Debating the issue: look at tactics for insight

Shadowfax thinks that Passing along the cost of health care to consumers won’t save money. The first clue that the argument is weak is that the argument starts by setting up the straw man army.

Republican budget guru Paul Ryan had a plan to end Medicare as we know it to be replaced with a series of less-generous vouchers. The House of Representatives has voted to implement this plan. The political side of this has been written about a lot, and I am not going to rehash what has been better covered elsewhere. I do want to address what seems to be a persistent fallacy or delusion which is held to a near-religious level by many free-market conservatives: The idea that market economics can have an impact on health care costs.

This concept has underpinned every major Republican health care plan since, well, since Mitt Romney’s proto-ObamaCare reforms. The idea is that consumers, when they have “skin in the game,” and when they are empowered and incentivized to see that their money is spent efficiently and only as necessary, will change their health care consumption behavior in a way which will force providers to compete on cost and quality and thus drive down costs. This is wrong, mistaken, misguided and inaccurate.

Note the “as we know it” and “near-religious” and “not going to rehash” as well as the strong, judgmental conclusion.

He then cites three points to support his view. One is the idea that healthcare is generally not a refuseable or elective service. A second is that there is an asymmetry of information. The third is that purchasing power is concentrated. Where are the problems. Take, for a start, the fundamental fact.

The driver of cost is the small fraction of people who have serious medical conditions. It’s the old 80/20 rule writ large.

What this means is that most people do not have such conditions. That means that their health expenses are indeed subject to decision among options. It illustrates that the underlying issue is not health care itself but rather health insurance. How are those who do suffer a “serious medical condition” pay for their needed services? That distinction, between health care and insurance is the basic distortion in the argument presented.

Insurance and normal health care needs are indeed matters where personal choice and market forces can make a great difference. The Medicare part D and Health Savings Accounts show how market forces can make a difference in health care as an example. Arguments that “This is wrong, mistaken, misguided and inaccurate” need to address these counter examples and not just pretend they do not exist or change the subject.

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