in the plan kicking around Congress. This is of course meaningless, as if there are no death panels there soon will be under a new name: Eurocare is all about having bureaucrats make cost/benefit decisions about health care. They withold treatment to 78 year old men with prostrate cancer so they can spend their limited resources on prenatal care.

Forget about arguing the ethics of Canadacare: after decades of anything goes Americans won’t go for it. If the Democrats pass it anyway, they are likely to rue the day. Put in death panels = driving off a cliff. Expanding coverage without rationing and death panels = faster fiscal suicide.

We’re caught in a trap…can’t walk out!

It seems to me then that some sort of catastrophic mandate/increased out of pocket expenses/health savings account approach outlined in the Times article far more profoundly sensible than the fiscal/political suicide pact currently under discussion.

Munchausen by proxy syndrome in health care might have been great fun for the politicians while it lasted, but with a $1.4 trillion dollar deficit this year, we can no longer afford it.

4 Responses to The John Stuart Mill approach to Health Care Reform

  1. allen says:

    Unfortunately, the Democrats, at least the Nancy Pelosi wing of the Democratic party, are too bewitched by the prospect of achieving medical utopia to give any consideration to the consequences and when they drive off a cliff you, and I, will be in the car as well.

  2. Greg Forster says:

    What do you mean “transform into” a gambling fiend?

    Your analysis here assumes that after the “health reformers” ruin everything, the American people will clearly understand and confidently act upon the knowledge that it was the “health reformers,” not the evil insurance companies, that ruined everything. The Dems are betting the other way – they know this plan won’t work, but they think once they ruin everything they can scapegoat the insurance companies and waltz their way to socialized medicine.

    I wish I were confident they’re wrong.

  3. matthewladner says:

    I don’t think that they can waltz to socialized care, because the quasi-socialized system they’ve had around for decades has created a health care culture which rejects the notion of limits or rationing. They have been trying to get their since the Truman administration after all.

    Of course, the status-quo is unsustainable, so something will eventually have to change.

    • allen says:

      There’s a certain sweet irony to the fact that one of the more potent and intractable opponents to Obamacare are Medicare recipients. While the recipients of ERISA largess may, falsely, comfort themselves with the belief that they’ll be able to hang onto their gilt-edged coverage there’s no such wishful thinking on the part of folks getting Medicare. They know that to some extent Obamacare will be paid for with a pound of their flesh.

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