Tuesday, January 16, 2007

Nietzschean Health Care

Evidence indicates that, for the average person, single-payer health insurance increases life-expectancy. This fact sways me towards nationalized health care, but I always return to the American system for one reason: our system has proven much more effective in improving the technology that keeps us alive. There is probably a very powerful health-care version of the Paradise and Power argument: the rest of the world pays so much less for health care because they are able to free-ride on the American medical technology juggernaut. Rich Americans serve as lab-rats for the rest of the world, and if technology isn't developed in America, it is often the high prices that Americans are able and willing to pay that will make an expensive technological project worthwhile. So if American health care was nationalized, we might find that the whole world suffers, even ourselves. Thoughts?
Via Sullivan, Instapundit(!?), and the Economist.


Blogger Robot said...

Something is indeed quite unfair here. There's no reason drugs in Windsor should be that much cheaper than drugs in Detroit, when, as you say, so much of the research and development that gives Canada (and the world) its drugs comes from America.

But, as most liberals like me would say, it's largely unfair because we're screwing ourselves. Anyone would be willing to accept paying a little bit more for health care in return for innovation. However, the fact is that health spending per capita (from 2002) is 2.5 times that of Britain, while our life expectancy, infant mortality rate, and nurses/beds per 1000 people figures are all worse. At some point, we have to say that the gross inefficiencies of our system have to be stopped. The costs simply don't outweight the rewards. (This data, along with perhaps the most persuasive case for universal health insurance, comes from Paul Krugman and Robin Wells' piece in the March 23, 2006 NYRB.)

The issue of what would happen to R&D in a single-payer system remains. Perhaps, however, we've all got it exactly backwards, and our competition-inspired system actually hurts development? I'll leave you with an excerpt from a speech Joseph Stiglitz gave earlier in the year. I am still far too uneducated on the matter to have a truly well-informed opinion on any of this, but Stiglitz is, as always, quite a provocative thinker:

"What about innovation? The answer is almost none. The drug companies spend far more money on advertising and marketing than they do on research, far more money on research on lifestyle drugs, like hair or other things, than they do on lifesaving drugs, and almost no money on the lifesaving drugs that are of concern to the developing countries, with hundreds of millions of people affected by malaria and other tropical diseases.

In the book I describe an alternative system for financing innovation. Innovation doesn't come costlessly, so you can't just say, "Let's just have people innovate." It requires incentives; it requires finance. But a far better system is a prize system, where you ascertain what are the diseases that we care about, malaria and diseases that affect hundreds of millions of people, and you say, 'If you discover that, you'll get a big prize. If you discover something less important, you get a small prize. But then we'll use the force of the market economy to distribute it at as low a price as possible.' As opposed to the current system, where you use monopoly to reduce the production and raise the price, this is based on increasing the production and lowering the price. I am going to argue this is a far better way of organizing our health care innovation system than the current one."

The whole speech can be found at http://www.cceia.org/resources/transcripts/5397.html#2

4:59 PM  
Blogger Scantron said...

I would also recommend, from the liberal side of things, Ezra Klein's blog, who is anything but a "single-payer" automaton. He is actually more interested in plans which _aren't_ universal, namely government-funded all-access programs that would compete with private firms. See his "Healthcare" tag list of posts here:


He mentions approvingly a new plan by wunderkind Jacob Hacker via the Economic Policy Institute:


Granted, Hacker does not seem to address any potential cuts in R&D, but the driving force behind such cuts--an absence of competition--definitely is eliminated.

I hate to say it, since I'm prone to radical assumptions and needless baggage and all, but the question to me doesn't seem to be one of all or nothing, universal, single-payer healthcare vs. the current swamp of the private sector, but of a gradual yet unabashed experimentation in a mix of private and public. Hacker's plan seems to do just that. Imagine that: little ol' me, being pragmatic.

9:49 PM  
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