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Obama’s ‘Hope Without Change’ on Health Care Policy

If the current system is "unsustainable" how can Obama assure Americans that they can keep the insurance they have?

by
Arnold Kling

Bio

June 29, 2009 - 12:50 am
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Research shows that spending on health care differs considerably across regions within the United States, with no difference in outcomes. Much of this research has been undertaken within the Medicare program, so that the problem cannot be blamed on lack of government involvement. Moreover, the research shows that differences in spending across regions are accounted for mostly by differences in the amount of services provided, not by price differences.

From a cost-effectiveness standpoint, to paraphrase the old Pogo cartoon, “We have met the enemy and he is us.” Given unlimited access to medical services without having to pay for them, as consumers we will choose procedures with high costs and low benefits.

Consider the following examples of what I call “gray area medicine,” meaning medical procedures that are neither absolutely necessary nor absolutely unnecessary.

On the ABC news program, President Obama mentioned that hip surgery on his terminally ill grandmother was not particularly helpful in retrospect. Yet he would not go so far as to say that such surgery is absolutely unnecessary.

In the United States, beginning at age 50 it is recommended that individuals get a colonoscopy in order to screen for colon cancer, and to repeat this procedure about every five or ten years. This protocol is not absolutely necessary. The cost per life saved may be quite high, perhaps one million dollars or more. In Canada, the budget does not allocate enough equipment and specialists to carry out this protocol. On the other hand, the colonoscopy protocol is not absolutely unnecessary. The scientific evidence strongly supports the efficacy of the protocol for preventing a very common form of cancer.

Consider the case of a young woman with cancer. After one attempt at chemotherapy, the cancer returns. Suppose that the best available treatment at this point costs $100,000 and offers a chance of working of only one in 200. A rational bureaucrat might say that you would have to treat 200 such people to save one life, for a cost of $20 million. But would you be prepared to say that this treatment is absolutely unnecessary? Would you say that if it were your own daughter?

Americans do not want to change the way that they make medical decisions today, and President Obama recognizes that. However, our health care spending decisions create a financial mess, because we are spending each other’s money. President Obama recognizes, too, that this system is unsustainable.

What President Obama does not acknowledge is the fundamental contraction between rhetoric that promises the status quo to individuals while also promising to solve fiscal problems that can only be achieved through reductions in our use of medical services. Politically, this “hope without change” promise is difficult to assail. The internal contradictions will only become evident in later years, when the tough choices have to be faced.

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Arnold Kling is an economist who worked at the Federal Reserve Board in the 1980s and at Freddie Mac in the 1980s and 1990s. He blogs at Econolog.
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