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Under socialised medicine, tough rationing choices are inevitable

As FA Hayek pointed out many years ago in his masterpiece, The Constitution of Liberty, if healthcare is paid for out of general taxation and delivered free at the point of delivery, then in a world of scarce resources – and healthcare is always constrained at any time by the supply of doctors, drugs, etc – then such care must be rationed by some form of bureaucratic/political rule. As Dr Hayek presciently warned at the time (1950s), any such rationing will put doctors, politicians or other people in power in the position of a god, in having the decision about who gets treatment for what, or whether life A is more “worth saving” than life B. For example, one such utiltarian consideration might be that it is more “cost-efficient” to save the life of a young kid with his whole life ahead than an 90-year-old. That is what happens when socialised medicine is established. It transfers key powers to people in ways that raise disturbing issues of accountability and control.

Now a socialist might respond that it is still better for health care to be rationed by some rule they consider to be “fair” than by the supposed lottery of the market, although in fact, as I would respond, there is, due to the benefits of competition and entrepreneurship, far greater chance that all but the poorest will get better healthcare under a genuine free market in health than under the system of centralised, state-provided healthcare. Also, if the possession of a large fortune is partly a matter of luck, then luck, being blind, cannot be either just or unjust. It just is. Some folk have access to better dentists or whatever because they are richer. That may annoy someone who cannot afford the whitest teeth, but that is not proof of unfairness, as such. To prove it, one would have to construct an ethical theory that says that humans have an apriori claim on their fellows to receive a certain amount of healthcare/watever as a “right”. But such “rights” are abuses of the term: one cannot have a right to X that requires that another be forced to provide X, such as forcing folk to train as doctors to serve the sick, and so on.

I was led to think about the latest twist in the US healthcare debate by reading an article by the US writer, Nat Hentoff. He totally bypasses the issue of how to deal with scarcity under socialism in ways that are fair. He rightly worries about the sort of brutal choices that state-rationed healthcare provides, but then does not see that any system of state-run, and socialised medicine, makes such issues of rationing unavoidable. Rationing by such tests of age, “need” and so forth is a feature of socialised medicine, not a bug.

(H/T: The Corner).

17 comments to Under socialised medicine, tough rationing choices are inevitable

  • el windy

    I’m not convinced as to whether “socialists” nor “free marketeers” have anything approaching a sensible solution. This whole debate has taken on the aura of the “pro-abortion” v. “anti-abortion” lobbies – both fanatical and both totally ignoring the poor bastards caught in the middle! I’ve always found Ivan Illich’s prophetic book “Disabling Professions” to apply equally to both the American as well as the European Health systems. All doctors nowadays like to see themselves as “God” because they’ve invested so much in their studies, etc..etc…

  • Johnathan Pearce

    el windy, no dice. There is a profound and important debate that needs to be had, and won, by those who want to get government out of our lives. And state involvement in healthcare is a huge issue because nationalised healthcare is frequently used as an excuse by various meddlers to control how we choose to live our lives, such as over issues like tobacco, diet, drink, etc.

    In the UK, as recent comments have suggested, for example, any attempt to question the underlying assumptions of state-provided healthcare provoke howls of rage and absuse, of a kind that suggests we are dealing, not with a rational set of views, but something akin to religious fundamentalism.

    So it is worth while, in my view, to keep hammering away at the presumed morality of socialised medicine, to keep questioning the whole nonsense of “healthcare rights”. There are no such things. Even many proponents of private medical care seem to implicitly accept that “everyone has a right to `decent’ healthcare, etc” but, in reality, delivering such a right is impossible. The entire GDP of the known universe might prove insufficient to meet such “rights”.

  • TomC

    This book is a vital tool in favour of your argument Johnathan. There is some evidence that “pro bono” cultural attitudes among doctors and surgeons of the pre NHS era did indeed make it possible for a good proportion of the poorest to obtain good health care in spite of the ubiquitous “howls of rage and abuse” from the “blank-out” rudderless statists.

  • Laird

    Proponents of socialized heakthcare (or socialized anything, for that matter) generally fail to understand, and always fail to acknowledge, that pricing sends important signals to the market which disappear when that market is distorted by the government. An important part of that is, as Johnathan points out, the allocation of axiomatically scarce resources. If we don’t have a market mechanism to allocate resources than something else must necessarily serve in its place. That “something” is, must be, political in nature. The very best you can hope for is rationing on a relatively objective basis, but rationing it must be. There is absolutely no alternative.

    Martin Feldstein makes this point explicitly in an editorial in today’s Wall Street Journal. This is a theme to which we in the US must continually return in fighting the government takeover of health care. People fear “rationing”, and rightly so. We must use that word at every opportunity.

    Somewhere, someone (individual, board, commission, whatever) will have make these rationing decisions. Why would we trust anyone who wants such power to actually possess it?

  • Sam Duncan

    It seems the current fashion in the US debate is for opponents of ObamaCare to call for calm from their own side and to talk down the prospect of the so-called “death panels”. Brits have chimed in with the argument that we have the most socialized system in the world, and we don’t have death panels.

    Oh, no?

    Mark Steyn has a good article at NRO pointing out that it doesn’t matter what you call them (and nobody with half an ear for public opinion would call them that), such bodies are inevitable under a state-run system. All the talk in the UK a couple of years ago was of rationing, “the postcode lottery” and rulings over who could receive what care and medicine. (Of course, now that Daniel Hannan has joined the debate it’s a national treasure, but that’s another story.) Who makes these rulings? Call them NICE, LEAs, or whatever you like, but they’re death panels. If the market doesn’t decide how scarce resources are allocated, somebody has to. And it won’t be the patient.

  • Just from memory, didn’t the first winner of the first ever British Big Brother very decently give his winnings to a Downs Syndrome girl who had been refused a heart/lung operation on the NHS, so that she could go to America and have the operation there? (She has died since, but had a few more years of life thanks to the operation.)

    If I’ve remembered that right, you can see why Sarah Palin gets nervous. But as you say, Jonathan, such rationing is unavoidable.

    Sorry, haven’t got time to google for links

  • llamas

    Maybe my memory is rusty, but isn’t there a calculus that operates within the NHS which decides whether or not a given treatment will be funded or not for a given patient? Something about £££ versus Quality-Adjusted Life Years? If the £££ per QALY is too high – no treatment?

    Somebody, somewhere, formulates that calculus. I doubt it’s a single person – it’s a committee, I’m sure.

    Now, what should we call them? They decide (effectively) how long patients will live. IOW, they decide when patients will die.

    “Death Panel” is not the least-descriptive name I could come up with. It describes what they are (a panel) and what they deal in (death, and the time of its coming).

    You could see where Governor Palin might pick that as a good working title for the concept she is trying to describe.

    llater,

    llamas

  • Brad

    All people need understand that the price system is a rationing system as well. The market is a constant process of matching needs and wants with resources. It is likely impossible to add up all the good and bad and come to a net good or bad under one system or another. The question should be which one uses force and which one doesn’t. Which one is a constant, consistent system of free choice and which one isn’t.

    The “right” to anything, with the exception of air and water, originates not by simply existing or stumbling upon a need or a want – it is part and parcel of the process of living and behaving. If everyone is entitled regardless of prior choices and behaviors, then you will have nothing but consumers and no producers. When this begins to become reality, it is part of the motivation behind the slavery command economies eventually resort to over and over and over again.

    Most libertarian-esque sorts rightly call social programs ponzi schemes. Thus far the consumers of such programs have lagged behind the producers. That is going to change very soon, and likely invert so that there are more entitlee/consumers than there are producers. And instead of admiting to the slight of hand and undoing the system, it is endeavoring to be begin the final process to “hardline-ism”.

    What peeves me is how there is decades of sound philosophical/economic arguments such socialization and yet the left MSM and the White House dismiss it as “rowdyism” and “misinformation”.

    I am afraid if these people proceed to ram this through it is going to set off a firestorm in the US. The way things are situated right now I don’t see the outcome, whatever it is, is going to be a boon for liberty. The day will be won by hardliners of the left or right when the fire dies down.

  • Brad

    Brad, you are right to say “All people need understand that the price system is a rationing system as well”. But I think you forget that the market place usually tries to innovate and to bring the price down, since this leads to greater profit. Government fiat does neither.

    I am old enough to remember the first commerical GUI computer. It was Apple’s LISA, and it cost IIRC, about $10,000. What would have happened if the government told us that information (like good health) belongs to everyone, and so Apple should be subsidized to make the LISA “free” as the point of sale?

    Well, I think we would still have LISA, and it would still cost $10,000, or more. But it would still be (as we now know) a very clunky slow computer, not nearly good enough to get the internet running. It was the market that produced the modern laptop — faster, smaller, and cheaper in a true sense.

    The same is true of health care. Make it free? It’ll never be cheap, and we will never see a cure for cancer.

  • Dom

    I have no idea why that last comment came out as “BRAD”. It was from me, Dom.

  • Laird

    “the price system is a rationing system as well”

    Not exactly true, Brad. Both are allocation systems, to be sure, but the term “rationing” is typically used to refer to the distribution of resources by political means. Aside from its inherent unfairness (political actors will always find ways to “game the system”), rationing loses the feedback loop provided by a market system. As prices rise, a market system automatically encourages thrift and the search for alternatives while simultaneously stimulating an increase in supply; falling prices squeeze out excess capacity. None of that happens with rationing; all you ever get is shortages (and generally lower quality). That’s true whether the commodity is butter or health care.

  • Brad (the first one)

    I agree innovations occur under a free market. There have been innovations under command economies too. Some would assert that without social transfer we wouldn’t have computers as we know them, or the internet itself (NASA and military communications respectively).

    It stands that command economies coerce and free economies do not. Command economies tend to attract self interested thugs who take what they please while free markets are filled with self interested people who must meet consumer demands.

    Command economies live and die by the choices of a few, free markets is the culmination of every last person’s behavior and the value systems native to them. Debates rage as to what will produce a better outcome. And both might be right at different times, over certain ranges of time. But one uses force and the other doesn’t.

    I believe in the long run forced transfer breaks the continuum of behaviors turned into production turned into other behaviors turned into consumption and round and round it goes. Forced transfer, in the long run, leads to economic misallocations and a population of people disconnected from real equity as their behaviors (and the values behind them) don’t materialize into anything that is theirs. In the long run, State intervention, regardless of the founding tenets that created the State, turns into a function that benefits the few and the connected and the rest are middle to low level slaves/serfs.

    I’d rather have a lifestyle that equates to the 1850′s and be free and be the possessor of my life and my labor, than live in a utilitarian society filled with meaningless advancements. I make no concrete assertions about what a free market economy will bring about. I personally believe that under a free market some things would be more advanced and others less so. But people would be free – completely free. Without pure economic freedom, one is just a degree a slave, mentally and physically. And, again, when the long run misallocations come home to roost, the proportion of slavery grows.

    In the US we have seen taxation of the average middle class person expand. At the same time the accrual basis debt has skyrocketed so that my wife and I are saddled with roughly a $500,000 portion of this accrual basis debt while currently paying 45% of our income in taxes (with more forced payments via regulation that likely is another 2-3%). So we are half slaves as is, with a huge estimate of how much more our taxes would have to go up to meet the unfunded entitlements as defined so far. And the slavery grows as more is extracted and choices are swept away with whatever scraps are left to us.

    Redundant as it is, I would rather have less than I have now (in name only) because I “owe” so much more than my current net worth is. What has been left to me by the Masters is confiscatable at any time. I own nothing. I am allowed to lease my house and my clothes and my car. I have no real equity. My future labor is already liened upon for well over 50%. And now the talk is equalizing even more than we have so far. I would rather have less than I do in theory if I know that it is MINE. I would rather have a system of freedom and self possession that is inferior to a system that has an artificial abundance for a brief period and nothing of consequence to show for it that is mine. Essentially, I would rather have 90% of the short term optimal that a command economy MIGHT produce with a chunk that is outright mine than to have the 100% optimal for a short period and nothing beyond that.

  • Brad

    I am not trying to be a semantical trixter here with the use of the term rationing.

    Rationing is typically used during times of war or when some other “scarcity” is seen to exist. But the whole philosophy of economics of any kind exists because scarcity is omnipresent – it is why economics exists in the first place. So pricing (as one economic form) exists as a means to allocate certainly, but so would taking a load of seed corn and dividing per capita be an allocation as well. Basically rationing IS allocation, and vice versa, whether in times of relative plenty or more severe scarcity. Another way to look at it is why do we ever allow for Civil allocations that we typically call rationing in its narrow sense? It only leads to the desire for those who con people during greater scarcity to use such functions all the time.

    If nothing else, I would say that using the words rationing and allocation interchangebly heightens the fact that, regardless of semantics, resources are either free flowing or they commandeered and handed out by those with the guns. And when production lags (in the long term), those with the guns use them to spur on flagging production.

  • Brad: rationing is a subset of allocation, i.e. all rationing is allocation, but not all allocation is rationing.

  • Laird

    Precisely, Alisa.

    I would also add that if you use the terms “rationing” and “allocation” interchangably you lose the “fear value” of the former. People understand that “rationing” (as generally defined) leads to long lines, shortages, cheating by the politically powerful, and general ineffeciency and unfairness. We need to exploit that (entirely rational) fear in the fight against the expansion of socialized medicine. Making statements such as “the price system is a rationing system as well” are not at all helpful; in fact, they are actively harmful to the cause.

  • As long as the market is allowed to work the fight over health care rationing will become as irrelevant as the fight over the phone company monopoly was in the 1960s.

    The fact is that a combination medical robotics and individually controlled medical information systems derived from military medical systems that are now coming into widespread use will make it easy for people to take control of their own healthcare. This will breakdown not only the whole US insurance system but will eventually destroy the NHS as well.

  • Paul Marks

    The high price of health cover in the United States is caused by the vast web of Federal and State regulations (I am including the distortion of tort law in that – but also things like licensing and the insane distortions of the health insurance market) and the huge subsidies – such as Medicare, Medicaid and SCHIP.

    In response to a problem (high prices) caused by government intervention (the regulations and the subsidies), the left (including the British “Economist” magazine, which I have a particular hatred for as it is a “false flag” entity as it claims to be free market) demand yet more government intervention – yet more regulations and subsdies.

    It must be made clear that the end game of the Obama Administration is not “Britain”.

    Certainly not – as the United States already had government hospitals (the county hosptials are just like N.H.S. ones) and regulations on such things as health insurance are already far WORSE in most States of the United States than they are in Britain.

    The long term, but deliberate and planned, aim of the Obama Administration and its allies is the total extermination of all independent health cover in the United States. This is part of their desire to eliminate all aspects of independent nonpolitical Civil Society.

    Prime Minister Gordon Brown is bad enough, but President Barack Obama is something much, much worse.

    Like many other people I have tried as best I can to warn people about what Barack Obama is – but far too many people still do not fully understand.