A Libertarian Appreciates Public Health Insurance

January 21, 2022

Summary: Conservative columnist Ross Douthat of the NY Times wrote this week about his shifting views on health insurance. He evolved from supporting a fully free market, to public catastrophic coverage, to more generous public coverage. But he worries that centralized universal coverage would stymie life-saving innovation. He needn’t.

How Being Sick Changed My Health Care Views
New York Times
Jan. 19, 2022
By Ross Douthat

[bolded subheadings by HJM, followed by article excerpts]

2013, based on Oregon Medicaid experience: access to Medicaid helped people avoid “catastrophic expenditures” and reduced their depression rates. … ideal insurance system would cover genuinely catastrophic expenses, helping people avoid bankruptcy and the worst kind of mental stress — but avoiding the overtreatment and cost inflation that you get when you earmark too many public dollars for health

2015, with an undiagnosed illness: I was sick and had absolutely no idea what was wrong with me — which meant that I went from doctor to doctor … object lesson in the ambiguities contained in terms like “overtreatment” and “unnecessary care.” Because considering my ultimate diagnosis, all of these visits were a form of overtreatment. … my perspective as a patient it was all reasonable and necessary…. Nor was I in any position to act as a discerning consumer or a good capitalist, … as a patient I was simply too vulnerable and desperate to do anything save throw myself on the medical system’s mercy.

limits of a libertarian vision of the patient as a cost-sensitive consumer. … the importance of insurance coverage for stable mental health, greater peace of mind, in situations where you’re worried that not only your body might be ravaged but also your finances as well.

But, disenchantment with official medical views:  entered a world where the official medical consensus had little to offer me. It was only outside that consensus, among Lyme disease doctors whose approach to treatment lacked any C.D.C. or F.D.A. imprimatur, that I found real help and real hope. … more skeptical of any centralized approach to health care policy and medical treatment. … if I couldn’t trust the C.D.C. to recognize the effectiveness of these treatments, why would I trust a more socialized system to cover them?

Faith in profit as motivator: more free-market systems yield more inequalities but also more experiments, America [with higher drug prices] also produces an outsize share of medical innovations. Whatever everyday health insurance coverage is worth to the sick person, a cure for a heretofore-incurable disease is worth more.

The ACA insight: clearest legacy was its Medicaid expansion, and that the attempts to build a thriving individual-insurance market and rein in unnecessary spending had met with less success, … skepticism about the patient-as-consumer hopes that undergird Obamacare’s exchanges.

Cost control as impediment to cure: Once you’ve become part of the American pattern of trying anything, absolutely anything in order to feel better … the idea of medical cost control as a primary policy goal inevitably loses some of its allure, and the American way of medical spending looks a little more defensible. … sometimes what seems like waste on the technocrat’s ledger is the lifeline that a desperate patient needs.

Comment by: Jim Kahn

Libertarian NY Times columnist Ross Douthat describes his fascinating trajectory from public insurance skeptic to enthusiast, first supporting public catastrophic coverage and more recently – after an undiagnosed chronic illness led him to search widely for help – supporting broader coverage. He believes in the mental health and financial benefits of insurance. Yet he worries that the “medical cost control” focus of a centralized system like single payer would cost lives by disincentivizing life-saving medical discovery. He needn’t, for several reasons.

First, our biggest problem isn’t inventing life-saving drugs, it’s providing access to the life-saving treatments we already have. Single payer excels here. Remove financial barriers to care, and we avert 50,000-100,000 deaths per year. And hundreds of thousands of medical bankruptcies.

Second, single payer doesn’t focus on controlling costs. Yes, it controls costs – by removing massive spending on wasteful insurance administration and profits, reducing ineffective care, and lowering drug prices. But the focus is on providing broad access to care. The system would retain massive resources.

Third, negotiated drug prices under single payer would allow for continued substantial pharmaceutical profits. The sky-high returns in pharmaceuticals could readily tolerate reduction to typical (substantial) corporate levels. The drug companies exaggerate their current research costs, and would continue to innovate vigorously.

Finally, Douthat’s notion that a universal system would impair access to as-yet unapproved therapies is wrong, and wrong-headed. It’s wrong because individuals will be just as able to pursue unapproved treatments under single payer as within the current fractious system, which as Mr. Douthat discovered does not pay for these therapies. Indeed, single payer with lifelong enrolment may be fairer and more generous in coverage decisions than private insurers, who have high beneficiary “churn”.

It’s wrong-headed because the processes we use to formally assess the value of new therapies – eg clinical trials overseen by the FDA – are critical to foster effective treatments, weeding out false hopes. Our system of drug evaluation is imperfect, but far superior to a less formal system or none at all. And post-marketing effectiveness surveillance should improve with excellent single payer claims data.

I’ll end with a cogent reflection by Don McCanne: The major point here is that Douthat, as a credible libertarian with a significant medical disorder, is now more comfortable with the “uneasy, unfinished place” where Obamacare has ended up. He has “more appreciation for the basic Medicaid guarantee, and more skepticism about the patient-as-consumer hopes.” Cloaked in these words is the concept that we have more security for our health care when we have a guaranteed government program of social insurance than we do when we are dependent on the marketplace for healthcare. That is quite a shift to the left for a libertarian.