Mises on Death Panels (Implicitly)

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.

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).

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?

@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.

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.

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.

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.

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.

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.