How to Get What We Want -- Better Health Care

By Arnold Kling (Arnold Kling is an economist and author of the forthcoming health-policy book "Crisis of Abundance")

In recent years, the approach to major policy issues has been for wonks to design proposals and for politicians to stage confrontations over those proposals. Sometimes, such legislation stalls, as with the Clinton health plan and the Bush Social Security plan. At other times it passes, as with Bush's Medicare drug benefit. Either way, the result can be considered a failure. The mistake has been to focus public attention on solutions without providing adequate background on the problem. An issue as challenging as health care requires a conversation, not a confrontation.

More people, both in Washington and in the country at large, need to be better educated concerning the trends, constraints and trade-offs involved in health policy. Some well-established facts are rarely brought up in the public debate, while myths, half-truths and rash promises are widely circulated. Here are some issues that Americans, liberals and conservatives alike, should consider: Our health-care system is pulled in different directions by competing objectives. For example, individual consumers would prefer to have health-care expenses covered for them, rather than worry about paying for health care. This is the objective of Insulation. However, we are concerned with the rising share of resources devoted to health care. This is the objective of Affordability. Finally, we do not like the idea of being denied health care because of a bureaucrat's decision. This is the objective of Accessibility, because we want to be able to access whatever our doctor recommends. These objectives conflict with one another. For example, managed care was an attempt to move toward Affordability, but it reduced Accessibility.

We cannot slow the growth of health-care spending in this country without changing health-care practices. Experts agree that new technologies make medical care more expensive. In addition, the rapid rise of physician specialization accounts for a large share of our health-care expenditure growth. Reining in health-care spending would require wrenching cultural changes. A market-based approach would be to reduce Insulation and instead steer people toward catastrophic health insurance, requiring them to pay more out of pocket for routine care. A government-based approach would be to set a national budget for health care and provide only the services that fall within that budget. The consequences of either approach are not well understood by policy-makers or the general public. The better plan would be to experiment with different approaches at the state level instead of suddenly lurching in one direction for the country. Perhaps California could be one of the states that attempts to experiment with a single-payer system. As a non-Californian, I would like to see that. My guess is that single-payer will require enormous tax increases and ruin the state's economy. Better that should happen in California than in Maryland, where I live.

We lack information about the effectiveness of health-care protocols. Critics complain about "information asymmetries," in which doctors know more than patients. But that problem pales in comparison to the information gaps shared by doctors and patients alike. For example, after a heart operation, no one knows how often a patient should be seen by a cardiologist. Is it cost-effective to be followed up once a month, once every six months or once a year? Researchers at Dartmouth University found that the main factor in determining follow-up visits was cardiologist availability. Cardiologists with a lot of room in their calendars will see a given patient more often than those with more crowded schedules. Overall, the researchers documented a shockingly broad pattern of differences in health-care practices that appeared to have no relationship to medical outcomes.

Those of us who propose market-oriented health-care reform need to spell out what this will mean for consumers -- how it will increase their responsibility to study the costs and benefits of alternative treatments. Those who favor universal government-provided health insurance also have an obligation to describe how health-care decisions will be made. If we cannot afford all the health-care services that everyone might want, then we are going to need policies for rationing health care.

Before electing to undergo surgery, we want the diagnosis explained, the alternatives described, the risks outlined and our responsibilities for contributing to a successful recovery made clear. By the same token, surgery on our health-care system requires a more thoughtful conversation than this country has had so far.

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For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation. Both Australia and Sweden have large private sector health systems with government reimbursement for privately-provided services so can a purely private system with some level of government reimbursement or insurance for the poor be so hard to do?

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