Practical Philosophy, Again

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I continue to find myself puzzled by John Holbo.  This statement makes no sense to me:

In all seriousness: I realize I have been arguing, for several posts now, at an unsatisfactorily high level of abstraction. (I have seized on the strange case of McArdle because she started it, insisting on talking only at the philosophical level, thereby giving me an excuse to continue in that vein.) But there is a point. Philosophically, there just isn't a case to be made against reform unless it's this simple one: if you don't have any money, you shouldn't be entitled to any medicine. McArdle is very indignant when people accuse her of indifference to the fate of the poor, but - honestly - if it isn't that, then it's nothing. At the philosophical level.

This echoes his earlier post.  John Holbo, who is, I believe, a professor of philosophy, seems to believe that you can develop a philosophical opinion on a policy issue without reference to particulars. 

Imagine a universe consisting entirely of two identical blue spheres.  Is there a right to national health care in that universe?  Please show your work.

Obviously you need a very large number of specific priors before you can even think about developing a "philosophical" opinion on health care.  Of course, we do need to operate at some level of abstraction. But Holbo's response to me consists of abstracting away all of the potential problems with national health care, and then demanding to know why I don't support it--I mean, apart from the fact that if millions of poor people die, there will be more room on the subway for me.  Libertarians think like that, you know.

So I'm not sure that this conversation is likely to be productive, since at least one side of it has decided to substitute sarcasm for engagement.  But let's see if we can't tone down the nastiness a little, and try to have a reasonable discussion. 

I'm afraid, however, that any discussion will include our assessment of the likely outcomes of our policy decisions.  It's not enough to defend the principles of communism if what you get in practice is a nasty, murderous dictatorship every time.

Some philosophic principles:

  • We have some obligations to future generations, if not necessarily future individuals within those generations.  Extreme thought experiment to clarify the principle:  we cannot strip mine the earth and leave them to die.
  • People have no obligation to perform labor for others.  I may not force a surgeon to save my mother at gunpoint. (To be sure, I might.  But society would justly punish me for doing so.)
  • States have an absolute right to tax their citizens to provide public goods, i.e. goods that are broadly beneficial but non-excludable.  They have a right to enact other laws, such as public health rules, to achieve similar ends.  Both rights are constrained by the basic rights of their citizens.  You may perhaps quarantine Typhoid Mary.  You may not shoot her.
  • Societies have a right to organize themselves to improve the justice of their income distribution.  That organization may include taxation. It may also include property rights, or outlawing behavior like blackmail.
  • Property rights did not spring full-blown from the head of Zeus into a natural right.  They're contingent, evolving arrangements that happen to work really, really well for encouraging many sorts of beneficial economic activity.
  • Just income distribution is not just a matter of relative position, but also of how the income is acquired, and absolute need.  I do not have any moral claim whatsoever on a dime of Warren Buffett's fortune, because I have a perfectly adequate lifestyle.  I still wouldn't have any claim on his fortune if he suddenly got 100 times richer, provided that he acquired that money through means that we regard as licit.
  • Societies should strive to organize themselves so that everyone in the society can, if they desire, acquire the means to provide their basic needs.
  • There is no per-se right to health care, since "health care" is not a thing, but a shifting collection of goods and services with amorphous boundaries.  Health care is a subset of the modern "basic needs" package, and therefore falls under broader distributional justice claims.  No matter what your distributional justice intuitions are, it would be perfectly acceptable, if impractical, to give very sick people the cash required to treat their cancer, and let them blow it on a trip around the world.
  • No one should have to work more hours for the state than for themselves.  This should inform our approach to taxation.
  • Taxation should strive to equalize the personal cost of taxation among all members of society, not the dollar amount or the percentage of income.  That is, it is appropriate for Warren Buffet to pay a higher percentage of his income in taxes for shared public goods than I do, because the personal cost of taking 25% of his income is much lower than the personal cost of taking 25% of mine.
  • An equal distribution of misery is not a good social goal.  When policies to redistribute goods or money result in fewer or poorer quality goods being available, that cost should limit the redistributive impulse.
  • If people will not comply with your regime, and their non-compliance may have unpleasant results for themselves or others, this is an important side constraint.
  • The government should not interfere in voluntary transactions unless there are significant direct externalities.  The fact that you get stressed or unhappy thinking about something does not qualify as a direct negative externality.  Nor does the cultural miasma that emanates from these transactions.
  • The government certainly should not forbid anyone to purchase something on the grounds that other people are not able to purchase that thing.

I am sure that John Holbo would quarrel with some of these principles.  But on the broad package that he thinks leads to national health care, we're probably in rough agreement.

Yet I do not think that they lead to national health care!  How can this be?

Mr. Holbo's answer is that I am an evil idiot who hates poor people, doesn't understand how markets and governments really work, and is philosophically incoherent.  My more boring answer is that we have different assessments of how the world to which we would like to apply these philosophical principles works.

For starters, Holbo has a very simplistic view of rationing--or perhaps, the objection to rationing that most libertarians have.  Either it is Britain in World War II, and the government has forbidden you to purchase more than 6 bandaids, or we don't have rationing. 

This is not true either philosophically, or technically.  That last principle I articulated is only one of the possible objections to rationing--one that I take it Mr. Holbo and I share, unless he is simply unwilling to come out and say he favors letting rich people die if poor people can't get a given treatment.  I might point out that rationing interferes with voluntary transactions, and that if the government wants to redistribute things, it should damn well raise the taxes and buy them.  I could question the justice of whatever regime you come up with.  These are all actual problems with any of the proposals that will be passed.

But even after you get beyond that, the more "practical" considerations remain.  If the government crowds out private health insurance for many people--a result that a number of analysts on both right and left think (hope) is likely, then the government rationing regime becomes actual rationing for the majority of the population.  There is also the fact that private insurers often base their services around what the government does, setting their rates as a percentage of Medicare rates, using Medicare to define what standard medical practice is, and so forth.

The core problem with rationing, for most libertarians, is that even if you think that the government's interference is just--and hey, in the case of World War II, I am probably willing to listen--that it has other effects we recognize as bad.  Black markets breed crime.  Government rules are necessarily extremely broad and will make some people worse off.  But the core issue is that when you disable the price signal, you usually severely degrade the production and distribution of the good in question.  I hate to drag out Hayek again, but that old chestnut is still the single best exposition of why you might choose not to ration, set price floors/ceilings, or otherwise disable the price mechanism, even if you would like to see some more just distribution of the goods in question:

Assume that somewhere in the world a new opportunity for the use of some raw material, say, tin, has arisen, or that one of the sources of supply of tin has been eliminated. It does not matter for our purpose--and it is very significant that it does not matter--which of these two causes has made tin more scarce. All that the users of tin need to know is that some of the tin they used to consume is now more profitably employed elsewhere and that, in consequence, they must economize tin. There is no need for the great majority of them even to know where the more urgent need has arisen, or in favor of what other needs they ought to husband the supply. If only some of them know directly of the new demand, and switch resources over to it, and if the people who are aware of the new gap thus created in turn fill it from still other sources, the effect will rapidly spread throughout the whole economic system and influence not only all the uses of tin but also those of its substitutes and the substitutes of these substitutes, the supply of all the things made of tin, and their substitutes, and so on; and all his without the great majority of those instrumental in bringing about these substitutions knowing anything at all about the original cause of these changes. The whole acts as one market, not because any of its members survey the whole field, but because their limited individual fields of vision sufficiently overlap so that through many intermediaries the relevant information is communicated to all. The mere fact that there is one price for any commodity--or rather that local prices are connected in a manner determined by the cost of transport, etc.--brings about the solution which (it is just conceptually possible) might have been arrived at by one single mind possessing all the information which is in fact dispersed among all the people involved in the process.

Mechanisms to distribute tin without prices have been tried, and found wanting.  So have mechanisms to distribute practically every other good you can think of, from housing to hotdogs.  Rent control distorts the housing market and discourages landlords from building or improving their housing stock.  Price controls on bread result in shortages, and often distort the non-controlled sectors of the market. Fuel subsidies result in your precious tax dollars being diverted to Columbian roadside vendors who will siphon the gas out of your tank at great danger to themselves and pay something closer to market rates for it.  Etc.

I mean, fine, let's not call it rationing.  Let's call it "Fred".  You'll still end up with a crappy, overcrowded housing stock and shortages of basic goods.  What philosophical principal favors this?

Holbo says I'm oscillating between endorsing rationing, and abhoring it.  As it happens, I'm not "oscillating" between anything.  For one thing, I'm not particularly worried about IMAC denying treatments to people, though I think it's perfectly rational that seniors are, because frankly right now they get a really great deal.

There are two entirely separate questions here.  The first is that we would like everyone to have all the health care they could ever possibly consume, but we can't.  This is true of other goods, like food and housing.  I find the process of figuring out what to produce, or provide, fascinating, which is why I am a business journalist. It is especially important in medicine because of the somewhat unique market.   Whether the government is paying, or private companies are, there will continue to be core tensions between what the doctors want, and what the people writing the checks will approve.  Right now, Medicare and Medicaid handle these problems somewhat differently--they simply slash the reimbursements until some providers refuse to take their patients.  But if the government comes to dominate health care payment, that problem will become more explicit.  One way or another, we're going to have to confront the fact that we can't all have everything we want--and that not having everything we want, in this case, probably includes suffering and earlier death for at least some people.

The second problem, which makes a less stirring Sunday supplement article, is that this allocative process can get badly screwed up when the government gets involved.  To take one small example:  we have a comprehensive national health care plan for seniors.  Yet we have a shortage of geriatricians, the one specialty that you would think would be booming.  Why?  Because Medicare sets a single price for the services of geriatricians, and it is low.  Since the field is not particularly enticing (though arguably it really should be, since geriatricians have extremely high job satisfaction compared to many more popular specialties), very few people go into it.  It's one of relatively few specialties that consistently has most of its slots and fellowships unfilled.

I've already discussed what I think will happen to new medical technology and prescription drugs under a more comprehensive government system.  For the same reason:  prices are very useful things.  And contra the liberals who keep saying I am maintaining this belief in the face of overwhelming evidence, we in fact have overwhelming evidence for two things:

  1. National health care systems control the prices of inputs, especially the prices of inputs produced by corporations:  medical technology and drugs.
  2. Price controls lead to shortages and other suboptimal results that decrease the general welfare, even though they may very well benefit some specific people.

People talking about how Europe is not paying its "fair share" of drug development costs have the problem wrong.  Drug companies charge what the market will bear.  Drugs wouldn't be any cheaper here if Europe dropped its price controls.  What we would have is more drugs.  But this is a hidden cost.  And governments almost always prefer hidden costs to explicit ones.  It's just electoral logic.

I understand that progressives object to price rationing because it implies that people who don't have the money aren't worth saving.  But the number of people who actually don't get treatment they would benefit from because of their insurance status is small, and there are more direct ways to deal with this problem.  You don't gut rehab an entire industry because 2% of the population can't afford its products.  You figure out a way to help them buy the products.

Let me close with two thoughts. 

John Holbo challenged me in a former post to say what I would think about the various proposals, or a putative single payer system, if it worked just the way progressives think it will.  I thought I had, but I'll do it again.  The answer is that I would be against it because I don't believe in taking money from the rich to subsidize the middle class--I don't think that people whose basic needs are taken care of have any distributional claim on people with more money, even though it is perfectly fair to ask the wealthy to pay more for goods that are broadly publicly enjoyed. 

If it were up to me, I'd combine a broad income subsidy like the EITC with some sort of reinsurance pool for high-risk patients, then I'd probably force everyone to buy some sort of catastrophic medical coverage on the grounds that otherwise, people with adequate income but few assets will be too tempted to freeload off the generosity of the public.  But anything that involved price controls I would shoot down faster than a duck at an NRA convention.

That said, if we end up with some sort of single payer system, and I turn out to be totally wrong and there's no issue with innovation and quality stays high, I will be happy.  I will still object, in principle, to middle class subsidies.  But as an issue for me, it will recede to somewhere between public highways, and the words "under God" in the pledge of allegiance.

Now, having embraced Holbo's thought experiment, and hopefully illuminating the principles by which I am evaluating future health care plans, I'd hope he'd return the favor.  I've asked once before, but Holbo has so far ignored the question in favor of long disquisitions on what he thinks rationing is.  So here goes again:

I've answered your thought experiment, saying what I would do if everything went just as you think and hope it will.  Now please turn the question around and try the same thought experiment.  What if everything goes the way I think it will?  What if converting the United States to a single payer system causes the pace of medical innovation to slow to a crawl?  People who have diseases for which there are not now good therapies lose all hope, because there is virtually no pharma or medtech industry which might invent something to save their life.  Lifespans stop lengthening.  Pharma and medtech turn into fat, soft, government suppliers, using the regulatory power of the healthcare agencies to keep out incumbents.  There are periodic shortages of various treatments because the government has a budget problem, or has gotten the prices wrong--and knowing us, the whole system comes with a "buy American" mandate.

Is that a tradeoff you would make?  Save the few thousand who might be kept alive by healthcare they now can't afford, and take the possibility of new treatments from the millions who might be cured, or at least have their conditions improved?

It's no good dismissing it on the grounds that it's unlikely, because you can't think it any more unlikely than I think the notion of a healthcare reform that is all upside, no downside.

I can see the arguments for both sides.  There's no right answer, and certainly no happy one.  I'm well aware that there are real people who may die because of my preferences.  And other real people who may die because of yours.  None of them are any less worthy of life than any other.

That's why I found the First Things article interesting:  because it faced up to the fact that on the margin, any choice we make about healthcare has terrible implications.  When it comes to healthcare, we cannot help but play God.  And unlike Him, we are cursed with imperfect knowledge.  All we have is our intuitions, our observations of the world, and our best guess about the future.


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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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