The Perils of Health Care Cost Control

For months now, the libertarians have been saying that the government does not have the political will to actually control health care osts.  And people who support the proposed reforms have been telling us that we're blind ideologues who simply cannot allow ourselves to believe that the government can do anything right.  Well, Exhibit A.

There are three classes of treatment that a future IMAC, or whatever we end up calling it, can cut.  There are things that eventually prove to be useless or harmful.  There are things that are ambiguous, and affect only a small number of people.  And there are things that are ambiguous, and affect a large number of people.


We'll cut the former, but since physicians usually end up cutting those in time, this is not where the biggest savings comes from.  The biggest savings comes from doing fewer knee reconstructions, fewer open heart surgeries, fewer screening tests.  The problem is, any line you draw will be somewhat arbitrary--how do you weigh false positives who will suffer somewhat, against false negatives who are very likely to die?  And I believe we are intuitively better at grasping the latter problem than the former, which biases us, and our government, towards action.

The problem with diseases that affect only a small number of people is that there isn't really much savings in denying a treatment, and the payoff is high in publicity and voter goodwill.  The problem with diseases that affect a large number of people is that then huge numbers of voters can imagine themselves dying for want of some procedure, and the political cost to denying it is huge.  Either way, I don't think our nation's politicians have the willpower to resist those incentives.  And so far, I'm right.

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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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