Friday, March 11, 2005

Healthcare Reform

Some people suggest that Social Security should not be reformed until Medicare is fixed. Medicare, after all, is slated to become a much bigger cost than Social Security. I don't think much of this position because perfection should not be the enemy of the good, and because health care reform is genuinely much harder than retirement reform.

The problem with social security is very simple: rising life expectancy and lower fertility is changing the ratio of people paying into the system vs. people taking out of the system. Since the government operates on a cash accounting basis, this will swing the fiscal budget into deficit. If the government used more standard accounting, the fiscal budget would already be deep in the red, and it would be interesting to see if that would make the debate more rational (since the facts would be easier to understand). At any rate the options are pretty clear, you can cut benefits, raise taxes, borrow, or cut other government spending, or some combination of all 4. In my humble opinion, the best option by far is to cut benefits by raising the retirement age. Since people are healthier than before, and the work they do is less physically demanding, they should be expected to work longer. [Note: I believe the AARP has come out firmly against raising the retirement age by even 1 year.]

Healthcare reform is much more complicated because people are fundamentally extremely addled when it comes to thinking about taking care of themselves and rationing healthcare. If healthcare in the US is further socialized, it will reduce the incentive to develop new treatments and ultimately acts as a transfer of healthcare from future generations to current old people. This is not obviously equitable to me.

Let me give you an example: my wife works in an ER in South Boston and a good percentage of her patients are junk patients. A woman came in at 3 in the morning with a toothache. It turns out that she never cleans her teeth which means that her mouth is a mess of abscesses. A guy walks in at 5 in the morning with a cold. Has he been to CVS and bought DayQuil? No. Has he taken any over-the-counter medication to treat his symptoms? No. So my wife tells him to buy some asprin and leave.

The point is that while the two individuals described above are poor, they could certainly afford the $5 or less it takes to buy a toothbrush, toothpaste, and packet of panadol. Going to a crowded ER and using up a doctor's time to have this sort of nonsense treated is an extremely high cost way to deliver healthcare. But since ERs are required to treat anyone who walks in for free, they have to spend time telling people to clean their teeth and take DayQuil. There is a significant population out there that simply takes no responsibility for their own health. The bad consequences of this are mostly born by them (rotting teeth, spending 8 hours in a waiting room before being given an asprin), but some of them are born by the medical system as well. The issue is that there really is no way to deny treatment to folks like these that sits well with everybody. Doctors are aghast at saying no to anyone because their business is to treat people who are sick. I don't think anyone doesn't want poor people to have access to good healthcare. But people really need to clean their own teeth, and go to CVS when they get a cold. Spend a little time trying to crack this problem and Social Security reform starts looking more and more attractive.

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