To address the system’s problems, the late Uwe Reinhardt prescribed price controls, but these don’t improve efficiency or quality of care.
Sally Pipes, President and CEO of the Pacific Research Institute, has written a very useful little book. Her False Premise, False Promise: The Disastrous Reality of Medicare for All offers market-oriented health care reformers something analogous to what Strunk and White’s Elements of Style offers serious writers. The latter is also a very useful little book, worth keeping in one’s pocket to refer to when needing a quick reminder of the rules of good writing. Ms. Pipes’s book is something one might want to consult before going on stage to argue against government-controlled health care. All the intellectual ammunition one might need is packed into this slim volume.
The book might be a few months late. Medicare for All, supported by many of the Democratic presidential candidates, was the big issue in September when Sen. Elizabeth Warren rolled out her version of the plan. But people got sticker shock when they saw the price, made worse by how Sen. Warren planned on getting the money. Everyone was going to pay—not just the rich—and they’d pay a lot. People lost interest in the idea, while Sen. Warren’s poll numbers dropped. Nevertheless, Medicare for All will be back in the news when the campaign heats up.
The book has several strong points. Ms. Pipes has carefully researched the Canadian National Health Insurance system and the U.K. National Health Service (NHS) to show exactly what awaits us if Medicare for All passes. For example, we often hear about wait times in Canada, but in her book we learn exactly how long those waits are, and in what specialties. Medicare for All supporters frequently trot out Canadians who say they have never had to wait for their primary care appointments or their elective gall bladder surgeries. The conflicting personal accounts confuse Americans trying to decide whether to support Medicare for All. Ms. Pipes helps to clarify the issue.
For example, cancer patients in Canada often have the shortest wait time (just four weeks), but people with orthopedic problems can expect to wait 39 weeks on average. In addition, Ms. Pipes explains, one must take into account “total wait time,” which includes the time to see one’s primary care doctor plus the time to see a specialist if that doctor makes a referral. A short wait to see a primary care doctor means little if it is followed by a long wait to see the specialist to which you’re referred. In Canada the median total wait time is 20 weeks.
Ms. Pipes’s description of the NHS is similarly illuminating. For example, people may have heard rumors about how the NHS uses QALYs, or Quality Adjusted Life Years, to calculate whether a treatment is worth its price tag. Ms. Pipes offers a short but extremely clear explanation of how QALYs work: multiply how much longer a treatment will extend a person’s life by the quality of that person’s life, then divide by the treatment cost, and you get a number. The NHS uses that number (based on a very subjective definition of “life quality”) to routinely deny patients access to treatments thought too expensive or insufficiently cost-effective.
A Right to Health Care?
The book reads like an indictment. It begins with the Medicare for All promise, then moves to the philosophical debate surrounding that promise, such as whether health care is a right. A thorough discussion of the defects in the various Medicare for All-type plans follows. Then come the horrors of the Canadian and U.K. experiences—the long waits, the poor access to cutting-edge drugs and technology, the high financial costs, and the poor outcomes.
In the first seven chapters, only the discussion of “the right to health care” seems a bit truncated. Ms. Pipes frames the debate as one between a positive right, which is a right to get something at other people’s expense, and a negative right, which is a right to be left alone and act independently. Progressives view health care as a positive right—hence Medicare for All. Market-oriented conservatives think more in terms of negative rights.
This binary model of rights is useful but a little out of date. After all, many conservatives these days also feed at the government trough, which is why President Trump’s economic program has sometimes been called “big government conservatism.” Although conservatives may not support Medicare for All, many of them do support Medicare, Medicaid (to remove the burden of caring for their aging parents), Social Security (which, though officially not redistributive, offers low income people proportionally more benefits than high income people), unemployment insurance, and a host of other government programs. Some of these programs are official entitlements, suggesting that people have a “right” to them, but even those programs that are not have created an expectation among some conservatives that the benefits are “deserved.”
In addition, given that only the most libertarian conservative would ban the income tax, which represents, in theory, an attack on negative rights, what we have in the United States is not a binary model of rights, or even a spectrum of rights ranging from negative to positive, but a set of rights agreed upon by the electorate, which means we get those rights from government. When Americans long ago reached a consensus that government can take up to 40 percent of their incomes in taxation, but no more—a number that has remained fairly constant over the decades—the negative rights position becomes irrelevant, or relevant only after the first 40 percent in taxes, which makes invoking it seem a little ridiculous.
Negative rights have sometimes been grouped under the category of natural rights, meaning rights that exist independent of society. In After Virtue, philosopher Alasdair Macintyre called the notion of natural rights a fiction. If so, it is a useful one, and serves as a rhetorical tactic to warn audiences against the excesses of government intervention. But when all is said and done, what guides us today is not a theory of natural rights or a firm belief in negative rights, but a utilitarian calculation decided at the polling booth over how much we should re-distribute the wealth to prevent civil unrest.
Progressives are also trapped in their own contradiction about rights. In the debate leading up to Obamacare, progressives said people had a “natural right” to health care, as opposed to simply a social right. This was troubling, as it meant government could create a natural right out of thin air and then demand (in the case of the Obamacare mandate) that everyone buy it. Without the mandate the Obamacare system does not work. What this means is that the so-called “natural right to health care” only exists when everyone in society behaves a certain way. Therefore, what is called a natural right is a right that exists only because government forces everyone to exercise that right, which means it is not a natural right at all. It is like forcing everyone to practice a particular form of religious worship in order for individuals to exercise their natural right to conscience.
Health Care Solutions
My bigger concern involves Ms. Pipes’s last chapter. To fix health care she runs through the litany of market-oriented solutions—for example, more competition between insurers, more consumer choice to lower prices, greater reliance on health savings accounts (HSAs), and fewer government mandates. Everything she advises I agreed with—twenty years ago. And while I remain sympathetic to many of her ideas, facts on the ground have changed, and therefore so have my views.
If we were building the health care system from scratch, and if economic conservatives enjoyed the trust of the American people, I would rally behind Ms. Pipes’s ideas. Too much water has passed under the bridge, however. In the form of Medicare, Medicaid, the V.A., the Children’s Health Insurance program, and other assorted health programs, government already assumes responsibility for more than half the country’s expenditures in health care. And given that “capitalism” is not a very popular term these days on the Left and even, to a lesser extent, on the Right, the American people simply do not trust the free market to fix health care (or other social problems such as daycare).
This may be why President Trump constantly reminds people in his stump speeches that any health care reform must require insurance companies to cover pre-existing conditions. In the past, the free market did not compel insurance companies to cover these conditions. The American people have long and bitter memories of how it all once was. President Trump seems to recognize this.
Ms. Pipes does too, for she emphasizes how insurance companies in any reform effort must cover pre-existing conditions, although her plan has some caveats, including the requirement that people qualifying for this benefit maintain insurance coverage from year to year. For those who fall through the cracks she recommends coverage through high-risk pools. But this is a public relations disaster in the making. Any retreat from absolute coverage for pre-existing conditions would immediately inflame public opinion. Meanwhile, any requirement put on insurance companies to cover pre-existing conditions sounds a lot like a mandate—of the kind that Ms. Pipes dislikes. By trying to find a middle ground on the issue, Ms. Pipes exposes herself to both popular and intellectual attack.
Another change rendering some of Ms. Pipes’s free market proposals doubtful is the trend toward a two-tiered system in American life—with much of this due, ironically, to free-market capitalism. After all, it was global capitalism that offshored much of American manufacturing and contributed to the decline of the American middle class. Indeed, the middle class is no longer as large as it once was relative to lower and upper income groups for this reason. Some in the middle have moved higher, while others have moved lower. It is why so many Americans no longer see the free market as their savior.
It is also why many upper middle-class Americans can live with a Medicare for All system, so long as the cost is not too great: They know they can simply escape from the system into an upper tier. They already do this in other areas of life. Although many Medicare for All plans ban private insurance, they do not ban cash payment for care, and while the plans may ban doctors from receiving cash, that ban only applies to doctors who participate in the Medicare for All system. Since most health insurance already comes with high deductibles, upper middle-class people have long grown used to paying cash for health care, while an increasing number of doctors have begun practicing so-called “concierge medicine”—in other words, they have already exited the insurance system and created an upper tier. Medicare for All puts American health care on track to follow education, restaurants, hotels, and many other areas of life where two tiers exist. High-income people can live with that.
And so can lower-income people. Obamacare expanded the lower tier by expanding Medicaid. Yet millions of Americans who now qualify for Medicaid, and who occupy this lower tier, would be furious to lose that Medicaid. Ms. Pipes’s free market reforms are a non-starter for them too.
Ms. Pipes’s reform ideas would best be directed to a small part of health care, namely the individual insurance market, which Obamacare greatly disrupted. There, free market reforms, such as greater plan flexibility, fewer mandates, and individual insurance enjoying the same tax advantage as employer-based insurance, would help millions of people. Beyond that, reform would best be focused on ameliorating the unpleasant consequences of living in a two-tier system, which has already become a reality in so much of life, as well as on the seemingly never-ending and thankless task of trying to bring health care costs under control.