What and where is “waste” in health care? (Continued)

I want to follow up on my earlier post on waste in the health care system. That post questioned the notion (definition) of waste. Though it is likely that the same degree of health could be achieved with less expenditure (one view of waste), that does not mean that the additional spending is without value of another sort. It could very well be that we value that additional spending because it is necessary to fund the wacky health system we’ve chosen (that is, that we apparently, collectively, like) and makes services that provide hope, without actual  health, possible.

Even if this is the case, there are still good reasons to be concerned about the level and trend in health spending. One set of reasons has to do with externalities. Your health spending can affect my premiums. If you use more, my premiums are higher than they otherwise would be, regardless of whether what you use is good for your health. The same is true in reverse: my utilization affects your premiums. Naturally, I think my health spending is justified and a whole bunch of yours is wasteful. Stop it! (I’m joking, to make a point.)

The same argument can be made for public programs. Beneficiary premiums aside, an extra dollar of spending by Medicare is a dollar of someone’s taxes (not to mention a dollar of someone’s salary). Even if every such dollar is valuable to some beneficiary–independent of whether it leads to health improvements or not–it is costing me money. It is reasonable to be concerned about this.

In this sense, we can all complain about health spending, label much of it wasteful, but still demonstrate through our actions that we like things just as they are. We’re each ripping someone else off while claiming that we’re buying something of value. If we didn’t, at some level, feel this way, we would change our behavior. We don’t.

Another reason to be concerned about health spending pertains to how it is or could be financed. The money has to come from somewhere. Who will pay for public health programs? Who will pay higher premiums? The stuff doesn’t grow on trees. There is opportunity cost. Are we considering the bigger picture? Are we willing to tax ourselves to the extent our commitments suggest? If not, we should stop buying. (Reasonable people can differ on this. There is no right answer.)

Finally, there are distributional considerations. For whom should the benefits of health spending accrue? Should the rich subsidize the poor? How much? Should the young and healthy subsidize the old and sick? How much? Should everyone have insurance? Is providing the opportunity for that (or mandating it) worth the cost? (No right answers here either.)

There may or may not be waste in the health system, depending on what we take “waste” to be. That’s one debate, and one worth having. But apart from it, even if there is no waste (now or someday), the financing of health care will still be a subject worthy of consideration. If one concludes that every dollar is well spent, one cannot necessarily conclude there is no financing issue. There is. There always will be.

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