Doesn't matter whether we pay out-of-pocket, buy private insurance, are "insured" by the government, or whether medical care is "free" – eg. paid for by someone else. Unless we have unlimited wealth, we can't have unlimited health care. That's just a simple fact of life and economics, which is such an unpleasant truth that it's usually ignored by all the sides in the health care financing debate. Since we need to have this debate, we need to face up to the facts.
We try to assure that no one starves to death – but we don't offer to buy unlimited food for the indigent; we issue food stamps. But it's fairly simple to know how much food money each individual will require to stay alive, so we know (subject to much abuse and imprecision) who needs food aid and how much.
Similarly we don't want people to live without shelter. But we don't offer mansions (except when compared to third world countries) for public housing. The needs of one family are very similar to the needs of another.
Ditto for fuel assistance.
But medical care is different. There is no limit to the amount of care any one individual might absorb – especially towards the end of life. Technology keeps making medical care better but the economics of medicine more difficult. There is more and more that can be done to prolong life or improve the quality of life. We don't like to think that cost limits treatment, or that we would trade off dollars for lives; but we have no choice. There are only so many dollars and there is no limit to how many dollars could be spent on any one of us.
Yes, the cost of any particular procedure can and should be reduced over time; but new expensive and sometimes crucially useful procedures will more than absorb the savings. Yes, administrative costs can and should be reduced substantially; but, even if they went to zero, the actual care options available can still absorb all the money available. No, there is no law of nature that says every doctor must be rich or even that we must pay a toll to a licensed MD for almost any health care need; but medical people need to be paid. If each of us gets an unlimited amount of care, there will be an unlimited amount of money spent on the people who provide that care. There aren't an unlimited number of health care workers available; there isn't an unlimited amount of money available for any purpose – even health care.
So the amount of care we get is going to depend on the amount of money available to pay for it.
If we all paid out-of-pocket for health care, we'd get as much health care as we had wealth and then it would stop. Most of us would ration what we spend. Bad luck (or bad behavior), however, can easily absorb whatever has been saved. So there's insurance.
Insurance means spreading the risk of bad luck across a group. If we each bought our own insurance policy, we'd decide how much we want and can afford to pay for a set amount or set categories of coverage. It's the insurance company's job to pay out only benefits which we've contracted for; that's not heartless; that's what makes insurance work. If we don't buy insurance or don't buy enough, we pay out of pocket. If we can't pay out of pocket, should we just be allowed to die? Should our families either pay for our improvidence or feel bad that they didn't? Should everybody else have to pay? What if we couldn't afford to buy insurance? On the other hand, what if we contributed to the cost of our own care through risky behavior or an unhealthy lifestyle?
If the answer is that "government ought to pay", then it's logical to assume that government ought to be able to force you to pay for insurance as we do today with Medicare – but not the full cost. Government also taxes us all to pay for care for those who are presumed not to be able to pay for insurance – Medicaid.
But the problem of deciding how much care each individual gets doesn't go away once the government becomes the payer of last resort. In fact, it gets worse because each of us is more likely to demand an unlimited amount of care if we or our families don't have to pay for it. Decisions still have to be made about who gets how much care. As nice as the slogan sounds, the decision makers can't be doctors because they are the beneficiaries of the dollars that go for care. Self-interest aside, when would they say "no" to any treatment which had any chance of success?
Here's my crack at the questions that get buried in the heat of the health care cost debate:
- Should the rich be allowed to buy as much health care as they want? Yes, but they should pay for all of their own health care. The treatments they pay for will help finance medicine's search for new treatments which will often become available to all. Even if their heirs would prefer otherwise, the rich shouldn't get a public health subsidy. Note that Medicare today offers a subsidy to everyone.
- Should the indigent get health care at public expense? Yes, but as with many welfare programs, the definition of "indigent" needs to be tightened up. Moreover, the amount of health care the indigent get needs to be rationed by government just as the amount of housing assistance, food assistance, and fuel assistance is. This means the poor won't have health care as good as the rich do. That's a hard thing to say but no point in not being honest.
- Should the middleclass get health care at public expense? No, there is no one to pay for our health care but us. We can pay out-of-pocket; we can buy private insurance to cover catastrophic risk and thereby get some control over how much health care we buy for ourselves. We can pay taxes to the government which it will then use to decide how much health care we can get; but it will still be us paying for it and decisions will still have to be made as to how much care we get; we'll just lose all control over how much we spend on health care as opposed to, say, food or education.
- Should we be forced to buy a minimum amount of insurance as we are today with Medicare, as we would still be under Rep. Ryan's proposal, and as we would be even more so under Obama's plan? I don't think so, but it's a tough call. If so, we should be able to choose the insurer and must realize that care will still be limited.
- What happens to those who exhaust their insurance and then become indigent? I think they go to #2 above.
It's really unpleasant to face the fact that, someday, we might be allowed to die because there isn't enough money available to keep us alive; that's one reason it's so hard to have this discussion. Some Republicans promised that we could have Medicare without rationing and demagogued about "death squads" – not helpful. Today the blogosphere and twittersphere are full of invective about Rep. Ryan's proposal - "genocide", "murder of old people", etc. etc. None of this helps decide how we want to pay for medicine and how much medicine each of us is entitled to. These are the questions we need to face up to.