Help the Sick and Reduce the Debt: The Moral Economy of the Health-Care Debate

 
 

The health-care debate presents us with a moral imperative to solve an economic problem, but how we solve this economic problem has moral implications: allowing individuals and families greater freedom to choose among treatment options in a market that drives down costs, or establishing centralized control that makes utilitarian calculations of the worth of different people’s lives.

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As we consider the options before us in next year’s presidential race, it’s vital to keep in mind the stakes of our politics. We are accustomed to dividing our great policy debates into those that involve profound moral issues and those that involve complex practical problems. On the one side are matters of conscience and the social order—like our debates about abortion, marriage, civil rights, or euthanasia. On the other side are matters of accounting and efficiency—like our debates about economic policy, the deficit, transportation, or energy.

But in fact, the most important public questions—including all of those listed above—combine elements of the philosophical and the practical. All of public policy is about setting priorities, which must always be done with an eye to both principle and practice, and every moral choice in politics must somehow be implemented in practical terms.

Nowhere is this inevitable intertwining of the moral and the practical more evident than in the health-care debate that has been raging in America for the better part of two decades, and that has been especially prominent in the past two years. Simply put, the health-care debate presents us with a moral imperative to solve an economic problem. The moral character of the imperative does not negate the economic character of the problem (and therefore the need for an economically viable solution), while the economic character of the problem can never blind us to the moral weight of the matter. This combination of the moral and the economic is what makes the health-care dilemma so challenging, but awareness of the combination helps us to distinguish among the solutions offered by the left and the right.

The moral imperative we confront in the health-care debate presents itself in two distinct facets. First, there are the 50 million Americans who lack health insurance today, and are therefore potentially without access to routine and chronic care. To be sure, some of them have chosen not to buy insurance, though they could afford it. Some are in the United States illegally, and so do not qualify for programs that otherwise assist the poor. But several tens of millions are simply unable to afford coverage. They are not poor—the poor are insured by the Medicaid program. They are not elderly—the old are insured through Medicare. They are, for the most part, lower middle-class people who do not receive insurance through an employer (as most American families do) and cannot afford to buy it on their own. And their numbers have grown in recent years because the cost of insurance has been growing far faster than wages.

Meanwhile, the second moral facet of the problem is the immense burden that our health-care entitlement programs present for the nation’s future. The numbers are depressing and staggering. A decade from now, our national debt will be as large as our entire economy—a level of debt we have not seen since the immediate aftermath of the Second World War—and (unlike the late 1940s) it will be on a trajectory of persistent ballooning growth. By 2035, according to the Congressional Budget Office, the debt will be twice the size of the economy and still expanding quickly. The resulting much-diminished economic growth will cast a great shadow over the prospects of the next generation, which will be unable to experience anything like the prosperity that Americans have taken for granted over the past 60 years. This is a moral problem at least as much as an economic problem—it is a failure of the present generation to meet its charge to the future.

Our health-care entitlement programs are by far the foremost cause of this coming explosion of debt. In its latest long-term projections, published in June, the Congressional Budget Office reported that, between now and 2050, federal spending on health-care entitlements (especially Medicare and Medicaid) will nearly triple as a percentage of the economy, while all other federal spending (including defense, discretionary spending, even Social Security—everything but interest on the debt) will actually decline as a share of the economy. Health-care entitlements are, in short, entirely responsible for our long-term debt problem.

These two moral facets of the health-care debate at first seem to contradict one another. More and more Americans are uninsured, even as the cost of paying for our existing health insurance programs is growing so large that it risks crushing the economy. So does the government need to do more or less to provide health insurance? Democrats in the health-care debate tend to emphasize the first of these problems, and so argue that more public spending on coverage is needed, while Republicans usually focus on the second, and so devise ways to cut health-entitlement spending. But wouldn’t focusing on one problem make the other worse? Is there a way to address both at once?

To answer that question, we need to grasp the underlying economic problem that explains both moral facets of the issue: the exploding costs of health coverage and care. The cost of health care has been growing far faster than the general inflation rate for decades. Last year, health-care costs grew by more than 7%, while inflation was below 2%. That means that the cost of insurance premiums is rising far faster than people’s wages, leaving more and more people unable to pay for coverage. And, combined with demographic trends that mean a greater share of the population is over 65 than ever before, it means that the costs of our health-care entitlements are growing far faster than tax revenues, leaving the government more and more in debt.

The health-care debate is therefore properly understood as an argument about how to restrain the growth of health-care costs. The moral dilemmas that compel us to act force upon us an economic question: what can we do to keep costs from growing so quickly without undermining the quality of care and people's access to it?

The debate now being fought in the political arena does in fact arrange itself along two different sets of answers to that question—answers grounded in economic premises, but which send us back toward the realm of moral analysis and judgment. The two answers derive from two different views of what makes for economic efficiency. Clearly, the problem with our health-care system is that it is grossly inefficient. But why?

Liberals tend to believe that our system is inefficient because it is chaotic and unfocused—there are too many players doing too many things in too many different ways, and none is moved by a concern for the public interest, so the system is a costly mess. It would be much more efficient if it were made more orderly—a system directed to the public good, governed by a single set of rules, managed by knowledgeable experts who understand what kinds of care are cost-effective, with just a few large providers of insurance (if not one huge provider) using their weight in the market to compel lower prices and more efficient delivery of services.

This vision is roughly what the health-care law enacted last year aims to make a reality: to restrain the growth of health-care costs by putting the health-care sector under tighter supervision and making the government a larger buyer and provider of coverage. It involves a vast expansion of Medicaid, more price controls in Medicare, and a system of highly regulated state insurance exchanges that will gradually transform the private insurance sector into a system of public utilities.

Conservatives tend to believe that our system is inefficient because it is too opaque and over-managed—that the fee-for-service structure of Medicare (which pays doctors by how much they do rather than how efficiently they work), the design of Medicaid (which allows state officials to increase spending at the federal government’s expense), and the powerful tax incentive for employer-provided insurance (which prevents consumers from making purchasing decisions and so prevents the emergence of a real market) all make for a badly broken health sector incapable of finding paths to efficiency in the ways that a market economy normally does. What is needed, they say, is a real market in which insurers compete for consumers and therefore have a reason to offer an attractive product at a low price, which would cause them to work with health-care providers to find more efficient, innovative ways of organizing their work.

That is roughly what most conservative health-care proposals aim to do: to restrain the growth of health-care costs by giving consumers real choices and making the health sector more competitive and therefore more innovative. This change involves turning today’s health-care entitlements (including the tax preference for employer-based coverage) into a system of premium-support subsidies to be used in a highly competitive private insurance market in which insurers and health-care providers have broad latitude to experiment with different avenues to efficiency and quality.

In other words, the left argues that experts know how to produce efficiency and that centralized control is the best way to empower experts, while the right argues that markets best discover paths to efficiency and that consumer choice and competition offer the best operating strategies for markets. That difference is the essence of the health-care debate.

But that does not mean that the moral significance of the health-care debate is only apparent or relevant in defining the problem, and not in assessing solutions. The two kinds of solutions offered differ not only in their economic assumptions but also in their moral consequences.

Centralized management of the health-care sector inevitably invites an explicitly utilitarian approach to comparing the worth of different people’s lives as a matter of public policy. Deciding what treatments to cover for which patients involves the government’s determining whose lives are worth living and whose are not. Princeton’s Peter Singer, an unabashed advocate of such public rationing, explained in the New York Times a few years ago that such an approach would, for one thing, require the government to value the lives of the disabled less than those of everyone else—a quadriplegic, for instance, should be valued at roughly half the worth of a healthy active person. “Some will object that this discriminates against people with disabilities,” he wrote, but that’s only because we begin from the premise that all human beings are equally valuable. That can’t be true, Singer argued, since the very fact that we seek cures for illnesses and disabilities proves that we believe such conditions make life less worth living. He concluded: “Disability advocates, it seems, are forced to choose between insisting that extending their lives is just as important as extending the lives of people without disabilities, and seeking public support for research into a cure for their condition.”

This kind of embarrassing sophistry is precisely where public control of the health-care system, and the resulting public rationing of treatment, must lead—to a rejection of human equality as a principle guiding government policy. Centralized bureaucratic administration of coverage decisions leaves no room for moral diversity (so, for instance, Obamacare compels everyone to fund abortion, despite some cheap tricks employed to make it seem as though money is not fungible). It leaves no room for individual decisions, and fewer ways for families to weigh their priorities and make unavoidable but difficult judgments humanely and compassionately.

Of course, any system of health insurance has to involve decisions about what to cover and pay for—and, in that sense, what to ration. But an underappreciated virtue of the market is that it puts such decisions far closer to the ground, and so to the people involved. Allowing for a wide variety of insurance options means giving people more choices and more power, and therefore also allowing families far greater freedom to choose among treatment options with their doctors. Hard choices will still need to be made, but having more of them made by families and physicians with some power to choose is vastly better than having all of them made by distant bureaucrats with the power to impose.

Believing in equality does not mean pursuing one-size-fits-all public policies. On the contrary, central planning and command-and-control administration too often require a betrayal of equality. Public rationing is not private rationing writ large; it requires an explicit rejection of our most fundamental national premise. Enabling a private market—backed with subsidies to allow those with lesser means to choose among options for themselves—would not only avoid the economic inefficiencies of central planning; it would also reduce the moral enormities of public rationing.

Of course, a more market-based approach would only reduce, not eliminate, such problems. In a competitive health sector, some rationing decisions would be made by insurance companies, not by families, especially in cases where the family’s means are limited. Having insurers make such decisions is marginally better than assigning them to a panel of distant public officials—since the insurers are more directly answerable to their consumers and more directly in touch with the particular physician on the spot—but only marginally so. Well-conceived public policy could significantly constrain the problem and expand the range of options available to families and individuals, but it could never eliminate it.

No one could argue that the market is a perfect solution to the economic inefficiencies of the health sector or to the moral travails of medical decision-making. But in both cases, it is easy to see how a regulated but highly competitive market backed by subsidies is a far better solution than central planning.

It is not by coincidence that the fiscal and moral concerns that define the health-care debate are both best (if always imperfectly) addressed by market-based solutions. For all the tension between market capitalism and traditional morality, both begin from a belief in the essential equality of all and the profound freedom and dignity of the human individual. Social and fiscal conservatives hang together—and jointly oppose the technocratic collectivism of the left—for far more than pragmatic reasons.

Seeing that deeper case for conservatism requires not only reflection on first principles but also careful examination of the complicated questions that underlie our most divisive and prominent public-policy debates. Those debates always combine moral with practical elements, and so always require the engagement of citizens—and the guidance of leaders—armed with principle and prudence alike. That combination is just what we should put to use as we consider who our next president should be.

Yuval Levin is editor of National Affairs and a fellow at the Ethics and Public Policy Center. This essay is part of the 2012 Election Symposium. Read all of the entries here:

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