McArdle: Failure To Implement Cost Controls In Past Proves Cost Conrols Don’t Work

On controlling Medicare costs, Megan McArdle says this:

I’d say we have substantial empirical evidence that we are not going to control the health care cost inflation which is busting Medicare’s budget, much less the new costs the administration is planning to add.  We have been trying to control health care costs since the 1970s made it clear that Medicare was going to get really, really expensive.  And any idea that you care to name, from comparative effectiveness research to healthcare IT to preventive medicine . . . these have all been on the table for more than thirty years, under one name or another.  They haven’t happened.

The answer that those promising magical cost reductions need to ask is “Why haven’t they happened?” and “What has changed to make them feasible now?”  But when I ask this question, I get angry demands that I put forward my plan for cost control, rather than merely critiquing everyone else’s. This seems rather like demanding that I put forward my design for a perpetual motion machine before I am allowed to point out problems in the US energy market.

Kevin Drum replies, “[t]his is an entirely reasonable position,” before rightly explaining that cost controls haven’t been enacted because health care costs are largely hidden from view, either through employer based coverage or because taxes for Medicare haven’t reflected rising costs (these have weighed on the deficit). All of this is quite right, except for the fact Megan’s position is in fact entirely unreasonable because her argument makes absolutely no sense.

If I follow Megan correctly, because the cost controls “on the table…haven’t happened,” therefore these policies are infeasible? What? Kevin Drum’s response correctly identifies the key political impediments to enacting cost control measures, but why on earth does our failure to implement cost controls suggest that the proposals themselves won’t work if implemented? As Megan herself notes, these same reforms have worked in other countries, all of whom spend less per capita for similar or better results. I mean, am I missing something here?

Now, in fairness, Megan’s post argues primarily that health care reform has become the “Laffer curve of the left,” and that health care reforms have become a way for Democrats to argue that their policies have no cost, in the same way that Republicans argue that lowering taxes will raise government revenues. Maybe so, but given that the US spends more than any other country on health care per capita, and doesn’t manage to get better resutls for the effort, I think it’s pretty safe to say we’re on the wrong side of the curve.


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