Judging Health Care

In the debate over health care, there are two broad competing visions.

The vision on the right is that we need to turn health care into a better functioning market, where consumers face real prices and have the incentive to make rational choices over their care, including additional saving to finance health emergencies. Hence, the right likes policies such as Health Savings Accounts that encourage more saving and health insurance with higher deductibles.

The vision on the left is that we need to turn health care into a government-run system, financed with higher taxes, where the government decides what you need and gives it to you. Paul Krugman, for example, has extolled the virtues of the health care provided by the Veterans Administration, suggesting that we should all be so lucky.

In yesterday's Wall Street Journal, David Wessel described some evidence that explains why the left think as they do and should give pause to those on the right:

Researchers from the Rand Corp. think tank, the University of California at Los Angeles and the federal Department of Veterans Affairs asked 236 elderly patients at two big managed-care plans, one in the Southwest and the other in the Northeast, to rate the medical care they were getting....In the second part of their study, the medical researchers systematically examined 13 months of medical records to gauge the quality of care the same elderly patients had received, using a comprehensive measure of quality developed by Rand's Assessing Care of Vulnerable Elders program....here's the interesting part: Those patients who graded the quality of their care as 10 weren't any more likely to be getting high-quality care than those who gave it a grade of 5. The most-satisfied patients didn't get better medical care than the least-satisfied.

In short, consumers of health care are often not smart consumers. So, my leftish friends would say, do you really want health care reform predicated on the assumption that consumers will make decisions rationally? Without doubt, this evidence is a challenge to my friends on the right.

The problem, my rightish friends would reply, is that the Rand study did not examine the other side of the coin. What if the quality of the health care were judged not by the consumer but instead by an employee of the postal system? Or, worse, by a random member of Congress, while he was running for reelection and accepting campaign contributions from a variety of health-care providers? Yes, decisionmaking in health care is hard, so mistakes are inevitable. But is there any reason to think that collectivized decisionmaking is usually better than individual decisionmaking? Without doubt, this question is a challenge to my friends on the left.

In the end, the issue comes down to a fundamental question of political philosophy and practical political economy: Who do you trust more--the individual or the state?