Equality is a mediocre goal, aim for progress

That is the title of my latest Bloomberg column, here is one excerpt:

Take this all a step further and imagine that the next 30 years brings an enormous blossoming of medical innovation, outpacing the general rate of economic growth. Government revenue then might not grow rapidly enough to cover all or even most of these new medical miracles, some of which will be quite expensive, especially in their early stages. Governments will decline to cover more and more care.

This fiscal crunch is all the more likely if people live much longer but cannot work enough longer to fund their newly extended retirement spans.

To date, so much of the health care debate has been about whom to cover. Over time, it may be more and more about what to cover. It could be that all the citizens will have nominally the same insurance coverage, whether subsidized or guaranteed, but many medical and mental-health conditions will fall outside this coverage —  leading to rampant inequalities in access.

It’s the best problem to have. It means that medical innovation has arrived at a very high rate. If we enter the future being able to cover most medical treatments with reasonable equality, that would be a sign we failed at the task of progress. In other words, successful futures are likely to be highly unequal futures, again because medical innovation will have outpaced government revenue. (Innovations that extend working years would ameliorate this effect by adding to government revenue.)

Do read the whole thing.

Comments

TC is right, as Socrates said, "know your place" (often mistranslated as "know yourself"). Eventually, the medical innovations intended for the 1% will trickle down to the masses. Wait your turn.

Bonus trivia: due to inadequate patent protection, innovation, I have found, is done by two classes of people: the leisured class, who can afford to tinker with innovation (which is hit-and-miss), or, the truly desperate, who risk all (and often fail) by inventing. Nobody in-between. Talking about pioneer inventions, not small improvements done by engineers for their employer.

Innovation in medicine sometimes comes originally from an altruistic concern to help others, even compassion. Tyler Cowen's "equality vs. progress" is based on the idea there is a real scarcity in this sector of the economy. But there is no scarcity that is real here, only a fictional scarcity related to money.

But money is the lodestone to scarcity, fictional or real. And if you've ever spoke to a practicing physician, you'd see many of them are motivated by money. After your one hundredth patient dies from some incurable disease, I would think, if you are not going to drop out of medicine, that you'd become rather callous about the compassion and focus on the money.

Money causes fictional scarcity in a sector which need not have any real scarcity, and thereby causes the actors in that sector to change their preferences from compassion to callousness. That is a description of the process, not an excuse for it. The solution would be to undo money's status as the lodestone in medical innovation, and make make money into a concomitant of medical innovation.

Lack of money causes a real scarcity. How are you proposing to allocate scarce resources without money?

Lack of money causes a scarcity that is fictional only, if there exist enough real resources to otherwise provide the good or service to meet all possible demand to satisfaction, both effective demand (i.e. from those who have money) and hidden demand (from those who do not have money).

focus on the money.

Once waiting to meet my parents' doctor in his inner office I noticed he subscribed to a periodical magazine titled "Doctors Wealth".

While there are exceptions, nonprofits, medicine does seem caught up in America's sort of desperate, no-fun, new gilded age.

Everybody is chasing their own Ponzi payout.

We are all in this separately.

This is what happens when you vanquish Virtue from the list of American .. well, there is no way to finish that sentence anymore.

American Signals doesn't have quite the same ring, or foundation.

Yes, the best indicator of a qualified, moral doctor is his poverty. To show your virtue, please take a 25% pay cut.

You get older, you get stories. How about the one where there is a back surgeon on a cruise. The first 4 nights he answers questions cautiously. The 5th night he gets sloshed and drunkenly tells the table "basically nobody needs back surgery."

But profit, am I right?

" The 5th night he gets sloshed and drunkenly tells the table "basically nobody needs back surgery.""

Only an idiot would really believe that "basically nobody needs back surgery.""

I should add that he was taking the cruise to celebrate his retirement.

I don't have data on backs handy, but remember the randomized trial on knees?

In 2002, Moseley et al published a randomized controlled trial (RCT) that showed no difference between knee arthroscopy and placebo for patients with osteoarthritis (OA).

Use that one to highlight perverse incentives in the American system.

Why does innovation entail higher cost? Many other industries are able to improve quality and reduce cost simultaneously.

The only way to reduce costs is to start with an expensive product. The first production run has to carry the costs of development. For things like drugs that can be billions of dollars. The more you produce the more that the costs of development and compliance are spread out over more product. Hence prices go down.

Hence innovation is always expensive. The less innovation you have, the more equality. Europe has chosen not to allow companies like Facebook and Amazon to grow. They have fewer billionaires as a result - and everyone is happy because they are more equal.

'The only way to reduce costs is to start with an expensive product.'

Sure - which is why Facebook was free for users when it started, and is free today. The same applies to GPL software, of course - free remains free, regardless of what you can charge for it. As for Android (derived from Linux) - yep, free remained free, so no way to sink price there either.

'Hence innovation is always expensive.'

Ever heard of this company formerly called google? It might be shocking to realize just how inexpensive its starting innovation was - use the Internet to rank itself, by searching the Internet and assigning value to links in terms of ranking search results.

Of course, software is just one of those newfangled things that a lot of people at MR seem to have a lot of problem properly grasping.

Google was so easy it took two PhDs to make its starting algorithm. Which was then not recognized as useful by the incumbents of the search space.

The only thing shocking about your second to last paragraph is the hindsight bias. Any information innovation is obvious once you've been given the discovered information.

'Google was so easy it took two PhDs to make its starting algorithm.'

But since the point of the comment was about the cost of innovation, I am not sure why it matters that it took two PhDs to implement this insight, compared to one or five.

'The only thing shocking about your second to last paragraph is the hindsight bias.'

But since the point of the comment was about the cost of innovation, I am not sure why it matters about looking back in hindsight, as the cost of that innovation remains unchanged. Google started cheap, and grew more expensive as time went on, exactly the opposite of 'Hence innovation is always expensive' and 'The first production run has to carry the costs of development.'

Here is a bit of history - http://infolab.stanford.edu/pub/voy/museum/google.htm

The number and education of the creators matters because labor is a cost. Which in the case of entrepreneurship we also have to multiply by the risk/chance for failure.

'because labor is a cost'

I am not sure how to put this, but in the framework of a typical university, doctoral students are about the closest thing to free labor one will ever run across. At least to their adviser.

And to call doctoral students the sort of people weighing risk/chance for failure like entrepreneurs is not really realistic. You did read the link, right?

'In the spring of 1995, Google's future co-founders first met at a social outing in San Francisco designed to welcome new applicants to Stanford's computer science doctoral program. That fall, Sergey Brin and Larry Page -- now Google's President and CEO respectively -- began their joint work on Stanford's Digital Library Project. Page, with web experience and a degree in electrical engineering, and Brin, with expertise in data mining and degrees in computer science and math, together created a data search algorithm, the technology that would become the heart of Google. After Google's lab inception, Brin and Page added their promising infant search engine to the Stanford website. As google.stanford.edu, first members of the Stanford community, then increasingly others, began to enjoy the upstart assistant and trust its ability to find what they wanted on the web.

Google soon overgrew the bounds of the lab of Page and Brin's principal investigator.'

Strangely enough Facebook is still free for its users

And why does it cost "billions of dollars" to find a new drug? The FDA.

No

Low hanging fruit, etc, etc

Tyler, you linked to this a couple days ago but please do a piece on price transparency in Medicare. Its about da** time they start acting like a market. Insurance is the top issue for the coming elections (see recent Bloomberg poll). Its one of the top reasons those red state teachers are striking. Wages don't go up but monthly premiums do. If we fix this, then Americans will care less about access to these new expensive drugs, just like they don't care if someone drives a Ferrari while they drive a pickup truck.

'To date, so much of the health care debate has been about whom to cover.'

Well, that has been answered in the U.S. with a resounding the fewer the better - 'The number of Americans without health insurance increased by about 3.2 million in the first year of Donald Trump's presidency, which featured a series of efforts to undercut the Obamacare law, a new survey finds.

A total of 12.2 percent of all adults now lack health insurance, an increase of 1.3 percentage points since the last quarter of 2016, according to the Gallup-Sharecare Well-Being Index.

The last quarter of 2017 saw no significant change in the uninsured rate, according to the survey.

But that spike in the uninsured rate over the course of 2017 is the biggest single-year increase measured since the survey started asking Americans about their health insurance status in 2008.' https://www.cnbc.com/2018/01/16/americans-without-health-insurance-up-more-than-3-million-under-trump.html

'successful futures are likely to be highly unequal futures'

Somebody likely thinks that Orwell was a man who believed in the rich getting richer, too.

Health insurance is not the same as health cover. Someone might well be healthy enough, and rich enough, not to need health insurance and yet still be able to cover all their medical bills.

After all, Elizabeth Warren was wrong in her research and medical expenses do not cause a large number of bankruptcies.

'Health insurance is not the same as health cover.'

Quite right - why, everybody in the U.S. has the privilege of using the ER for health cover, both the insured and uninsured equally.

"Western citizens have been living in a comfortable and “feel sale” bubble"

"feel safe"?

What, you don't feel safer yet? Probably because all of those obstructionists preventing our president from doing whatever it takes to makes us all safer from Mexican suicide bombers and Muslim undocumented workers.

What? The first line of the last paragraph (in the actual article) says "feel sale" and I was suggesting this was a typo.

Sorry, my mistake - I thought you were making a comment on the steady drumbeat of fear that marks so much American media these days, where apparently no one is supposed to feel safe because of all the threats that surround them.

It is pretty notable when looking at the U.S. from the outside.

Your Stoicism is unconvincing because people are no longer fooled by instruction to self-improve through discomfort, obscuring the interest of the powerful.

Yes, the envy of other people is an eternal and ugly part of human nature over which you have no control.

Checks and balances? It's OK if some people aims for progress while others aim at equality.

Also, let's look at AIDS. Patients in developed and emergent economies get relatively good treatment. Is this a "failure at the task of progress" as defined by Tyler?

AIDS groups have demanded that cheap retrovirals are made available to everyone. Which by and large has happened. America is selling these drugs cheaply in places like Thailand.

As far as equality goes that is great. But if pushed to its extreme, no one in their right mind would work on anti-HIV drugs because there is no money in it. We have already bent the law as far as it will go to appease the activists. If we went all the way and made these drugs free to everyone on the planet, do you think that would save lives in the long run?

Exactly, neither equality (redistribution) nor progress (as presented by Tyler) should be pushed to the extreme. There is a nice middle ground between them.

The AIDS case is an example of compromise where big pharma keeps generating revenue to sustain research and more people gets treatment.

Another case is insulin. After a century of the discovery of the process to make it, there's no cheap and generic insulin. The patent system and the free market need a little shakedown on this specific case.

It's funny that you mention insulin. I was just reviewing my insulin costs on the insurance website. The diabetes related drugs that I take cost the insurance company over $1,000 per month. My health outcome would be as good or better if I gave up half those drugs and at the same time gave up alcohol, bread and pasta. Personal responsibility would go a long way towards reducing cost.

'My health outcome would be as good or better if I gave up half those drugs and at the same time gave up alcohol, bread and pasta'

Oddly, for the person I know with zero insulin production (he is 45, and I have known him for 25 years at this point), personal responsibility would go absolutely no way at all towards reducing insulin cost. Though with luck, he might avoid having any amputations in the next couple of decades compared to a GMU professor I used to know decades ago.

Progress, right?

There are different types of diabetes. Art Thompson was referring to Type 2 Diabetes, whereas the example you are referring to is probably Type 1 Diabetes.

This is pretty obvious. Were you being intentionally obtuse? Or we you just commenting on a subject that you know very little about?

I think, what is missing are some guesses on which medical miracles might appear.
cancer and hiv vaccines?
Could they be expensive? I think not.

growing organs in, say, pigs, instead of looking for donors - will it rise costs or lower them?

In effect - most of those medical innovations, which might be thought about (based on where researches look at currently) seems will be widely applied for most pressing deceases, based on genetic engineering ( which costs are dropping see costs of decoding human genome for the past 20 years - we already paid most of what is needed to jump start this medical area) and thus be low cost.

maybe I'm wrong, but so far without realistic scenario of future medical technologies, I cannot figure out what Tyler tries to reason about: there is 'something' which either might be cheap ( as I reason ) or for some unknown and not articulated reason prohibitively expensive. Tyler takes 'expensive' guess and then says - ok here are outcomes, but misses the point how realistic is his guess among other alternatives.

Tyler Cowen:

"You see, peons; your immortal plutocratic overlords are a good thing!"

/sarc

Yeah, I'd hate for anyone to be better than me. Abolish all jobs more prestigious and well-paid than that of a security guard. We don't need em.

America seems to have traded in compassion for the idea that a few do benefit.

I do appreciate Tyler's argument, and mostly agree, but it does lend itself to parody. You have to laugh at your own positions sometimes to show you are still sane. :-)

The thing is, if you are in the UK, you likely cannot imagine that in the U.S., it is not actually possible for tens of millions of people to just walk into a doctor's office and get treated when they are sick. And many millions more than that can only go to an approved doctor, and not just the one closest to them at the time (the same applies to pharmacies).

At best, the first group can go to a hospital ER, then get handed a bill. As for paying for a prescription? Good luck with that.

Of course, this is not a method to vaccinate children, for example, as the ER does not do that. It is also not a way to get a cavity filled.

The funny thing is this, Americans cannot imagine how such things work in the UK either.

America is really an outlier, and there actually dedicated people who are spending large amounts of money attempting to achieve immortality. Though Thiel, for one example, is unlikely to have any plans to share, one can safely assume.

There are a lot of systems better (efficient, effective, equitable) than both UK or US.

Thought fairly I hesitate to call the US system a "system". It's a mess of overlapping systems within several distorted markets. Critics really shouldn't talk about a singular entity there.

Absolutely - I live in one, at least in my opinion (and it is a system/framework that will never, ever be possible to transplant to the U.S., even if it is basically private, and has existed for more than a century). Though strangely, a British person I know recently sliced her finger badly, and she was shocked that she had to wait a few minutes while the person at the hospital processed her health insurance card when she walked in - basically, she said, that would never happen in the UK, you just go see the doctor without any paperwork at all. It is always interesting to get another perspective on things that one takes for granted.

'Critics really shouldn't talk about a singular entity there.'

Oh, I know. I try to bring up Kaiser Permanente regularly, which actually is a quite effective and in American terms inexpensive health care provider (not insurer) whenever people say how screwed up the American system is, but the fact remains that most Americans have absolutely no experience with a system that also arose as a result of WWII - 'Kaiser Permanente is an American integrated managed care consortium, based in Oakland, California, United States, founded in 1945 by industrialist Henry J. Kaiser and physician Sidney Garfield. .... As of 2017, Kaiser Permanente operates in eight states (Hawaii, Washington, Oregon, California, Colorado, Maryland, Virginia, Georgia) and the District of Columbia, and is the largest managed care organization in the United States.

As of October 2017, Kaiser Permanente had 11.7 million health plan members, 208,975 employees, 21,275 physicians, 54,072 nurses, 39 medical centers, and 720 medical facilities. As of December 31, 2016, the non-profit Kaiser Foundation Health Plan and Kaiser Foundation Hospitals entities reported a combined $3.1 billion in net income on $64.6 billion in operating revenues.

KP's quality of care has been highly rated and attributed to a strong emphasis on preventive care, its doctors being salaried rather than paid on a fee-for-service basis, and an attempt to minimize the time patients spend in high-cost hospitals by carefully planning their stay.' https://en.wikipedia.org/wiki/Kaiser_Permanente

Sounds a bit like the NHS, at least in some ways.

Yes, Kaiser Permanente is a good example of a working sub-system within the general dysfunction. It performs quite well on efficiency, effectiveness, and equity.

I really wouldn't compare it to the NHS; they have very little in common in terms of structure, funding, and incentives.

The thing is, if you are in the UK, you likely cannot imagine that in the U.S., it is not actually possible for tens of millions of people to just walk into a doctor's office and get treated when they are sick.

That is ironic because only in the US (and to a lesser extent other countries that do not have a government-run health system) can you walk into a doctor's office and get treated.

In Britain you would have to wait six months until enough people have died off ahead of you so that the doctor has an opening.

Nonsense. I am no fan of many aspects of the NHS, but if I need to see a doctor today, I see a doctor today free of charge. Yes, we have queues, but the idea of losing access to healthcare if I lose my job is seen here as lunacy. Likewise that US doctors are so rich - with the exception of an elite doctors here are well paid professionals, not millionaires.

Well, with the NHS, if I need to see a doctor today, I will actually see a doctor by appointment in 48-72hours, or I can queue for 4 hours at the GP to get a ad hoc spot.

Unless it is serious (requiring immediate treatment) in which case I will see a doctor in about 2 to 3 hours in A&E.

Unless it is very serious life-or-death requirement for immediate treatment in which case, yes, I'll probably a see a doctor in the next half hour. Yay.

This is what "I can see a doctor for 'free' today" actually means in the UK.

What's with the obsession with health "insurance"? Paying for coverage over even a relatively small amount of time is soon equal or greater than the actual expense of most medical service. If there was no such thing as health insurance, procedure prices would likely fall dramatically. Just the same, health care has never been cheap. Even witch doctors were able to get most of a patient's chickens and cows by relieving his migraines.

"Government revenue then might not grow rapidly enough to cover all or even most of these new medical miracles, some of which will be quite expensive, especially in their early stages."

But this is contrary to the modern pattern. In medicine, as in technology, typically the cost of R&D is high, but the cost of production is low, which means that broad sales to the masses are the way to recover R&D costs and generate profits. That is why wealthy people don't have better iPhones or web browsers or television shows....or better drugs.

A new drug that isn't generally covered by insurances won't pay off and, so, won't be developed. That is the greatest threat to medical innovation, I think.

Basically, this is one of those "make it up in volume" arguments, where you never really make it up in volume.

There has never been, and there is not now, any rule that old medicine becomes cheap and readily available medicine. Especially in America.

(I heard people comparing dentists at a dinner recently.
The criteria was not who was a good dentist. It was which dentist doesn't try to add too many extra procedures to a simple tooth cleaning. It was which dentist doesn't up-sell.)

"Progress" is tainted.
Consider "improvement".

I hate making perennial banal points, but when you talk about equality, do you mean outcomes or opportunity, Or legal or social bias?
I think were all in agreement that equal outcomes are likely not a desirable goal, but we don't want to say let's just ignore systemic prejudice , because that's not an equality issue that is a justice and fairness issue. We don't want a society with an entrenched caste system, where certain group are systematically economically favored and disfavored.

I should really read more than the headline. This is what happens when you comment first thing in the morning on the phone before drinking your coffee.

If you don't use prices to allocate a good or service, then it will be rationed. The bread lines in the old Soviet Union or waiting lines in "free" clinics in the United States demonstrate this truth.

The movement toward greater government control of medicine is the movement toward rationing health care. The rationing will take the form of deciding who gets care or what type of care we can receive.

Most of the low hanging fruit of health care has already been captured. (Improving sanitation gave a big boost to health.) The marginal cost of each additional year of life for the general population is increasing.

Even if we defeat one disease, we remain mortal. Curing one disease that is cheap and easy to treat still leaves us vulnerable to other diseases that will be harder and more expensive to manage.

Typically the introduction of a new treatment is very expensive.. Over time the costs often fall. A classic example is polio. In the beginning, only palliative care was an option. Then costly iron lungs. Then expensive research toward a vaccine. Now it is largely gone as a threat. Huge resources were expended on that journey.

Many politicians do not like to let the price system allocate resources. They don't view it as fair. But those prices give signals and allocate resources more efficiently.

The early stage treatments are usually expensive. If the government rations treatments at this early stage then we may never get to the point on the cost curve where costs are dropping rapidly. And the government will ration because they will not trust the price system to allocate resources in ways that they think is unfair.

MRIs are expensive. The government has limited dollars and will usually limit access to expensive procedures. They will ration access to those they decide are most in need and restrict overall expenditures on MRIs. Fewer dollars will be spent on MRIs. In contrast, if you allow the price system to allocate the MRIs those with the highest demand will pay a higher price. Those dollars will generate increased competition. You see innovation, improvements and increased scale leading to lower costs in the long run. Which system offers the greatest benefits?

Either you ration by money (and risk that the poor will miss necessary treatment), or you ration by need (and risk that providers will lose income).

Because in the second case you are not actually avoiding needed, effective, treatment.

You really are clueless. Good luck standing in line waiting for government handouts. Why do you want everybody else in line with you?

Buddy. You built a strawman argument that rationing by a democratic society must be unjust, because it is government. And then *you* get mad.

I'm not mad. Maybe a bit sad that a person can come to an economics blog and be so proud to demonstrate how little they know. I would like to think society had enough basic economic knowledge to make informed choices. Sort of like going to an environmental science blog and reading people deny basic science. Doesn't make you angry, just a bit sad.

I didn't say that rationing was "unfair". It is expensive and wasteful especially when you look at the opportunity costs. Government isn't bad. Ignorant people using the power of government to impose their notion of fairness, based on ignorance and ignoring the true cost of their policies, is bad.

If you believe government is everywhere and always in service of ignorant people you have already given up everything. You have sold the farm.

So of course you have no farm.

Please don't take your ideas into agriculture, we will all starve.

Here's what really kills me:

A certain sort of "conservative" says "government is always corrupt" and then "pick me to run government!"

What do we get? Scott Pruitt, cashing in right and left because (1) he never believed in Virtue in the first place, and (2) he thinks it's his turn.

This is why we should never allow support virtue-denying conservatives or libertarians within 400 miles of Washington.

Or listen to them at all on topics of government policy.

Can you read? Where did I say "government is always corrupt". It can be as under Mao, Stalin, and your version of fair. But saying that you want people to reject bad policies means you want to lead a corrupt government.

Please put down the shovel, that hole is getting pretty deep.

Your entire premise of this entire thread has been that government rationing of healthcare is necessarily unjust.

read again

It is expensive and wasteful especially when you look at the opportunity costs.

It is, I suppose, unjust to those who will be denied access to the treatments that would be developed under a smarter system. The world would suffer when the technologies developed in our markets are no longer cheaply transferred to the world.

Getting rid of market-based prices to allocate goods and switching to rationing has been tried in various places and various times. It failed.

What do you call people who keep trying to do something that fails over and over?

I don't even know where this statement makes contact with reality. The government funds nearly two-thirds of U.S. health care costs.

How the heck do you avoid need-based analysis in such a system?

How do you switch to "the market" deciding whether Medicare or Medicaid funds a knee operation?

That is cooking the books. The claim that the government buying private insurance for government employees is government expenditures on health care is a bit dishonest.

Doctors and health care providers only work directly for the government under the VA or other local charity programs.

Perhaps 20% of US spending goes to 1% of the population. Other countries frequently refuse care for these people. I guess that is an example of virtuous care and efficient rationing. Looking forward to more of that.

Medicaid is growing. In fact, it is growing faster than the government ability to pay. Meaning debates about whom and what to cover will become a bigger issue.

You seem to prefer to spread that money around to provide more basic care for more people. If that means wage and price controls and other mandates you seem OK with that.

Quality of care, ie the ability to cover more complex cases will suffer, the increase in knowledge will decrease, but you seem to be OK with that.

It's a choice I guess.

That is cooking the books. The claim that the government buying private insurance for government employees is government expenditures on health care is a bit dishonest.

I would think that purchasing decisions and specifications of coverage would very much shape the "rationing" right on down the line.

Forcing private firms to compete to get government business is not on the same planet as government-run health care

"Curing one disease that is cheap and easy to treat still leaves us vulnerable to other diseases that will be harder and more expensive to manage."

It isn't as if one disease is being researched at a time. Why can't cancer, diabetes, heart disease, Parkinson's and Almeizer's disease all be cured within a decade? We are pretty close on al of them.

" Huge resources were expended on that [polio vaccine] journey."

"Huge resources were expended" is relative. In today's dollars, funding was $50 million in 1942 when that started and had reached $250 million by 1954 or so. A good guess of total funding might be $1.5 billion - not much to get rid of a horrible disease.

I mean, if you want to agree with me now that government servants may have Virtue and may seek Just allocation of scare resources, that's great.

Are you ready for that, as an aspirational goal?

Its fine if everyone starves, as long as the central planners are Virtuous and try to allocate Justly.

That is the madness that afflicts our age. You look at Canada, or Great Britain, and all you can see is a slippery slope to Venezuela .. no worse than that, the Chinese Cultural Revolution.

This is why we can't have nice things. Black and white logic. No subtlety or discretion.

The problems with communistic ideas are the same no matter your development stage: they sound good and Just and Virtuous, but actually create really bad systems where instead of paying an openly stated cash price, you have to have connections and give the appropriate gifts.

If you inject a bit of corruption and Virtue and Good Intentions in the British healthcare system, you won't kill the state overnight. Doesn't mean you should do it.

"If you don't use prices to allocate a good or service, then it will be rationed."

Actually, prices are not an alternative to rationing, prices are one method of rationing. All economic systems have one or more ways of rationing, one of which is rationing through the price system--that is why economists speak of the "rationing function" performed by prices.

Any system of providing health care or health insurance is going to engage in rationing. The choice is not whether we are going to have rationing or not, but how the rationing is going to take place. The US health care system operated (and still does, to some degree, even in the era of the ACA) by pricing millions of people out of the market for health insurance, due to the problem of adverse selection. In Canada, health care is rationed by people having to wait long periods for non-emergency surgeries and other procedures.

The question is what kind of rationing system are we going to have.

I thought that was obvious but thanks for the clarification.

Historically, the uninsured tend to be healthier than the insured. Adverse selection was not a problem in the American health care system. Adverse selection was a problem under ACA because it depended on cross subsidies. Young healthy people would be mandated to buy relatively expensive insurance to subsidize lower premiums for sicker people. The core problem was the cross subsidies not adverse selection

That hinges on a just-so story, that the uninsured are healthy and nobody misses treatment.

No that is what the data unambiguously shows.

This was basically Tyler argument in a nutshell:

If we ration by price, the poor may be unable to find treatment. But on the bright side, the rich may be able to buy unnecessary and ineffective treatments. From these unnecessary and ineffective treatments we may gain innovation. And the innovation made aid the poor who can't afford it!

Brilliant.

"This was basically Tyler argument in a nutshell:

If we ration by price, the poor may be unable to find treatment. But on the bright side, the rich may be able to buy unnecessary and ineffective treatments. "

That's a pretty dumb interpretation, even for you.

Do you want to pony up and admit to a hyperbolic strawman argument, or just double down on dumb?

"This fiscal crunch is all the more likely if people live much longer but cannot work enough longer to fund their newly extended retirement spans."

Perhaps that needs some more work regarding the meaning of "an enormous blossoming of medical innovation." Given a choice between "higher quality of life" and "longer life," I suspect most would choose the former. In which case the solution is, no extension to retirement time.

In any case, medical care will never be available in unlimited quantity, yet an aging population with a declared "right" to consume medical services without limit regardless of ability or wish to pay can't possibly work, can it?

Which leads to either a British-style cost-benefit analysis (i.e., if the treatment is expensive and you are low in quality-adjusted life expectancy then no treatment for you) or to a simple age cutoff (i.e., palliative-only treatment after age 70 unless you're paying 100%).

Allowing costly treatments to come to market while restricting their availability to those willing and able to pay for them may well have a "trickle-down" effect as these initially-costly treatments become cheaper; the real question is, is such an approach politically viable?

Does Mr Cowen mean "mediocre" in the sense of the sports commentator - i.e. incompetent, lousy, pretty dreadful - or of the educated classes?

But Bernie Sanders wants the federal government to pay $15 an hour (with benefits) to anyone that wants to work. The government will simply make up jobs - ditch diggers and ditch fillers. There is no cost attached to such policy but I'm sure it will be insignificantly small!

Sergey Kurdakov' criticism, higher up, is correct: "...but so far without realistic scenario of future medical technologies, I cannot figure out what Tyler tries to reason about: there is 'something' which either might be cheap ( as I reason ) or for some unknown and not articulated reason prohibitively expensive."

I can't see why a gene therapy would cost millions of dollars as Tyler speculated. A successful gene therapy for fewer than ten people did cost $1 million but the next was $650,000 for fewer than 30 people. Yescarta is a $200,000 treatment used by 7,5000 people or .002 percent of the population. The most expensive cancer drug costs $475,000 for 300 people so far but that is a one time payment and most anti-cancer drugs are around $150,000 a year. These costs will come down, not go up.

Right now there is a supplement, a derivative of Vitamin B3, called NR (Niagen) that is showing efficacy in human trials where NR boosts NAD+ in every cell where that declines from around age 20 and by age 80, a person may have 10 to 15% those levels in youth. This may help stave off Parkinson's disease and Alzeimer's disease based on mouse trials, and it may significantly improve the lives of heart failure patients as their heart ejection fraction would increase as it has also has been shown to do so in mice. NR and its cousin NMN may also strengthen muscles (like the heart) and offer some protection against cancer, all for $1 to $2 a day, and pharmaceuticles can improve on this vitamin B3 to help prevent the need for expensive treatments in the first place.

"Coulda, woulda, shoulda"

"This commercial message is brought to you by Chromadex; ask your doctor for more complete information'

You know Carlospln, if you take NR (Naigen), your brain cells will become somewhat healthier, and you may start thining logically again. Hope springs etertnal. Elysium, with nine Nobel laureates on its science advisory board, is also selling NR. Sort of discounts your argument that I'm shilling for Chromadex, right?

I take HPN retail, not TruNiagen by Chromadex because it is cheaper. But last month it got more expensive so switched to Life Extension. It is all NR. But the point is that the pharmaceuticles will soon improve on NR and NMN.

That should be:

Yescarta is a $200,000 treatment used by 7,500 people or .002 percent of the population.

Cowen has often defended trade and globalization by pointing out that trade and globalization have reduced both poverty and inequality (as between developed and developing countries). I might point out that trade and globalization have increased inequality both within developed countries and developing countries. Sometimes reducing inequality is a good thing and sometimes it's not, the former when it increases inequality within developed countries. At least some people seem to take that position. As for inequality in health care, inequality in wealth often times leads to innovation in health care designed to benefit the wealthy, who are the only ones who could afford it. It reminds me of the pyramids of Egypt: great achievements that benefited the very few at the expense of many.

"This fiscal crunch is all the more likely if people live much longer but cannot work enough longer to fund their newly extended retirement spans."

I recommend watching some of Netflix's series "Altered". A somewhat thoughtful take on Wealth inequality and expensive anti-aging treatments. Essentially, rich individuals can afford to transplant their consciousness into new bodies. However, the cost of cloning a new body, combined with population pressures, ensure that your average person can't afford to live much beyond the lifespan of their natural body.

In one interesting scene, a child is killed, and the state provides a free body for her. Her parents pick her up and she's in the body of a older woman (dead from a stroke maybe?). Because that's the body that was available for "free". So on the one hand, this child is being forced into an old woman's body and potentially missing the greater portion of her life. Of course, on the other hand, she isn't dead.

The shows overarching back story is a long running war with a militant group that want to socialize the supply of bodies, and kill everyone at age 100 and the capitalist society that allows the very rich to live forever with a general populace that lives to a normal lifespan.

I read this from two different perspectives. The first is the entitled white male who would typically read Bloomberg and say yes this article confirms my prior that innovation is stifled by government regulation. If I didn’t have to cater to lesser men and all the takers then I could become ...A GOD. The second is an average female who rolls her eyes at the mendacity of the phrase universal protection. Those who cannot afford decent healthcare cry foul. Those whose homes were taken after the crash cry foul. The only universal protection that I have witnessed is afforded to entrenched sectors of our economy. Vampires that resist innovation while feeding their corpulent selves on tax breaks and subsidies. So I choose a different interpretation, one driven not by giants of industry but by average people fed up with entrenchment. I look forward to how this plays out. The future looks local and decidedly female.

This begs the question of whether we really get more utility from actually having improved medical treatments or from not thinking that we are getting worse treatment than someone else.

This may seem obvious but it's not. For instance, it's not at all obvious the world would be a much better place if we all lived for ~ 160 years rather than 80 years. We all don't want to die but can we really say our lives would be that much happier knowing that we had that much more time?

Seems to me quite plausible that better medical care ends up not adding that much utility while the effect of believing one is getting less than the best creates quite a bit of unhappiness.

The inequality that we are plagued with may not be fixed by progression. It may increase the technologies to bridge the gap, but whether or not it is feasible is different issue. On the other hand since there will always be this gap between countries and peoples in the capitalist world we live in I do agree that better all people and progressing forward is a bring idea.

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