Critical Condition

Whac-a-Mole with Health-Care Costs

For two views on why, in the age of the Internet, it’s very difficult for governments to lower health-care costs through blunt rationing, see Megan McArdle and my colleague Dr. David Gratzer.


The economist’s perspective:

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.

The physician’s perspective:

As a psychiatrist, I’ll break the bad news gently: Medicare cuts are like Santa Claus and his flying reindeers – often talked about, never actually seen.

The federal government has long fought to control Medicare spending. Today’s Medicare program costs taxpayers twice what it did 10 years ago. But whenever lawmakers from either party agree to savings, Congress reverses course, fearing cuts will anger voters on Election Day.

Without real market incentives, health-care bureaucrats will just wind up playing whac-a-mole with health-care costs.