Whose Medical Decisions?

Whose Medical Decisions?
Thomas Sowell
Wednesday, August 19, 2009

When famed bank robber Willie Sutton was asked why he robbed banks, he said: "Because that's where the money is."

For the same reason, it is as predictable as the sunrise that medical care for the elderly will be cut back under a government-controlled medical system. Because that's where the money is.

My experience is probably not very different from that of many other people in their seventies. My medical expenses in the past year have been more than in the first 40 years of my life-- and I did not spend one night in a hospital all last year or go to an emergency room even once.

Just the ordinary medical expenses of keeping an old geezer going along in good health are high. Throw in a medical emergency or two and the costs go through the roof.

So long as my insurance company and I are paying for it, it is nobody else's business what my medical expenses are. But once the government is involved, everything is their business.

It is not just a question of what the government will pay for. The logic of their collectivist thinking-- and the actual practice in some other countries with government-controlled health care-- is that you cannot even pay for some medical treatments with your own money, if the powers that be decide that "society" cannot let its resources be used that way, or that it would not be "social justice" for some people to have medical treatments that others cannot get, just because some people "happen to have money."

The medical care stampede is about much more than medical care, important as that is. It is part of a whole mindset of many on the left who have never reconciled themselves to an economic system in which how much people can withdraw from the resources of the nation depends on how much they have contributed to those resources.

Despite the cleverness of phrases about people who "happen to have money," very few people just happen to have money. Most people earned their money by supplying other people with goods or services that those people were willing to pay for.

Since it is their own money that they have earned, these people feel free to spend it to give their 80-year-old grandmother another year or two of life, or to pay for a hip replacement operation for their mom or dad, even If some medical "ethicist" might say that the resources of "society" would be better used to allow some 20-year-old to talk over his angst with a shrink.

Barack Obama has talked about the high costs of taking care of elderly or chronically ill patients in terms of "society making those decisions." But a world in which individuals make their own trade-offs with their own money is fundamentally different from a world where third parties take those decisions out of their hands and impose their own notions of what is best for "society."

Calling these arbitrary notions "ethics" doesn't change anything, however effective it may be as political spin.

More is at stake than the outcomes of medical decisions, extremely important as those are. What is also at stake is freedom and the dignity of individuals who do not live their lives as supplicants of puffed-up power holders who are spending the money taken from them in taxes.

One of the many phony arguments for government-controlled medical care is that Americans do not have any longer life expectancy than in other countries, despite much higher medical expenditures.

This argument is phony because longevity depends on health-- and "health care" and "medical care" are not the same, no matter how many times the two are confused in the media or in politics. Health care includes things that doctor cannot do much about.

Homicide affects your longevity but there is not much that doctors can do about it when they arrive on the scene after you have been shot through the heart, except fill out the paperwork. Rates of homicide, obesity and narcotics usage are higher here than in many other countries, reducing our longevity.

But in the things that medical care can do something about-- like cancer survival rates-- the United States ranks at or near the top in the world. But that can change if we give up the real benefits of a top medical system for the visions and rhetoric of politicians.

The "Preventive Care" Myth

The "Preventive Care" Myth
Charles Krauthammer
Friday, August 14, 2009

WASHINGTON -- In the 48 hours of June 15-16, President Obama lost the health care debate. First, a letter from the Congressional Budget Office to Sen. Edward Kennedy reported that his health committee's reform bill would add $1 trillion in debt over the next decade. Then the CBO reported that the other Senate bill, being written by the Finance Committee, would add $1.6 trillion. The central contradiction of Obamacare was fatally exposed: From his first address to Congress, Obama insisted on the dire need for restructuring the health care system because out-of-control costs were bankrupting the Treasury and wrecking the U.S. economy -- yet the Democrats' plans would make the problem worse.

Accordingly, Democrats have trotted out various tax proposals to close the gap. Obama's idea of limits on charitable and mortgage-interest deductions went nowhere. As did the House's income tax surcharge on millionaires. And Obama dare not tax employer-provided health insurance because of his campaign pledge of no middle-class tax hikes.

Desperation time. What do you do? Sprinkle fairy dust on every health care plan, and present your deus ex machina: prevention.

Free mammograms and diabetes tests and checkups for all, promise Democratic leaders Nancy Pelosi and Steny Hoyer, writing in USA Today. Prevention, they assure us, will not just make us healthier, it also "will save money."

Obama followed suit in his Tuesday New Hampshire town hall, touting prevention as amazingly dual-purpose: "It saves lives. It also saves money."

Reform proponents repeat this like a mantra. Because it seems so intuitive, it has become conventional wisdom. But like most conventional wisdom, it is wrong. Overall, preventive care increasesmedical costs.

This inconvenient truth comes, once again, from the CBO. In an Aug. 7 letter to Rep. Nathan Deal, CBO Director Doug Elmendorf writes: "Researchers who have examined the effects of preventive care generally find that the added costs of widespread use of preventive services tend to exceed the savings from averted illness."

How can that be? If you prevent somebody from getting a heart attack, aren't you necessarily saving money? The fallacy here is confusing the individual with society. For the individual, catching something early generally reduces later spending for that condition. But, explains Elmendorf, we don't know in advance which patients are going to develop costly illnesses. To avert one case, "it is usually necessary to provide preventive care to many patients, most of whom would not have suffered that illness anyway." And this costs society money that would not have been spent otherwise.

Think of it this way. Assume that a screening test for disease X costs $500 and finding it early averts $10,000 of costly treatment at a later stage. Are you saving money? Well, if one in 10 of those who are screened tests positive, society is saving $5,000. But if only one in 100 would get that disease, society is shelling out $40,000 more than it would without the preventive care.

That's a hypothetical case. What's the real-life actuality in the United States today? A study in the journal Circulation found that for cardiovascular diseases and diabetes, "if all the recommended prevention activities were applied with 100 percent success," the prevention would cost almost 10 times as much as the savings, increasing the country's total medical bill by 162 percent. Elmendorf additionally cites a definitive assessment in the New England Journal of Medicine that reviewed hundreds of studies on preventive care and found that more than 80 percent of preventive measuresadded to medical costs.

This doesn't mean we shouldn't be preventing illness. Of course we should. But in medicine, as in life, there is no free lunch. The idea that prevention is somehow intrinsically economically different from treatment -- that treatment increases costs and prevention lowers them -- is simply nonsense.

Prevention is a wondrous good, but in the aggregate it costs society money. Nothing wrong with that. That's the whole premise of medicine: Treating a heart attack or setting a broken leg also costs society. But we do it because it alleviates human suffering. Preventing a heart attack with statins or breast cancer with mammograms is costly. But we do it because it reduces human suffering.

However, prevention is not, as so widely advertised, healing on the cheap. It is not the magic bullet for health care costs.

You will hear some variation of that claim a hundred times in the coming health care debate. Whenever you do, remember: It's nonsense -- empirically demonstrable and CBO-certified.

How's the new car?

Can someone explain to my why I should pay for someone else to get a new car? And as far as stimulating the economy, it does no such thing. Sales made through this program are either frontloaded sales that would have occurred anyway, or an artificial reason to spend money that could have been spent elsewhere rather than true "stimulus". And if they purchasers did not have the $$ to make the purchase, now they have traded in a low-debt car for a high-debt car - deepening the debt cycle that has contributed to the poor economy in the first place.

Mostly I am just pissed that my tax dollars are going to help people buy new cars. Is that what taxes are for?

I am so glad to see people are not getting caught up in the "buy American" crazy - buy the best product at the best price. In this case, those options appear to be foreign...

Cash for Clunkers: Trade in American, Buy Foreign

The only part of the stimulus program that is working, the cash-for-clunkers program is, in reality, a subsidy to foreign car companies, proving that Barack Obama is the best president Japan ever had.

The Department of Transportation reports that the ten leading trade-ins are all American branded cars while six of the top ten new cars purchased - and four of the top five - are foreign. So the United States Senate is about to pass additional funds to subsidize the trade-in of American cars and the purchase of foreign cars.

DOT reports that the following are the ten top trade-ins, all American:

1. Ford Explorer
2. Ford F150 Pickup 2WD
3. Jeep Grand Cherokee 4 WD
4. Jeep Cherokee 4 WD
5. Dodge Caravan/Grand Caravan
6. Chevrolet Blazer 4 WD
7. Ford Explorer 2 WD
8. Ford F150 Pickup 4 WD
9. Chevrolet C1500 Pickup 2 WD
10. Ford Windstar FWD Van

And the top ten new car purchases, subsidized by the American taxpayer, are mainly foreign vehicles:

Top Ten New Car Purchases: Cash for Clunkers

1. Toyota Corolla
2. Ford Focus FWD
3. Honda Civic
4. Toyota Prius
5. Toyota Camry
6. Ford Escape FWD
7. Hyndai Elantra
8. Dodge Caliber
9. Honda Fit
10. Chevrolet Cobalt

It is a violation of the World Trade Organization rules to enact a public subsidy program and skew it toward only domestically produced products, so the Congress has no choice but to extend the program to all comers. No choice, that is, but to not spend the money in the first place.

Cash for Clunkers will do wonders for the Japanese economy, but its impact on the US job situation is problematic. This unintended consequence is a great illustration of what happens when the blunt tool of government subsidy is applied to the fine tuning of a free market economy. Government planners keep getting it wrong. That's why socialism is such a bad idea.

So Obama can boast of a great success in taking American cars off the road and replacing them with foreign cars. Great going!

How Much is That Clunker In the Window?

How Much is That Clunker In the Window?
Jonah Goldberg
Wednesday, August 05, 2009

Ce qu'on voit et ce qu'on ne voit pas. That may exhaust my French phrase quota for the year, but it's worth it. The saying is the title of an essay by 19th century French economist Frederic Bastiat and means "that which is seen, and that which is not seen."

Bastiat's essay is most famous for the "parable of the broken window," in which a young boy shatters a shopkeeper's window and, after some initial outrage, the villagers conclude that the rascal helped the local economy. Why?

Because if no one broke windows, window makers would be out of business, and if window makers were out of business, they wouldn't buy any more bread or shoes, hurting the bakers and cobblers. So the six francs the shopkeeper must spend for a new window is really a boon to the community.

The problem with this argument can be gleaned from the title of Bastiat's essay. By counting the money the shopkeeper spends to replace a perfectly good window (that which is seen), we ignore the money he might have spent on something else (that which is unseen). The shopkeeper might have instead dropped six francs on new shoes, a book or a bonus for his assistant. Those who celebrate the broken window as a generator of growth take "no account of that which is not seen."

Sorry for the long digression, but the parable of the broken window is worth keeping in mind, or perhaps even worth updating to the parable of the crushed clunker.

This parable is more convoluted, but the upshot is that Uncle Sam pays people to destroy their own cars as long as they use the money to buy a new, more expensive car.

As you've no doubt heard, the "cash for clunkers" program gives buyers up to $4,500 of taxpayer dollars toward the purchase of a new car if they trade in their old cars for vehicles with better gas mileage. The old cars, still roadworthy, are then destroyed just like the shopkeeper's window.

The thinking behind the program is that the car companies need a boost, Michigan needs a boost, the environment needs a boost (through lower emissions), and Americans need help too.

Unsaid, but just as relevant, is that the authors of the government's mammoth stimulus plan need some proof that something is being stimulated.

The program's $1 billion funding evaporated in days rather than months as consumers, most of whom had been waiting to trade in their clunkers anyway, lined up for free cash. Washington is now agog with its successful effort to give out free money.

That Washington is shocked by the news that Americans like getting free money shows how thick the Beltway bubble really is.

Like the drunk who only looks for his car keys where the light is good, Washington can only see the economic activity it has created, not the activity it has destroyed.

For starters, who says the smartest thing for people with working cars is to buy new ones? Personal debt is supposed to be a problem, so why not look at this as bribing consumers into taking out car loans they don't need? Even with the $4,500 subsidy, not all of these customers are going to be paying cash for their new cars. So they'll be swapping serviceable-but-paid-for cars for nicer cars that are owned by banks.

Besides, maybe some people would be smarter to buy a savings bond or max out their kid's college fund or -- here's a crazy thought -- buy health insurance. But instead they've been seduced into spending the equivalent of their six francs on a car they don't really need.

But, you might say, some buyers surely do need a new car. True. But if they needed a new car, they'd get one anyway, eventually. Indeed, they might already have gotten it, but rationally opted to wait for the program to kick in.

Or maybe they'd have needed to delay the purchase until next year, or buy a cheaper car, possibly even a used car, which will now become more difficult for poor people to find because we are taking all these cheap cars off the market.

But at least under these scenarios, they'd be spending their own money.

Under the government's program, tax dollars are being diverted to people with cheap cars so they can buy expensive ones. That's just really inefficient wealth distribution, not wealth creation. But government can see it, and that's all that counts.

Impossible Promises

Impossible Promises
John Stossel
Wednesday, August 05, 2009

I keep reading about health-care "reform," but I have yet to see anyone explain how the government can make it easier for more people to obtain medical services, control the already exploding cost of those services and not interfere with people's most intimate decisions.

You don't need to be a Ph.D. in economics to understand that government cannot do all three things. (Judging by what Paul Krugman writes, a Ph.D. may be an obstacle.)

The New York Times describes a key part of the House bill: "Lawmakers of both parties agree on the need to rein in private insurance companies by banning underwriting practices that have prevented millions of Americans from obtaining affordable insurance. Insurers would, for example, have to accept all applicants and could not charge higher premiums because of a person's medical history or current illness."

No more evil "cherry-picking." No more "discrimination against the sick. But that's not insurance. Insurance is the pooling of resources to cover the cost of a possible but by no means certain misfortune befalling a given individual. Government-subsidized coverage for people already sick is welfare. We can debate whether this is good, but let's discuss it honestly. Calling welfare "insurance" muddies thinking.

Such "reform" must increase the demand for medical services. That will lead to higher prices. Obama tells us that reform will lower costs. But how do you control costs while boosting demand?

The reformers make vague promises about covering the increased demand by cutting other costs. We should know by now that such promises aren't worth a wooden nickel. The savings never materialize.

Some of the savings are supposed to come from Medicare. The Times reports "Lawmakers also agree on proposals to squeeze hundreds of billions of dollars out of Medicare by reducing the growth of payments to hospitals and many other health care providers."

With the collapse of the socialist countries, we ought to understand that bureaucrats cannot competently set prices. When they pay too little, costs are covertly shifted to others, or services dry up. When they pay too much, scarce resources are diverted from other important uses and people must go without needed goods. Only markets can assure that people have reasonable access to resources according to each individual's priorities.

Assume Medicare reimbursements are cut. When retirees begin to feel the effects, AARP will scream bloody murder. The elderly vote in large numbers, and their powerful lobbyists will be listened to.

The government will then give up that strategy and turn to what the Reagan administration called "revenue enhancement": higher taxes on the "rich." When that fails, because there aren't enough rich to soak, the politicians will soak the middle class. When that fails, they will turn to more borrowing. The Fed will print more money, and we'll have more inflation. Everyone will be poorer.

The Times story adds: "They are committed to rewarding high-quality care, by paying for the value, rather than the volume, of [Medicare] services."

Value to whom? When someone buys a service in the market, that indicates he values it more than what he gives up for it. But when the taxpayers subsidize the buyer, the link between benefit and cost is broken. Market discipline disappears.

Listening to the health-care debate, I hear Republicans and Democrats saying it's wrong to deny anyone anything. That head-in-the-sand attitude is why Medicare has a $36-trillion unfunded liability. It's not sustainable -- and they know it.

They've given us a system that now can be saved only if bureaucrats limit coverage by second-guessing retirees' decisions. Government will decide which Medicare services have value and which do not. Retirees may have a different opinion.

One may be willing to give up the last year of life if he's in pain and has little hope for recovery. Another may want to fight to the end. But when taxpayers pay, the state will make one choice for all retirees.

Now, to reduce the financial burden of the medical system, Obama proposes a plan that inevitably will extend the second-guessing to the rest of us. So much for his promise not to interfere with our medical decisions.