Our National Fugue State

If you opened an umbrella in Times Square you could say you covered New York

A sizable portion of the American political class seems to be mired in a prolonged fugue state (code 300.13). Their confusion has led them to the conviction that our nation’s well being will be served by a complex piece of new health legislation with so many unforeseeable ramifications that more permutations of its implementation are possible than there are elementary particles in the universe.

We are about to improve Medicare by taking $500 billion out of it. Reducing physician reimbursement by $200 billion dollars will also improve the program. Surely, no believes that these cuts will be implemented. Cynicism and delirium combined.  We are going to extend health insurance to tens of millions of additional people  while proclaiming that we will spend less money. Personal liberty will also increase – 16,000 new IRS agents will make sure of that. Our economy is said to be on the mend, so much so that Berkshire Hathaway’s and Proctor and Gamble’s cost of borrowing is now less than that of the United States government. Bond investors are now viewing Treasuries as riskier than a vast array of corporate debt. They’d rather own bonds backed by sales of toilet paper than the full faith and credit of the United States.

If you want a perspective on what animates many who would “reform” our medical system I recommend you read We Can Reduce US Health Care Costs by James E Dalen, MD, MPH in the current issue of the American Journal of Medicine. In brief, the article argues that central planning will solve all our healthcare problems. The record of central planning over the past century is ignored (or the author is ignorant of this record). He holds the Canadian medical system as an exemplar. The Canadian experience causes him to conclude that we could save  15% of our healthcare expenses by emulating our northern neighbor. I love this sentence: “The ultimate solution to our excessive health care costs is national health insurance: Medicare for all.” He then gives a reference – to whom? Himself. Say something often enough and it must be true. Pirandello wrote a play reminiscent of this thinking.

Dr Dalen wants to focus on preventative care by encouraging more physicians to enter primary care. He would do this by paying of loans for those who behave as he thinks best and by manipulating Medicare reimbursement to favor doctors in primary care specialties.

How many doctors do we need in each specialty? If we possess this knowledge it must be relevant to a decade or two hence because that’s how long it takes to redirect the output of doctors from training programs to practice. Our previous record of getting manpower needs right is not encouraging. You can make just as good a case for needing less doctors in the future as more and just as good a case for needing more specialists rather than less. Which is right? I don’t know, but neither does anyone else. Prediction is very hard, especially about the future – Yogi Berra.

Dr Dalen also thinks the drug companies make too much money. His solution? Price controls. Another tactic with a great track record. His last paragraph says it all: In summary, we must reduce the cost of health care in the US. We can do this by developing a health care system that emphasizes prevention rather than disease management. To do this we must encourage more physicians to be adult generalists and we must provide them with new skills. Furthermore, we must insure that all physicians have cost-effective practice patterns that avoid unnecessary tests and procedures and that all citizens adopt living wills. As a nation, we need to have better control over the cost of prescription drugs. Finally, at some point in the future, we should adopt a policy of national health insurance, Medicare for all.

Let’s look at Medicare – currently covering less than all. The 2009 Social Security and Medicare Trustees Reports show the combined unfunded liability of these two programs has reached nearly $107 trillion in today’s dollars! That is about seven times the size of the U.S. economy and 10 times the size of the outstanding national debt. Why would anyone think that Medicare serves as a good model for restructuring all of American medicine?  Medicare is in far worse shape than Social Security. If Medicare for the elderly is plunging the nation’s finances into a bottomless abyss of debt, throwing the rest of America into it can only improve our condition – at least Dr Dalen thinks so.

The knowledge required to effectively do as Dr Dalen and those who think like him desire is infinite. We can never know in advance the right price for a product independent of any market. We can never know in advance the manpower needs of any complicated endeavor, especially when these needs will be subject to changes in technology and circumstance that are not even imagined now.

Nobel prize winner in economics Gary Becker, succinctly summed up how congress could have acted had they not been driven to insanity by ideology rather than reason: Drafting a good bill would have been easy…. Health savings accounts could have been expanded. Consumers could have been permitted to purchase insurance across state lines, which would have increased competition among insurers. The tax deductibility of health-care spending could have been extended from employers to individuals, giving the same tax treatment to all consumers. And incentives could have been put in place to prompt consumers to pay a larger portion of their health-care costs out of their own pockets.

We cannot spend ourself to wealth or health. Entitlement spending will soon consume 75% of the government’s spending. Inevitably we will have to raise taxes even more than we are already doing and cut spending, but not until financial disaster is palpably upon us and likely irreversible. Where will we start? I’d bet on the Defense Department. Our economy is headed for debtors prison as things stand now. What difference can a score or more trillion in debt make? With the exception of acts of God almost everything bad in human affairs stems from the sometimes heartfelt, but always incompletely reasoned, wish to improve our lot. Going broke in the name of fairness is not a good plan. Those who favor such a plan will never concede its failure not matter how wrong things go. They will continue to argue for more government involvement blaming what’s left of the private sector for the the failure of public programs while begging for more public spending. Get out your wheelbarrows.

If we can’t get JS Bach to write our fugue we’d better wake up. Wachet auf – a fantasia rather than a fugue but equally apt.