Health Care Hypothetical

I see that health care questions are making the rounds again on the internet.  At Crooked Timber, Ted Barlow posts on the topic and initially makes what I think is a characteristic error on the topic:  he talks about the government paying for health care as if it repeals the problems of limited supply and enormous demand. 

In the comments he writes:  "Very few would seriously argue that a pauper has the right to expensive shoes, televisions, or airline tickets. But there's a general agreement that people who can't afford health care ought to get it anyway. I don't see any way to reconcile that philosophy (which I agree with) with a policy that I'd recognize as deregulation."

The problem with this is that people always see whatever they need as health care that absolutely must be paid for. Unfortunately the supply for health care is always going to outstrip the demand because if you need that liver transplant, you personally don't care how expensive it is and even if it is your second liver you are going to think someone ought to pay for it.  It takes a lot of work to become a doctor.  It takes a lot of time and effort.  Few people are going to put the time in if they aren't well compensated.  Medicines are complicated and risky to develop.  They aren't going to get made on the cheap.  New medical devices are complicated and take a lot of effort to design and make.  That isn't going to come cheap either.  The second something new comes along (now matter how expensive) that can help you, you are going to want it no matter the cost.  That fact doesn't go away when the government is paying, in fact it may intensify if you don't have an obvious linkage to the payment.  This is the long way of saying that rationing is going to happen on the basis of price one way or another.  Either we will significantly slow new research by making it not profitable enough to compensate for the huges risks, or expensive things will exist but be inaccessible.  There really isn't a third option.  Which leads me to this proposal found in the comments of the Crooked Timber post (by Nicholas Weininger):

A concrete example, as a thought experiment. Suppose our fantasy "basic" socialist health care plan decided up front that it would cover only those devices, procedures, and drugs that had been available for at least 20 years. No coverage for the latest and greatest machines or cutting-edge surgery; only the tried and true. No coverage for on-patent drugs, only generics. You want your care paid for by the government? You get a 1985 standard of care (or a 1986 standard next year, etc).

Surely this would be an effective across-the-board cost control measure. Stuff that's been around 20 years or longer tends to be relatively cheap, and also easy to evaluate for cost-effectiveness since you've got a lot of data on its use. It'd address Sebastian's objections about innovation, too: any developer of a new drug or device would have 20 years to sell it on the private market, charging whatever that market would bear, before the government took a price-distorting hand in it.

1. Would such a restriction violate your intuitions about individuals' positive rights to be provided with health care regardless of ability to pay? Why or why not?

2. Do you think the advocates of any realistic US single-payer plan would have a chance in hell of getting the electorate to accept such a restriction?

I would personally change the period to more like 10 years.  The government will fund health care to the state of the art as of ten years ago.  The more modern techniques have to be paid for by you.  In effect, something like this happens already.  Canada has only recently started to use MRIs at a level that was common about 8 years ago in the US.  How does this meet with liberal expectations about health care? 

Posted by Sebastian Holsclaw at April 13, 2005 3:41 AM