Health Care, Education, Spending, and Outcomes
By Arnold Kling
I attended a Cato event at which Glen Whitman and Ezra Klein discussed health care spending. The main stylized fact is that those who spend more on health care do not necessarily get more. As Ezra puts it
The evidence seems to be that systems that spend $2,500 and systems that spend $7,000 give fairly similar results. More health care dollars does not bring you more health care results, and this is true across nations, but also across states (Minnesota v. Florida). Health care does not seem like a good place to overspend. We should probably err on the side of spending less, not more. Instead, we err on the side of spending much more.
In other words, we are all Hansonians now.
I believe that the same stylize fact holds in education. [UPDATE: Andrew J. Coulson confirms this.] That is, the U.S. spends more per capita than other countries on K-12 education, without better outcomes. School districts that spend more per capita do not necessarily get better outcomes. So I asked Ezra if that implies that we should err on the side of spending less on education. He demurred.
Ezra wants to see a heroic national effort to ration health care, so that we stop wasting money on it. That seems a bit odd, when you think about it. We waste money on cars, food, and lots of other things, and we don’t call for rationing.
What people on the left will say is that socialized medicine is cheaper. The notion is that we need to socialize medicine because otherwise our health care system will be wasteful.
However, I look at it the other way around. The only reason I worry about waste in the health care system is that it is socialized. If you were wasting your own money on medical procedures with high costs and low benefits, that would be none of my business. I only care because you are wasting my money.
Where I come down on this issue is that I believe that we waste money on both health care and education. I would be ok with providing means-tested vouchers to people to enable them to buy health insurance or pay for their childrens’ education, but I would get rid of all other government subsidies in those fields, including public schools. My guess is that if such policies were adopted, spending on education and health services would go way down, and outcomes would not be adversely affected.