A lot of us conservatives in the health-care debate have the sense that when the liberals talk about containing costs they are really talking about expanding the reach of government into the system, and the talk of costs is just a cover. But I think there is actually something deeper than that going on.
The health-care debate reveals an underlying difference between most liberals and most conservatives about the significance and consequences of the fact that modern life is very complicated. Democratic leaders and many health experts on the left look to centralized decision-making as a means of improving efficiency and so reducing costs. Implicitly, and in many cases also explicitly, they believe that the reason our health care system is inefficient is that it is disorganized, and that the reason it is disorganized is that no one has taken up the task of organizing it. If we study the patterns of efficiency and inefficiency that emerge from current practice, discern those that work best, and then apply those patterns as rules onto practice, we will vastly improve the efficiency of American health care, they suggest. They point to the now-famous Dartmouth studies of regional disparities in health care provision and outcomes — which are certainly wonderful examples of social science at its best — and take the complicated picture that emerges from those studies to show that we need to centralize coverage decisions and run the system from one place so that best practices are universalized. A panel of health-care professionals and statistics experts need to set rules for everyone to follow.
To me, this all looks like a demonstration of how much of what you conclude about public policy from social science really depends on the implicit assumptions you bring to the table about human behavior and human fallibility. When I look at the immensely complicated picture of American health-care decision-making that emerges from those Dartmouth studies, I don’t think “we need to centralize this,” I think “this can’t possibly be centralized.” I take it not as an indictment of local variability but as proof of the limits of imposed efficiency. Those limits, if we take them seriously, argue for rules that set general incentives and then give individual players the freedom to find their own ways of responding to them, because we cannot know in advance the peculiar pressures that will drive behaviors in different parts of the system, and we cannot hope to eliminate those pressures. There has to be room for local and individual decision makers to find what works for them. That certainly means that the system won’t be optimized for efficiency, but optimal efficiency is not in fact the alternative to this kind of messy market approach. The alternative is artificial shortages.
The kind of fallacy of weak induction you see in the panel of experts model (i.e. the error of taking patterns of practice to add up to ideal “best practices”) leads us to ignore the reasons why certain practices cost less or work better in some places or are more popular with doctors and patients in some circumstances. The efficient practices in those Dartmouth studies emerge from the same activity as the inefficient practices: trial and error by doctors and nurses and hospitals trying to do their best for their patients within certain rules. Making information available about what works and what doesn’t would allow people to learn and experiment themselves to find what works in their circumstances, but turning the efficient practices into mandatory rules leaves no one free to experiment, and leaves the system less capable of meeting the needs it exists to serve — which are different in different times and places and are always changing. When the system is left incapable of adjusting, it creates shortages, which leave people waiting for care. That’s how the Soviet Union, notwithstanding its control of the breadbasket of Europe, with some of the most fertile land in the world, suffered food shortages. It’s how Canada, with a very developed economy and a highly educated population, suffers medical-care shortages.
This is different from “rationing.” Rationing is what this model is supposed to achieve — distributing a scarce good given limited resources to pay for it. Government rationing of medicine has its own very serious problems in a free society of course, but it is the unintended shortages that come along with futile attempts at universal rationing that should really worry us. They are the result of an excessive faith in our knowledge of a complex system, and in our ability to impose order on society.
If you have that faith, you want to maximize the knowledge and control of the system in the hands of disinterested experts who can impose order and best practices to avoid terrible and costly inefficiency. If you lack that faith, you want a functional market that makes information about costs and values available and exposes people to the consequences of their decisions so each can make a reasonably sensible choice, while caring for those least able to care for themselves.
And there, in a nutshell, is our health-care debate. About the only thing both sides can agree about is that the system we have makes very little sense.