Tuesday, May 30, 2017

Scarcity No Excuse For Avoiding Health Care Reform

Image Source: Center for American Progress.
Plenty of people have written ad nauseam about liberal smugness. Heck, even liberals have written about liberal smugness. I’ve already pointed out that liberals’ supposed intellectual superiority is oversold. But for sheer condescension, try reading a conservative on economic issues. It’s hard to find a conservative talking head who doesn’t assume liberals know nothing about economics, who doesn’t treat liberals like third-graders in need of a stern talking-to about grown-up stuff. Case in point: Kevin D. Williamson, whose National Review piece, “Health Care, from the Top”, can serve as a model for How to Write Like a Patronizing Ass.

“Those Poor, Simple Liberals”

“Our ongoing troubles with health care,” Williamson begins, “stem from an unwillingness to deal with certain facts. One of those facts is scarcity.” Just from the way Williamson tees up the ball you can see where he’s aiming: “Those poor, simple liberals think everything is available in mind-dazzling abundance and shouldn’t have to be paid for (except by other people).” Apparently, to Williamson liberals are all college-age kids going to school on Mommy and Daddy’s nickel, who don’t have to pay for anything except Jell-O shots and the occasional reefer (thanks to Obamacare, the Trojans are covered).

To give Williamson his due, his attitude never verges into a Scroogean desire for the unfortunate to die and decrease the surplus population. “There is a certain libertarian tendency,” he writes,  “to … throw up one’s hands, exclaiming: ‘Just let markets work!’ We should certainly let markets work, but not ‘just.’ We aren’t going to let children with congenital birth defects suffer just because they might have stupid and irresponsible parents [people are poor because they’re stupid and irresponsible, don’cha know], and we are not going to let old people who have outlived their retirement savings die of pneumonia because we don’t want to spend a couple of thousand bucks treating them.” He even writes approvingly of “giving poor people money and money analogues (such as food stamps) to pay for food,” which makes him a rarity among conservatives.

However, these heartwarming glimpses of Williamson’s humanity aren’t enough to dispel the irritation produced by his ham-handed belaboring of the obvious. It might distress him to learn that not all liberals are spoiled-brat millennials mindlessly parroting Bernie Sanders’ Facebook memes. Indeed, it might cause him consternation to know that liberals are fairly evenly distributed among income strata and that college graduates are a bit more likely to lean left than right. I can’t imagine what would happen to Williamson if it were revealed to him that there are even a few liberal economists still around.

Comparison-Shopping for Diabetes Management?

Moreover, Williamson assumes that, if we only knew what he knows about economics, insurance, and health care, we would immediately cease all clamor for health care reform and choose to stick with the present system. It doesn’t occur to him that we might have good reason to stick with the clamor. And, in explaining to us what we already know about scarcity and insurance, Williamson reveals certain blind spots imposed on him by his uncritical acceptance of classical economics theory.

For instance, speaking of elasticity of demand, Williamson asserts, “But not every medical procedure is a life-and-death matter, and, even in the matter of serial chronic conditions such as diabetes, there is opportunity for comparison shopping and negotiating.”  In reality, patients with such conditions can’t comparison-shop. Conditions aren’t auto parts, legs of lamb, or kitchen dinette sets; they can’t be managed separately from the rest of one’s health. For most basic health care needs, insurance makes competition irrelevant: you pay the same copay regardless of what your GP or clinic charges the provider. Competition is not a factor in many areas of health care; that’s one of the reasons why health care is in desperate need of reform. This is one of those issues which led Arthur Fiedler to say, “For economists, the real world is often a special case.”

And as for negotiation — please, don’t make me laugh. In fact, if Williamson really thought through the logic of scarcity, he’d realize it means that situations will arise in which one party has the other by the short ’n curlies, and to accept or refuse is a Hobson’s choice. Martin Shkreli, ex-CEO of Turing Pharmaceuticals, hammered this point in with his price-gouging on the drug Daraprim. But Shkreli’s villainy also illustrates two further points: 1) not all health care commodities are scarce to the same degree (aspirin scarce? seriously?); and 2) scarcity can be created artificially.

“Fear of Scarcity Become Pathological”

Let’s put it a different way: Williamson’s argument requires we accept that, in all cases, the potential supply will always be less than total demand (SP < D). However, this isn’t true because at least some commodities can be produced in excess of demand (SP > D). For instance, the market for Daraprim is small and the 64-year-old drug neither difficult nor expensive to make; it should be (relatively) cheap to produce it in abundance. However, there are no mass-market generic equivalents, no herbal supplements with which the consumer can replace it. And since Daraprim is an essential component of the “drug cocktail” used to treat AIDS, the patient can’t simply do without it. Ergo, Daraprim is price-inelastic (i.e., price has little effect on demand) and makes a perfect tool for a greedy weasel like Shkreli to rape — er, reap a windfall.

Economists and economics wonks still tend to equate rational behavior with self-interested behavior. And, indeed, people can have cogent, coherent reasons for self-interested acts, such as robbing banks or keeping wage increases below the inflation rate. But reasoning can produce bad decisions as well as good; and self-interested behavior can very well be self-defeating behavior (e.g., “the tragedy of the commons”). Self-interest, in the absence of solidarity and the virtues of compassion and self-restraint, cannot produce the healthy, cohesive society which best enhances the individual members’ survival.

Classical economics assumes the necessity of competition and the rationality of self-interest, and even gives a backhanded endorsement to Gordon Gekko’s axiom “Greed is good.” But greed isn’t good. Greed is the fear of scarcity become pathological. Greed is incapable of saying, “I have enough; let others have what I don’t need.” Greed doesn’t recognize the right of others to enough. And while some income/wealth inequality is inescapable in any working human system, even conservative economists recognize that a high degree of inequality is a sign of bad economic health. Left unchecked, greed poses a threat to the survival of the community. To survive, the community needs cooperation more than it needs competition, and solidarity more than self-interest.

Equality vs. Merit

But where Williamson’s argument from scarcity really falls down is that it fails to connect the dots between “We can’t treat everybody for everything” and “The rich deserve first crack at what’s scarce”. And no wonder, because the territory between the premise and the conclusion threatens to trap him in explicit moral Darwinism. Many conservatives and libertarians implicitly assume that all individuals are in 100% control of their economic destiny and that they become or remain poor due to bad judgment, lack of foresight, ignorance, or indolence, or some combination of those factors. The poor aren’t merely victims of misfortune; rather, they fully deserve poverty and everything that goes with it. As one Evangelical put it, “Why should I stand in the way of God’s judgment?”

Objectivism would argue that the rich merit the most access to health care because they’ve already demonstrated superior survival skills. However, Objectivism posits selfishness as its only real virtue, when in the real world (as I’ve argued above) selfishness is not just a threat to the community but also sick and often self-defeating. Utilitarianism would argue that the rich are more socially useful than are the poor. However, as I’ve argued elsewhere, once you assert that Person A can be worth less than Person B, it’s no great stretch to conclude that Person A can be worthless, a lebensunwertes Leben (“life unworthy of life”), and therefore not entitled to any rights or consideration. By implicitly equating social utility with the right to live, Utilitarianism categorically denies the cornerstone of democracy and foundation of individual rights — the intrinsic equality of individuals to each other.

Williamson’s argument from scarcity, then, fails on at least three grounds: 1) it fails to recognize the extent to which the status quo frustrates competitive health-care pricing; 2) it fails to account for those commodities that can be produced in sufficient quantities to meet demand; and 3) it fails to demonstrate on philosophically tenable grounds that people merit health care in proportion to their ability to pay for it. But there are other problems with Williamson’s argument, such as his reliance on the trope that universal health care and economic freedom can’t coexist, as well as his blindness to the fundamental absurdity at the core of the insurance industry (you’re paying for something on which both you and the company hope you’ll never need to collect).

Perfect Hostile to Better

The fact is, private insurance tries to do exactly what universal health care would do — it tries to bring as many people together to spread out the costs of health care. However, the private insurance industry hasn’t shown itself more effective at driving down the costs than a semi-private or public single-payer system would be. In fact, the health care industry in its entirety has developed several groups who have significant financial interests in maintaining the cost spiral; the health care industry outspends the defense industry in lobbying government by around 3:1.

We know some things in health care are scarce, that not everyone will have access to everything. It doesn’t follow, however, that we should do nothing to improve access to those things we can produce in abundance and cut out the industry’s ability to create artificial scarcity through price-gouging, unethical billing practices, and lack of competition. We’re not asking for a perfect system. Perfect is not only the enemy of good enough, it’s often hostile to better. Scarcity is no excuse to put off the hard and extensive task of health care reform.