Thursday, March 25, 2010

Technocrat's Challenge on the topic of Health Care Ethics

Looks like my last post about Dingell's gaffe has started a discussion of sorts.  I'm glad. This particular discussion is with my friend, whom I will abbreviate as CC.  I've had many illuminating discussions with him.  He's very thoughtful and I've always appreciated this aspect of his character so I am always glad to hear his opinions and reasoning on thing and to exchange with him my thinking.

He has asked me to set aside these considerations:

  • [The history of] what has happened up to this point to bring government mandates on Health care/Insurance providers and the rest of us.
He has asked me to consider a list of premises which considers to be the core of the health debate:
  • Statement: The current health care model imposes a monetary value to the life of a human.
    • Some (not all) people who work and pay for good health insurance have been put into a position where they have to acquire more money in order to either continue living or reduce any physical/emotional suffering. 
    • Sometimes the amount of money required is beyond their own abilities to acquire so they will die or continue to suffer.
    • Some (not all) people have been denied health care insurance or offered insurance at a cost that far exceeds their ability to pay.
    • As a engineer, I can reduce this down to (more money = Live, else die or suffer).  I can even boil this down to Human life = $$$$, where $$$$ is based on current supply/demand and profit margin for a particular medical treatment.
Distilled Answer - 260 words.

Living in a free society, does entail putting a price on life-saving medical treatments.  That is what makes the creation of these treatents possible.  We certainly don't expect these people to work for free, especially when they have to go through years of training to become highly specialized doctors and scientists.

It's unfortunate that people are in such desperate need when they are in harm's way due to a medical condition but that is not the fault of the doctor or the insurance company who are only each trying to do their part.  The insurance companies shouldn't be punished for trying to reduce risks via pricing and selection.  That is part of how insurance fundamentally functions as a risk mitigation device.

Similarly it would be unfair to hold a mortgage on the rest of society by the mere fact of your desperate need.  Need doesn't give anyone a right to override the individual rights of others. If you cannot afford a treatment, you are not entitled to pick the pockets of others to pay for it.  You must ask for charity. 

Finally, you can't ignore the role of Congress in destroying private individual health insurance via tax subsidies to employers for health benefits and arduous regulations which have serious economic effects.  You cannot have a full discussion of the morality of medicine and health insurance without discussing the regulatory framework and incentives that the government has created.  A return to a free market would bring competition, rewarding efficiency and innovation, thus making medical goods and services cheap and plentiful.

Because I tend to think in fundamentals, I will usually not accept the such premises as they have been presented without some analysis.  My notes, observations, and responses follow.  They are quite lengthy.
  • In a civilized society, where we have engaged in specialization and trade, money is the medium of exchange.  
    • Whether in a society or not, as human beings we have to support our existence by our own effort.  We cannot work at a net loss indefinitely.  If poking around in the dirt all day doesn't yield any crops, you're done for. 
    • Productive work is creative thought and action applied to the problem of survival as a human being.
    • We use money as a means of exchanging non-homogenous goods and services incrementally. 
    • The only way to establish objective value of a good/service is by mutual and voluntary trade on a free market. 
    • The better we are able to produce specialized and objectively valuable goods or services, the more we are likely to be paid for them.
    • Summation: Money is not evil, it's only a medium of exchange.  Money is good when it is the manifestation of your ingenuity and hard work turned toward the task of production.
  • At any time in history, if I get a serious disease (disease X) or injury for which there is no known cure/treatment, I am at risk of death if my body cannot naturally heal.  
    • You might compare this to cancer or HIV/AIDS in present day.
    • Now we add the this scenario... If after years in school and then years of research and hard work someone invents a cure for disease X, now I have a chance for survival.  Does this person therefore owe me the cure?  
      • If you answer yes, you now have an ethical dilemma.  Does this person make himself my enemy by inventing the cure for my disease?  Before, I had little hope of survival.  Now this man stands between me and death?  Would it have been better if he had not invented the cure? This is part of the contradiction that the morality of altruism presents.  Altruism doesn't make a virtue of innovation, hard work, or self-interest.  Only sacrifice.  Sacrifice doesn't invent anything.
    • I would say that that person who invented the treatment/cure owns it and may charge whatever he deems appropriate for it.  
    • Let us continue examining the moral boundaries here:
      • Do I have a right to the cure simply because I need it desperately, I am suffering, and my life depends on it? No.
      • Do I have a right to insurance coverage to be paid for by others without their voluntary consent just because I need it desperately? No.
      • If I have insurance but it isn't enough to cover the expense of the cure, do I have a right to force the insurance company to pay me more than they have agreed to?  No.
      • What were my chances of surviving if no one had invented a cure? ZERO.
      • So if someone invents something that other people need, and the government decides that it works well enough that people now have a right to it, the inventors make themselves victims or martyrs?  Sounds like it.
      • If this is how it happens in practice today, is it just?  Absolutely not.
    • Summation: I have no right to the creations of others regardless of my need.  If they had not invented it, I would probably have died.  Now that they have invented this medicine, at least I have a chance.  If I cannot afford it, I am not entitled to pick the pockets of all to pay for it.  I may ask for charity.  
      • additional observation:  only people who have a surplus (profit) can afford to give charity.
  • I wanted to include a few notes about insurance from Thomas Sowell's Basic Economics 3rd Edition.
    • Insurance transfers and reduces risks.
      • Transfer - the insurance company assumes the risk of compensating for losses caused by [disaster]
      • Reduces - [the insurance company] charges lower prices to safe drivers and refuses to insure some homes until... flammable materials near a home are removed...  It charges different prices to people with different risks.  That way it reduces its own over-all risks and, in the process, sends a signal to people... conveying to them the costs created by their chosen behavior or location.
      • ...risks are not simply transferred from one party to another, but reduced in the process.  That is what makes buying and selling an insurance policy a mutually beneficial transaction.
    • Forcing insurance companies to charge the same premiums to groups of people with different risks means that premiums must rise over all, with safer groups subsidizing...
  • And more generally regarding economics... Is it proper to use economic principles to make life and death decisions (put a price on things)?  Absolutely.  We are human and we need values to guide our decisions through life.
    • Economics is all about the allocation of scarce resources that have alternative uses (values).
      • How much should I spend on housing?
      • How much should I spend on food?
      • How much should I save as a cushion in case some unexpected disaster happens?
      • These are incremental alternative uses of time and money.  You can't help the fact that you have to put a price on your survival.
    • For instance you work productively to support your existence.  You may get a paycheck or you may own a business.  The bottom line is that you can put a price on your time.  This may be evident to people who change jobs to spend more time with kids (e.g. stay at home mom).
    • In a case where you are not destitute, you can put a price on whether you need a shiny new computer vs. a new kidney.  It depends on how you value your life and whether your kidneys are in good function.  If you kidneys are failing, the computer can wait.
    • In considering the question of value, you must consider of value to whom?... 
      • In your life, the final arbiter of value is your rational judgement.   
      • If you are in desperate need of a procedure or cure, and it will save your life, one might argue that the value of the procedure is, to you, immeasurable.  This is not true for the medical professional who performs the procedure.  He doesn't take your life in exchange.  
      • To a bystander who doesn't know you that well, you may gain his empathy but you cannot in reason expect him to value your life more than he values his own and risk financial ruin to help you. 
Now we can look at the premises presented above and see why they don't tell the whole story:
  • CC presents the premise of a person who is denied health care insurance at a cost that is not affordable.  
  • CC seems to ask whether we are putting prices on lives here. My response is to ask who is doing the putting and whose lives are at stake.  His question seems to imply that we, the voters, are in the position of deciding and that we are, in effect murdering people, if we do not vote for universal health coverage.
  • Given that he's asked me to set aside the history of government action that has led to the current state of the cost of health care insurance, I would have to accept his premise as a given.  Health insurance is just expensive , we don't know why.
  • But it is not a given.  The cost and availability of medical care and of insurance for medical catastrophes is a dynamic economic issue with supplies and demands capable of shifting with the economy unless government regulations act to make them more static.
    • Supply factors can depend on existing supplies: Number of pharmaceuticals producing new drugs, Number of surgeons/doctors/nurses/etc.  Number of hospitals/doctors offices/etc. 
    • Supply factors are altered by profitability: Are they people in the medical fields permitted to make a profit?  Do they make a large profit?  If yes, expect more competitors unless there are licensing and regulatory requirements that prevent new entrants.  If costs are being held down by price control, expect people to leave the field (retire early), and few new entrants.
    • Demand factors are related to Insurance Risk Transfers: How much does it cost out of pocket to go to the doctor?  How much does it cost to get drugs?  How much does it cost to get certain drugs over other drugs?
    • ...and to Insurance Risk Reduction: Can the insurance company charge more or deny coverage to steer people toward less risky behaviors?
  • It is important not to forget that in economics prices serve to permit a decentralization of intensive information and creates a division of labor in a society and relays information to people that a given good/service is highly valued and that there is room for more competitors and innovation where there are large margins.  This mechanism is what enforces the strict efficiency and the resultant innovation which results in low prices and wide availability.
So the final question is whether I may properly consider this to be putting a monetary value on a human life.
  • I think the answer is yes if you are the ill person: Price, no object.  
  • As to the question of whether putting a price on (buy/sell) medical services is putting a price on human life?  Medicine is about fighting disease, which might otherwise kill you.  Because you trade for medical services, you have to put a price on it.  This is what makes medicine possible in a free society.
    • We can't pay these people enough if they save our lives.  They should be compensated for their years in school (or years of research and failed clinical studies).  Only they can determine what level of compensation is fair (on a free market).
    • It isn't human lives here that are being priced, it is the question of what is being researched and developed?  What areas are under-supplied?  What areas are over-supplied?
    • If something is under-supplied, the price will be high.  This may lead to more production/research/entrants in that field if regulations do not interfere.
    • If something is over-supplied, the price will be low.  This will cause people to find more profitable areas of the medical field or some other field.
    • Important principle here: prices (and profits) are a communications tool in an economy as to where scarce resources are valued.
    • A return to a free market would bring competition, rewarding efficiency and innovation, thus making medical goods and services cheap and plentiful.