Ignoring Scarcity Is Real Scary

Newt Gingrich in today's LA Times has an essay titled "Healthcare rationing: Real scary" exclaiming the failings of the current House health care proposal and the virtues of his own ideas.

I have no doubt that removing the current barriers that prevent consumers from purchasing insurance in a nation wide market will increase competition and will reduce costs for some time. So I can say with confidence that Gingrich is right on this point but unfortunately is he wrong on many others. Mostly due to ignoring the issues and concerns of consumer's and the benefit of the larger community.

As it does seems wrong for a single man to pay for the very unlikely need for pregnancy coverage Gingrich ignores the constraints of purchasing insurance for small businesses, the providers of most insurance in the country. Gingrich writes:

"One key proposal is to mandate an 'essential benefit package' for every private insurance policy sold in the United States. Currently, individuals and employers usually make these coverage decisions. This legislation creates a new federal Health Benefits Advisory Committee that would decide instead. For example, if you are a single male with no children, the legislation still requires you to have maternity benefits and well-baby and well-child care coverage. You don't want or don't need that coverage? Sorry, you have to pay for it anyway."

Currently employers do not cater insurance options to individual employees based on their demographic characteristics. To do so may be unnecessarily expensive. In my previous job I had coverage for pregnancy for ten years and never used it until I got married then had a baby with my wife. So to claim that a man would not have opportunity to utilize child birth coverage is not entirely correct. Perhaps an al a carte option of insurance was available many men would choose to not have this coverage, but products bundling is more efficient for both consumer and the firm.

Gingrich's prescription for health care ignores the unpleasant fact of scarcity. Medical resources are not infinite. The problems of scarcity is a conversation that needs to happen. We have only so many vaccines, beds, organs and pieces of equipment and what is the appropriate way of allocating those resources. A well defined metric for prioritizing the uses of these resources seems very appropriate, but the conversation needs to be frank. It is easy to acknowledge the coldness or even callousness of Ezekiel Emanuel's conclusions of his research but it should be the beginning of the discussion of how much we value life.

The question of how we value of life should not be limited to whether we withhold treatment from an individual but expanded to how we use the resources available. Withholding an organ from one person is only a factor in the equation of what is the value of life, not the answer. That factor is held against the factors of the prognosis and potential quality of life of other people in relation to the person not receiving the organ or other medical resource. To leave this sensitive and emotional decision entirely to market forces or family decisions will create poor outcomes. Government panels should not make these decisions either but doctors should be empowered to calculate the prognosis and potential future quality of life against the value of the resources and life. There is an extreme risk of adverse selection if we don't find acceptable answers to this question. What is the opportunity cost of medical treatment if prognosis is poor? Sphere: Related Content