June 5, 2009 featuring Arnold Kling

" Ensuring the public against big health care expenses is -- challenge though it's not clear that a government run health plan could make it happen without sacrificing either quality. Or access. Arnold kling author of crisis of abundance rethinking how we pay for healthcare believes the values that drive health care reform more often at loggerheads. And the government's role should be limited. He spoke at a Capitol Hill briefing June 2 2009. The -- offense is available at Cato that'll work."

" Health care costs are driven to a large extent. By extravagant use of medical procedures that have high cost some of benefits. So I think in general -- health care policy wonks understand this the health care policy want those interviewed and then things six weeks ago is. Obama I think if he and I were sitting on a panel. In a relatively private setting discussing. Health care what's going on I don't think we would be that far apart. But as a politician and president he has other responsibilities. And I think those other responsibilities will lead him. To deal with health care and in a way that's very different from what they policy wonk and deal with. A -- sort of a prelude to this really is what through the five X five points about the economics of health care and these are again all on the book crisis of abundance. First picture a triangle with the top is sustainability affordability. Sustainable affordable health care system. Over here. It is a system where people have unlimited access to procedures that is there's no rationing of health care. And then over here. Is people had. Don't have to pay for their health care services they're insulated from having to pay for the and so what we want as individuals this to have unlimited access to medical services without having to pay for them as we want to be at these. Include deal with these points in the triangle. The problem with that is that if you give everybody -- limited access to medical services without having to pay for them -- you end up with is an unsustainable affordable unaffordable systems so you have a problem with atop the -- and you can't. These three points in the triangle the same time that's kind first point. And where I think the debate has more logically should be assuming that we. I understand the need for a sustainable affordable health care system. The debate is between how you governor's -- how -- you going to achieve that with the Bennett restrained people's use of medical services by rationing. Or by self restraint. Based on people confronting the cost of their services and having to pay more out of pocket. And make different decisions based on that having to pay out of pocket. So it if the real debate ought to be between. Rationing. By. Centralized management or rationing by the decentralized price system. I've never met anyone from the left who wants to have that toe to toe debate they've got all sorts of debating tactics for invading that. And that's. NASA and I've never actually engaged in that debate and into the I think -- I could I could debate that from either side by the way I could make a case that it would be morally superior to have government to rationing and I don't. -- ultimately that is the the right answer I think it's. You know I don't think the left is hopeless if they try to get into that debate but they'd rather not. Located so that's the first point is that there's this triangle he can't be at all three points on the trying. Second point is that there's a large gray area. In Madison. That is the gray area is procedures that are neither absolutely necessary -- absolutely unnecessary. In the and hand out with the interview with the wrong with Barack Obama he mentions that his grandmother had terminally ill cancer and had. Hip surgery. And you can see from the tone of and he's not really sure that that hip surgery was really worthwhile in the end because you know her health went downhill rapidly afterward. Iraq that is a lot of similarity with between that and what I experience with my father about a year and a half ago again term -- cancer. Hip surgery and then just a rapid downhill from now. And so because at some -- fraud issue and that's you know sort of it's. -- its -- more extreme example of the group of the gray areas may be it's. -- absolutely necessary maybe it's honestly and necessary. Plenty of other examples of the gray area of the -- I like she's the most is for those of us over fifty. Happy birthday you're supposed to get a routine colonoscopy screening to screening for colon cancer. And that's not absolutely necessary. In Canada. They don't do that and candidate they don't have the equipment or of these specialists needed to do. Colonoscopy screenings unhealthy people to screen you know two witnesses screened for colon cancer. And it may be the right decision wouldn't be surprised if the cost per life saved from that doing that is you know on the order a million dollars or perhaps more and so he from -- bureaucrats point you could say well. You know if I'm not optimize the mix of services. I'm not gonna spend a million dollars to save a life by putting everybody through -- over fifteen through colonoscopy screening every five years. What more exactly what they're saying is. Of all the ways to ingratiate ourselves of the voters. Colonoscopy screenings is not you know that's not going to win a lot of popularity contest so maybe that's that's why we don't allocate a whole lot of resources to that. -- can sue happy people are too young to appreciate what experiencing a colonoscopy is -- seem to realize that that that's not a way to win a popularity contest. And so there will be something. Now so it's not absolutely necessary that you -- that you go through this protocol of having colonoscopy screening every five years. Having said that I've done you know I. Go through that protocol. I've looked at the research on it. I'd buy into it I mean it's it really need is a way of preventing colon cancer. Not just spotting it early but actually preventing. So. SO. I would say that the colonoscopy protocol is not absolutely unnecessary either it's not absolutely necessary and absolutely necessary. And I think it's very important to understand this very area. Peter Orszag who was then head of Congressional Budget Office is now head of the office of management budget. Well throughout this figure 30% of health care spending in this country is unnecessary. And it's helpful and -- helpful for him to say that it's helpful in the sense that it points out where the really big. Driver of excess costs is. In. Health care spending in the US comes from our choice of medical procedures. So in that sense it's helpful to -- say some like 30% unnecessary. But it's also very un helpful. T use the term unnecessary. As if this is a binary issue that there's a very bright line dividing. Necessary. And unnecessary health care. Because the truth is there's a huge gray area my guess is that the amount. Spending on procedures that is absolutely unnecessary. It's probably weigh less than 5% it's not knowing you're 30%. I'm gonna handle the amount that's spent on clearly necessary procedures might only be a quarter and then in the -- is huge gray area two thirds or more of spending that's neither absolutely necessary -- absolutely unnecessary. So that's my second point that there's a very big grade area. And when you do. It is so when. Peter Orszag talks about doing comparative effectiveness research I'm actually all for comparative effectiveness research but I don't think it's -- Create a dividing line between absolutely necessary and absolutely unnecessary I think what is going to do is going to. Shed more light on this gray area. But it is not going to dictate. What ought to be done in every case it's not going to dictate to individual doctors are individual patients what the right choice should be. At most it'll give a little bit more statistical guidance. But he is not going to be a who is not going to divide the world into necessary and unnecessary procedures there will still be in large gray area we'll just know a little bit more. About some of the probability is involved."

" Arnold kling is author of crisis of abundance rethinking how we pay for health care yeah. The couple Capitol Hill briefing is available at Cato got to work through it."