Hyman’s Inferno
posted by Frank Pasquale
Devilish rhetoric is hot nowadays–ranging from the Chavez diatribe at the U.N. to “apocalypse chic” to the Left Behind series. Now the Cato Institute is getting in on the act, publishing an expanded version of David Hyman’s law review article Medicare Meets Mephistopheles as a book.
The book does a great job clarifying some complex Medicare law–the glossary and primer on Fraud and Abuse Laws alone are worth the purchase price. However, consistency is not a virtue of the book’s Screwtape-inspired narrator. He first suggests that Medicare is problematic because “’single working mothers in Nebraska (often themselves lacking health insurance) [are] footing the bill for gold-plated health care provided to high-income Medicare enrollees in Miami’” (41). But soon enough, the grand design becomes apparent:
If Medicare were wholly means-tested, it would be instantly transformed into a program for poor seniors, instead of one for the poor, the wealthy, and everyone in between. Once the Medicare program does not include all the elderly, it becomes much easier for legislators to impose significant funding and benefit cuts . . . . (89)
This is a pretty scary vision; as Ezra Klein notes, in Hyman’s ideal world, “those who make poor decisions, or simply get really ill, face financial ruin.”
While Hyman thinks moral hazard drives “gluttonous” overuse of health services, recent scholarship (reported here) is undermining that shibboleth of consumer-directed health reformers. Certainly there are some ways in which cost-controlling measures could save health care dollars. But Hyman and other free marketeers seem to ignore the fact that expenditures on the chronically ill (which are largely nondiscretionary) are driving cost pressures.*
There’s a bonus excerpt from Richard Epstein’s forward to the book after the jump….
Perhaps the most entertaining part of the book is this fable from Richard Epstein on the wisdom of privatizing all health care:
I was about 22 years old when Medicare was first established in 1965, and to this day I remember my initial reaction to it. Think of two ways in which a group of 10 teenagers can drink soda at a luncheon counter. One is to get a large pitcher and have 10 thirsty kids each use a straw to take out what he or she wants. The second is to divide the soda into glasses, and assign them one to a person. Let there be 10 pints and each teenager’s initial entitlement is one pint either way. The patterns of consumption of the soda will not be the same in these two arrangements. Even if by some miracle each person gets the same amount of soda in the two configurations (which they won’t), we can be 100 percent confident that the soda will be more rdpidly consumed when all 10 teenagers slurp their soft drink from the common pitcher. Consumption rates will slow markedly if each has his or her own glass, for slow sipping now results in greater satisfaction, not a reduction in individual share.
Well, there you have it. Chemotherapy is just like a coke on a hot day. You get a whole bunch of cancer patients who don’t have to pay for their meds, and they’ll just use ‘em up like there’s no tomorrow.
Of course, anyone familiar with Epstein’s Mortal Peril wouldn’t be shocked by the analogy; there he proclaims:
The most common formulation of the egalitarian ideal skirts difficulties by holding that everyone has a right to health care regardless of ability to pay. The major question is: Why is this principle appropriate for health care when it’s been rejected for vacation homes and fast cars? (112)
What’s so bizarre about this rhetoric is how often an Epstein will oscillate between
a) an assumption that health care is a unitary phenomenon, such that any “right to health care” is (an inevitably incoherent) right to “the very best health care by all people” and
b) an assumption that there are many levels of health care, and that we can only incentivize the creation of higher levels of health care by charging a lot for them.
Epstein reminds us that “Equal health expenditures on rich and poor alike would not equalize health care,” as if that sort of equality is on any realistic agenda of US policy change. He then warns that “costs of equalization in terms of lost production would be so great that everyone would suffer.” Thank heavens a few merciful hospitals realize that the opposite is often the case.
*For more on the relative proportion of expenditures on the chronically ill, see John Jacobi, Consumer Directed Health Care and the Chronically Ill, 38 U. Mich. J.L.Reform 531 (2005).
Photo Credit: Gustave Dore/Wikipedia Commons.
October 26, 2006 at 5:37 pm
Posted in: Health Law
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Responses (4)
greglas - October 27, 2006 at 10:26 am
Yep. Good post.
Maryland Conservatarian - October 27, 2006 at 5:01 pm
you ought to ask Dave Hyman be a guest blogger – you know, diversity and all that stuff…
Frank - October 27, 2006 at 8:40 pm
Conservatarian, I’ve followed Peter Schuck’s points on “ideological imbalance in the academy,” and while I’m not entirely convinced, I do think your suggestion is one to keep in mind. Let me talk to the co-bloggers!
For now, be assured that next week I’m going to be talking about Schuck & Zeckhauser’s book on “bad apples and bad bets” in social policy, which is (I think) a much better attempt to apply “tough love” and efficiency principles to government programs.
Rose - November 2, 2006 at 8:49 pm
Anyone who wants to criticize Mr. Hyman’s ideas on Medicare should first be sentenced to spend a year in a clinic with the old people who come in at the drop of a hat because of brown spots on their arms, and other trivial things that they want the taxpayers to pay for – and the taxpayers have been forced to pay for it, and the physicians are driven crazy by the whole ridiculous Medicare circus – you walk in our shoes, THEN you can really know how bad it is. The old people, and the “poor” people, who are on Medicaid, but will be going on vacation to Hawaii next week, and playing with their gameboys and riding their ATV’s, are bankrupting this nation, and sucking off every working person in the USA. ot to mention also – illegal immigrants.
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