• Save Fewer Lives or Save Lives More Efficiently?

    Let’s say the cost per saved life due to providing an additional individual with health insurance is X dollars (Tyler Cowen says X = $9 million; I say that’s an overestimate). If one thinks X is too high, what’s the right policy response? One answer is to extend insurance to fewer people. The other is to try to reduce the cost of care so that X is lower.

    There is a huge difference between these two responses. I won’t go into all of them now. One important difference I want to highlight is that if we simply reduce the number who will become insured then the rest of us are still left paying exorbitant health care costs. Thus, two problems remain, many are left uninsured and health care costs are still too high.

    On the other hand, if the policy response is to reduce the cost of care then we all win. More of the uninsured can be insured for some level of funding and the rest of us can benefit from lower health care costs. That’s a double victory.

    That health reform is too expensive (*) is not a good argument for doing less of it. It is an argument to do more. The provision of health care will not become more efficient under the status quo. And the status quo (with perhaps minor tweaks to it) is what we will get if health reform does not pass this year. But if reform does pass it sets the stage for more reforms, and ones that focus on costs.

    (*) I’m not saying I think it is too expensive. But if you do think it is I do not find that a convincing argument not to do it.

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    • “The provision of health care will not become more efficient under the status quo. And the status quo (with perhaps minor tweaks to it) is what we will get if health reform does not pass this year. But if reform does pass it sets the stage for more reforms, and ones that focus on costs.”

      My concern is that HCR will only serve to solidify the structural problems that are causing costs to skyrocket (problems of information, incentive, choice, competition, etc.). We’ve passed many bad/ineffective bills through the years, and we often don’t “tweak” them later on down the road when we come to understand all of the unintended consequences that result from their passing. You seem to be saying that if something doesn’t get done now, we’re in for more of the same for the foreseeable future. But if we’re really in such dire straits, we’ll be forced to address it again until we get something through Congress that actually addresses the more serious problems. What if Congress just began undoing some of the legislation that caused the distortions in the health care market in the first place (the Hippocratic approach if you will)? So much of what we have is the result of a planning approach that was short-sighted and blind to the many unintended consequences of regulation. My fear is that this legislation will be similarly short-sighted and no amount of tweaking will fix it.

    • Sort of just parachuting in. Much of my understanding in this area comes from the Goldhill article in the Atlantic (he seems to think that legislation won’t change the market distortions, although that was a while ago). In general, my instincts are Libertarian and informed by history and experience. I’ll check out the link though. My mind is definitely not settled. I’m uninsured and have had bad experiences with insurance companies when I have been insured. But I’ve also seen legislative hubris too many times to count.

      • @Jason – Please do read the content of this blog. I recognize there is a lot, and it may be hard to find the answers to your concerns. Make use of the categories and tags (see tag cloud in far right sidebar or note tags to posts that interest you–follow them and read, read, read). I would warn you not to rely exclusively on any one source, and particularly not The Atlantic, on health policy. For a list of other sources on health care, among other things, see my Sources post.

        Feel free to ask questions via comments to posts or through the contact page.

    • I certainly will. Anyone that listens to This American Life, Radio Lab and Econtalk is worthy of trust. I’m sure I’ll be able to ferret out your opinion on the Goldhill piece from your links.

      • @Jason – I don’t believe I ever commented on this blog about the Goldhill piece, though I have elsewhere. But one should be able to infer nearly everything I think about health care and health reform from my posts. If there’s anything significant left to doubt, ask me and I may post on it.