Mises on Death Panels (Implicitly)
Unlike most opponents of Medicare, I think that restricted reimbursements and so-called “death panels” are great ideas. If the government is paying the bills, saying “We’ll pay for whatever you want” or “We’ll pay whatever it takes to save you” is highly imprudent. I recently discovered that Ludwig von Mises elegantly stated the same point back in 1952:
[T]he manager of a bureaucratic operation issues instructions on many things which appear unnecessary to the businessman–how often to clean the offices, how many telephones to have, how many men to watch a certain building, and so forth. These detailed instructions are necessary because in a bureaucracy what has to be done and what has not to be done must be determined by such rules. Otherwise the man on the spot would spend money without giving heed to the total budget. If there is a limited budget you must tell the employees what they can and what they cannot do. This refers to all branches of government administration.
This is bureaucracy, and in these areas it is indispensable.You cannot leave it to the individual employee; you cannot tell a man, “Here is a big hospital. Do what you want with it.” A limit is drawn by the parliament, the state, or the union and, therefore, it is necessary to limit the money spent in each department.
If it seems cold-blooded to put a price on another person’s life, remember that each of us puts a price tag on our own lives every time we drive to the store or cross the street.
Mar 17 2013 at 11:40am
Indeed. We already have death panels. The real issue should have been, who will run them and by what standards.
One of the real dangers of letting the government run them, aside from corruption, is “majesty of the law” arguments. The state will try to enforce its monopoly on decision making in healthcare, and forbid actions that would otherwise broaden choices. We see this in Canada pretty explicitly.
Mar 17 2013 at 11:42am
I don’t think this one is so clear cut. Suppose someone’s lifetime Medicare taxes paid have vastly exceeded their lifetime claims or, if you prefer, have exceeded the premiums that would have been required to buy an insurance plan that would have covered the procedure in question. It seems wrong to say, “Sorry, ‘we’ can’t allow your money to be spent on that life-saving procedure because ‘we’ need to spend that money on someone else’s procedure that we think is more important.” We have to keep in mind that Medicare takes money away from people that they could have saved to buy health insurance as seniors. On the other hand, your reasoning is sound if the person in question contributed far less in Medicare taxes than would have been required to cover the procedure in question. Such is the problem with treating an essentially private good, like health insurance, as a public good.
Medicare not only subsidizes some people’s health insurance but also replaces others’ health insurance. It unnecessarily mixes together two unrelated functions: forced savings for old age health insurance and subsidization of poor seniors’ health insurance. There needs to be an accounting that separates the part of Medicare benefits that represents a return of one’s own contributions and the part that represents a subsidy paid by others’ contributions. The death panel’s discretion should only apply to the subsidized part. Of course, this accounting would be unnecessary if we scaled down Medicare, collecting only enough in taxes to pay for poor seniors’ health insurance. Everyone else could use the savings in taxes to buy their own private insurance as seniors. Then, we wouldn’t be put in the position of asking the government to give our own money back to us.
Mar 17 2013 at 12:29pm
People who argue against death panels are in a trap because the system justifies death panels. If you are against death panels, you must oppose the system.
You can justify anything once the government is paying the bills. Force unwed mothers to marry the father of the children in order to get welfare. Ban welfare to divorced mothers or fathers. Ban promiscuity. Ban smoking. Ban all fattening foods. Ban immigration from countries with diseases not in the U.S. Ban people from traveling to countries with communicable diseases that can be brought back. Ban people from doing any activity that is statistically riskier than some baseline activity.
Mar 17 2013 at 1:26pm
I’m not an expert on death panels or healthcare, but I can throw in some food for thought regarding the larger issues raised in this post.
Rules are necessary, but bureaucratic discretion is inevitable. Legislation and administrative procedure cannot contemplate every relevant contigency the administrator encounters in doing the government’s day-to-day business. Thus, what is the administrator to do? This is a fundamental question in public administration, and one for which economists (mostly via principal-agent-type approachs) have lots to add.
I’m not sure how pervasive the “problem of discretion” (if we can call it that) really is in the case of death panels, but it certainly comes up in other areas (e.g., defense acquisition, where sometimes it is not even a government employee, but rather a contractor, making decisions).
The ultimate quesiton, it seems to me, is whether discretion is consequential or not. Once you make that distinction, perhaps incomplete laws and administrative procedures are not so bad – provided they address the contingencies we really care about.
(NOTE: There are, of course, other sources of bureaucratic discretion. Incomplete legislation is just one).
Garrett M. Petersen
Mar 17 2013 at 2:17pm
Being for socialized medicine but against death panels is akin to being for binge drinking but against hangovers.
Mar 17 2013 at 4:09pm
It seems to me that when the government pays for our medical care, it becomes both our benefactor and our adversary. The adversarial role arises from the government’s interest in protecting its own financial interests. That is, to save medical costs, the government says it must have legal authority to deem certain patients sick enough to forfeit further medical treatment. That will obviously have a corresponding patient cost – in some cases that cost will be the patient’s death. So I think there is good reason that people are worried about “death panels” – by any name – when the government is responsible to pay for our medical care.
In any event, this notion precedes von Mises by decades. In the preface to his 1906 “The Doctor’s Dilemma”, George Bernard Shaw observed
“In legislation and social organization, proceed on the principle that invalids, meaning persons who cannot keep themselves alive by their own activities, cannot, beyond reason, expect to be kept alive by the activity of others. There is a point at which the most energetic policeman or doctor, when called upon to deal with an apparently drowned person, gives up artificial respiration, although it is never possible to declare with certainty, at any point short of decomposition, that another five minutes of the exercise would not effect resuscitation. The theory that every individual alive is of infinite value is legislatively impracticable.”
A “death panel” or whatever euphemism one might prefer, is part of a government mechanism to achieve for itself a practical medical cost. However necessary, this mechanism is inherently adversarial to patients.
Were Americans wise to have given such an unearned measure of trust to our government, especially without full and open discussion? Should not such discussion have occurred well before March 23, 2010?
Mar 17 2013 at 4:49pm
In response to Jon Fembup: The combination “benefactor” and “adversary” relationship already exists, as do death panels, within the private insurance industry. The private insurance industry is incentivized by profit. When getting health insurance, would you rather the one making the decision of which treatments to cover was choosing based on statistical effectiveness or profit?
Mar 17 2013 at 5:24pm
@Erik: You forget that if we had private insurance that was truly private (no government mandates on what can and cannot be covered), then people could pick the health insurance plan that best meets their needs and budgets. With a one-size-fits-all government plan, no one gets a choice.
Mar 17 2013 at 5:50pm
Erik asks “would you rather the one making the decision of which treatments to cover was choosing based on statistical effectiveness or profit?”
I think that’s a false choice, Erik. “Profit” is a motive; saving money against budget or to avoid tax increases is a motive. One is not more powerful than the other. And “statistical effectiveness” based on what? A specific study of how my body responds to specific treatments? Or a study of an entire population? What assurance do I have that an entire population will reflect my particular clinical need at any moment? Any physician will tell you that an average has no clinical meaning. On average, Americans have one testicle and one ovary. Will a government dictate the use of statistical averages? If yes, I think that involves dangers that people are correct to worry about.
Of course I recognize that private insurance restricts choices. But I think it’s rational to fear that government will allow still fewer choices and those choices will be regulated by nameless, faceless and hard-to-access bureaucrats, working in a bureaucracy that is even more resistant to change that private organizations are. MingoV gets it – government solutions tend to be one size fits all.
Mar 17 2013 at 7:01pm
The fact that Medicare is an open ended commitment to “pay whatever it takes” is the core of the reason that health-care costs inflation is spiraling. Medicare, and other third party payment systems that effectively provide such an open-ended commitment.
Health care is a price inelastic good. People will spend whatever it takes to stay alive, especially if it is someone else’s money. It’s also something to which there is no definite limit to how much you can consume, except technological barriers, which are fast being eliminated. We’re all mortal. We all want to be immortal. Not many people will choose death over life attached to costly machines. At least not until quality of life declines to a very bad state.
What tends to happen to the price of good which are price inelastic and for which demand far outstrips supply? Why should be be surprised that health care costs are rising.
Note that the ACA not only *doesn’t* impose any serious rationing in Medicare, it also extends the open-ended commitment to everyone in society, by banning lifetime coverage limits. There is really no mechanism for insurance companies to control costs, since they have no bargaining power, since the law does not allow them to deny treatment.
Mar 18 2013 at 8:06am
Governments find it terribly difficult to impose death panels, or even “slightly increase the odds of death by denying this treatment” panels.
Mar 18 2013 at 8:50am
Republicans such as Paul Ryan tout “premium support” as an alternative to rationing in Medicare. I’m a staunch Republican, but I think premium support would just mean rationing by private insurance companies rather than Federal government. I don’t want the government to have a monopoly on deciding what insurance should pay for, but I don’t think rationing in some form can be avoided.
Mar 18 2013 at 9:38am
I can control the decision maker’s profit. I can’t control statistical evidence.
Mar 18 2013 at 10:00am
The whole point of calling them death panels is not to say that they don’t work, but rather to point out that they are a good reason not to socialize health care.
Mar 18 2013 at 11:05am
And of course, in Singapore, signing up for your death panel (ok, Advanced Medical Directive) is a simple two page form. And most of that length is due to witness signatures!
Mar 18 2013 at 2:22pm
The point raised by John Fembup is the most disturbing to me. We didn’t just fail to talk about death panels. Proponents of socialized medicine called us liers, insensitive, and sometimes called us evil.
Social services ought to be broadly popular. Its beneficiaries ought to mostly be happy about what we’re getting. Instead, I feel more like a small majority is telling us little people to stuff it.
Let me be clear. I don’t feel like I’m being helped. I am deathly afraid of getting caught up in Medicaire’s red tape for anything that matters to me or a loved one.
Mar 18 2013 at 5:24pm
The genius of this post lies in the last paragraph. It sums up the human experience even better than Bryan hoped. I want to cross the street whenever I want (or consume all the healthcare I want) but I don’t want you crossing the street while I am driving (or using too much healthcare).
“We” put prices on the lives of other people all the time. “We” just don’t discuss it amongst polite company.
Mar 19 2013 at 11:58am
Yes and the thing people ignore is the “death panel” does not tell you that you cannot get x treatment, it tells you that Medicare will not pay for x treatment! That seems quite sensible to me as a citizen and as a Christian.
Mar 19 2013 at 7:00pm
Now hold the phone there, Floccina. In the case of therapeutic approval agency’s like Canada’s CADTH and the UK’s NICE, it absolutely does mean that if the panel says no, you cannot get x treatment.
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