It should probably come as no surprise that I’m a pretty devoted Democrat: I mean, I’ve worked for Democrats, I vote for Democrats, I don’t see much of a viable option outside Democrats when it comes to advancing the things I care about. But I’m also a political scientist, economics enthusiast, and a skeptic, and I can’t give lousy thinking a pass just because it’s my team pushing it.
In this case, I’m talking here about the idea that because Americans seem to spend a heck of a lot on healthcare, with results that are poorer than many other nations, that this proves our healthcare system is subpar. Like’m or hate’m, Greg Mankiw does a pretty good job of laying bare how those sorts of claims mislead rather than inform.
Now, I’m not saying that our healthcare system isn’t screwed up, or couldn’t get any better. It’s just that tropes like “Americans spend more on healthcare and get less out of it” are just maddeningly foolish and simplistic as indictments against our system. Any good scientist should know that it just isn’t that simple to draw causal conclusions from such things: there are just too many counter-intuitive factors, countervailing effects and complications. And any good economist should know that changes in, say, the effectiveness of healthcare will unavoidably change people’s behavior, and the effects of those changes can have surprising and often unpredictable confounding results. Reform of our system should be based on understanding, not ignorance and slogans.
Heck, while Mankiw doesn’t really delve into this, the fact that Americans have such seemingly poor comparative health outcomes despite putting so much more money into healthcare could just as well be evidence that our healthcare system is actually well worth the money rather than the claimed opposite.
Consider this: people like to be healthy and live as long as possible. But they also like to enjoy life, take risks, eat fatty foods, and so on. And to some extent, these good things trade off with each other: you can either eat McDonalds every day of your life, or you can live a long healthy life, but you can’t have both.
Or can you?
Well, in fact, more efficient and effective healthcare does provide exactly that: if you are willing to spend the money, modern healthcare really can allow you to enjoy more burgers without as many of the negative consequences on your lifespan. Whether that means you live longer and healthier or just as long but more gluttonously, or even shorter: that’s all up to the particulars of people’s preferences (which is one reason why you can’t just “know” what’s really going on with healthcare from a few stats: you have to do the hard work of finding out).
Now, unless you really love graphs, this is hard to envision without an abstract example, so… consider Jim. Jim currently chooses to enjoy eating a 40% fast food diet which will shorten his life by 10 years. Were he to increase his percentage to 50%, it would shorten his life by 30 years: the cost (dying that much younger) is no longer worth the benefit (Big Macs) to him.
But along comes modern medicine: instead of the snake oil tonics of yesteryear, there are cutting edge cholesterol drugs, EMTs with defibrilators, and heart valve replacements. If Jim is willing to increase his healthcare expenditures considerably, then he can increase his fast food consumption to 50% but only shorten his life by 20 years.
This all being worth it to Jim, he does so. And the outcome is 1) way higher healthcare costs 2) seemingly worse healthcare outcomes 3) Jim is happier overall.
Now, you can claim that Jim is nuts, or you can claim that Jim isn’t representative of most Americans. Those are, in fact, important empirical matters when it comes time to debate the reality of healthcare reform. But my point here is simply that unless you understand and consider the possibility of cases like Jim, and how they can have counter-intuitive effects that totally negate any simplistic comparisons of inputs to outputs, you’re pushing crap rather than understanding.
Don’t DO that!