Unlimited Demand
As I said before, I miss Frank McGahon's blogging presence. We saw eye-to-eye on enough things to make arguing over the many things we certainly don't agree on very interesting indeed! Anyway, following a statcounter link last week, I discovered that Frank had moved to occasional blogging on a group enterprise called Distributed Republic. And what a good site it is too. Very libertarian, but in a way that a liberal (in the American sense) like myself can really get my teeth into.
Anyway, I inadvertently started a row over there this afternoon in response to this post, which is really a lifting of a rather silly (to my mind) critique of Michael Moore's Sicko. I haven't seen Sicko, but I do take issue with someone, as the commentator did, suggesting that 'When governments attempt to regulate the balance between a limited supply of health care and an unlimited demand for it they're inevitably forced to ration treatment.' Where to start with this nonsense I don't know. I chose to object to the idea that there is a potential for unlimited demand for healthcare, which irks the pedant in me, though I could just as easily narked that markets also ration treatment. They just use price as the mechanism for deciding how treatment ought to be rationed. I prefer a system that uses illness (say, as defined by a triage nurse) as a mechanism for distribution.
Anyway, I wrote a rather tetchy comment and to my surprise provoked a load of responses. To which I responded in turn.
As I write my very long response is in a moderation queue and I don't know if it deserves to come out the other end, but I think the thread is interesting enough already. And if my post does turn up, I'm sure that by the time I wake up tomorrow I'll have been bollocked to high heaven by my interlocutors.
Is it terminally geeky to think that good non-flamey online rows are fun?
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Comments
Frank McGahon:
Good non-flamey online, er, discussions are indeed fun. With the emphasis on the "non-flamey" part!
Where to start with this nonsense I don't know. I chose to object to the idea that there is a potential for unlimited demand for healthcare, which irks the pedant in me, though I could just as easily narked that markets also ration treatment. They just use price as the mechanism for deciding how treatment ought to be rationed. I prefer a system that uses illness (say, as defined by a triage nurse) as a mechanism for distribution.
To be "pedantic", you're quite correct that there can't be any such thing as "unlimited" demand but in practice the limit associated with the demand so far exceeds the capacity to satisfy this demand that it might as well be unlimited. I think you are aware of this because if there wasn't something close to an unlimited demand, there would be no need for anything, whether a "triage nurse" or "the market" to distribute/ration it.
I do realise that you are suspicious that a distribution associated with "the market" will correspond to one's intuitive ideas about justice. The problem is that a) there isn't really any better alternative but more importantly b) this suspicion of yours isn't warranted by how the market ends up allocating similarly essential non-health stuff - markets somehow end up doing a pretty good job of sheltering and feeding people and if it's true that the "distribution" of this stuff is skewed in that rich avail themselves of the most extravagant and frivolous sorts of food and shelter it's also irrelevant to the question of whether such markets make sufficient food and shelter available to everybody else.
Those who are skeptical of markets in healthcare have to do a bit more to establish that health is a special case, and certainly more than simply assert that the fact that the demand side is composed of "sick" people who represent a small portion of the overall population, not least because this is the case with almost any market (demand for elvis memorabilia is restricted to a tiny portion of the overall population for example).
In a way, use of a term like the market tends to obfuscate the key insight about how markets work. The price mechanism generated by the millions of voluntary transactions contains a vast amount of constantly updating information that no one body - no triage nurse, never mind a government department - could ever hope to emulate.
Ciarán:
Sorry for not getting back to you sooner Frank. It's been a long day!
I think our dispute focuses on two related questions. First, is the market for healthcare so different that it is not resolved, so to speak, by the price mechanism? Second, is there anything morally important that is not addressed by market solutions to healthcare?
A response to the first question, to an extent, lies in your final paragraph. You are correct that the price mechanism conveys a vast amount of information that no centrally controlled body can match. It conveys information about whose desires lie where and to what extent. What it does not convey is information about need.
This is reflected in the fact that demand for fundamental healthcare is price inelastic in extremis. As Andrew Olmsted says, prices cease to incentivise people if the alternative to spending is death. So price will not actually communicate very much in the distribution of healthcare.
Scarcity also manifests itself in a different way vis-a-vis healthcare than it does for your examples of food and shelter. Fois gras is certainly scarce, and pricing is successfully used as a technology for distribution. But food itself, in places like Ireland at least, isn't particularly scarce. Likewise with shelter: good houses cost more than crap ones to buy or rent, but most people have at least a functional alternative supplied without state intervention.
When it comes to healthcare on the other hand, there's rarely such a thing as, for instance, an inferior form of chemo. You either get it or you don't. And the consequences of not having the resources for the often very high costs of treatment are cataclysmic for individuals in a way that a lack of fois gras is not in an era of cheap food (though i should say that as Irish people we ought to know what the consequences of people being priced out of the food market are).
You may be able to take less effective pills, admittedly, so cut-price, less effective healthcare is available at times, but this lets us segue neatly into the second quesion. Is it right to distribute the most effective treatments (or, in the chemo example, any treatment at all) based on capacity to pay? Is this the communication of desires? No. Healthcare is morally special because the enjoyment of good health is fundamental and prior to the enjoyment of pretty much every other thing that different people think is valuable in life. So, the question is not about desire (since every reasonable person desires health) but about desert. If you argue for the market you have to argue that ability to pay is a good way of denoting who deserves healthcare. I take an alternative approach. I think that the urgency of need is a good measure for desert.
Now, I should mention that I'm not totally anti-pricing, as I've said before, in terms of how healthcare is supplied. I'm simply hostile to the idea that anyone be excluded from healthcare because of their capacity to pay.
Apologies if this doesn't make sense: my flame is flickering and I need to sleep!
Frank McGahon:
I actually had a longer reply half typed out but my computer crashed and lost it. The first point I'd make is that we do live in a world of scarcity, including that of shelter and food. Noting that healthcare is different in practice is merely restating my basis premise - we don't really have a market for healthcare analogous to those for food and shelter - rather than establishing the key difference.
Taking chemo as an example, my longer point in the aborted reply deal with what likely outcomes might be under a free market in healthcare but upon further reflection, I don't think such elaboration is strictly necessary - it might well be the case that increased demand under market conditions would indeed encourage supply of cheaper, more effective chemo meds, or that patients and families would think twice (or at least have a much keener sense of the tradeoffs) about embarking on futile, expensive and painful treatments, it might also be the case that absent a cultural expectation that someone else picks up the tab, people would tend to choose the best treatments for themselves - it's a little ironic that one of the cornerstones of the case for "universal" healthcare is the notion of asymmetric information: the patient is presumed to know more about her own health status, if this is so, you would think that she is in the best position to determine her own interests.
Why I say this is not strictly necessary is that I think the real stumbling block is your notion that the market would distributes healthcare on the basis of "capacity to pay". This is not quite right and if I can take this off the table, maybe you might see the merits of a more market-based approach. For starters: I have the "capacity to pay" for plenty of things that I don't want. The market can't and doesn't respond to my capacity to pay for anything because a) I have no way of signalling it and b) there's nothing in it for anyone. The market would tend to distribute according to what people *want* rather than what they can afford. This mightn't seem like it but it is an important distinction because once people want something, if someone else can give it to them at a cheaper price and make a profit, that's generally what those someone elses will do. "Affordability" isn't a fixed quality and will tend to adjust
Now, there might well be specific barriers to prevent this from happening in the case of healthcare, and it is also entirely possible that for the bottom whatever-cile of the income distribution, certain treatments are priced out of reach, but if so, it is better to address these specific barriers and rely on straightforward transfers to those less well off rather than simply assume that "this time it's different" when it comes to nationalised health and that it's going to be possible to a) scale up ER-style treatment priorities to an entire health system and b) avoid waste and distortions inherent in a system whereby providers and users are largely insulated from the costs of treatment.
* by the way - I would also prefer to avoid any system which presumed that there was a neat and easily identifiable distinction, commonly held, between "want" and "need". It could reasonably be argued that all non-lifesaving treatments qualify as "want"s rather than a "need"s.
Ciarán:
Sorry Frank: I've just gotten down to Dublin and I'm shattered. Partly due to the generation of people suffering from technological tourettes: why not play your music from your mobile on the train? Fucking hell.
Anyway, I'll try to read both your comments properly tomorrow when I'm sweetness and light again and will respond properly! I doubt I'll agree with you, but also think that I've cornered myself into a rather silly charicature public=good position (as you kind of pointed out in the other front on our discussion!), so will try to clarify then.
Ciarán:
Sorry for not getting back to you on this Frank. I think there might be space for us to agree - at least roughly - here. Not on chemo: r&d for these sorts of treatments, plus the ingredients themselves, makes them very very expensive. So I think that a lot of people would be straight-up priced out of the market. And I think that's tragic vis-a-vis healthcare in a way it is not with most other things. Your supposition that the market would supply isn't warrented by any market I know. Though that said: I am interested in the idea of people making different non-tragic choices where costs are not distributed universally. Sentimentally, I do wonder at some people's choices to maintain life past the point where it is at all pleasant.
At the same time, when I was going through chemo myself (at the cost, I was told, of about £50,000), I did meet one fascinating person who knew she was going to die and was in tremendous pain but was delighted to have had an extra few months with her family. I was struck by how calm she was about it all and seemed admirable to me in the way that people who calmly choose euthanasia , thus bringing the opposite result about, are admirable. Anyway, I'm not making a great evidential claim for my anecdotes. Just that you've raised an interesting question there.
What I think we can agree on is that a (Nozikian in a sense) system could be just, if those who could afford to pay pay and those who cannot afford to pay do not suffer as a consequence. And, in a sense, I suspect this will be the move made in the United States, with some variance. This sort of fundamental idea is drives both Barack Obama's scheme and the Massachusetts Health Bill by the looks of things. As I said here some time ago (though I've probably shifted slightly away from the public component), I'm not averse to private care as such. I'm simply averse to people not getting healthcare when they need it.
One problem with my approach here and on Distributed Republic has been the lack of attention to insurance. A just insurance system with both public and private components is far easier to imagine than a simple pay-at-the-door system. That said, as the Americans who are in the system are finding out, insurance systems do contain some of the flaws of the public system as you describe it, namely a willingness to consume needlessly or unwisely. And the American system seems also to suffer hugely from the 'local' monopolies of pharmaceutical companies on various drugs. But I think you and I can agree that an insurance system could be devised that addresses these issues plus both your and my concerns.
A regulated market with an in-built safety net might actually get us to agree! Or am I just to damn optimistic after my restful weekend?!
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