Health Care Costs and Conflicting Cycles of Responses: Back to the Future, Part 2

Earlier this year,  another round  of congressional hearings on  rising health care costs  focused, predictably, more on who is to blame and less on  how to slow cost growth more sustainably . Most policy “solutions” advanced tend to be incremental and aimed at the lowest hanging fruit, yet usually remain hard to bring to the finish line in a Congress that prefers more to accuse than execute. There is no shortage of proposed policy responses, which can usually be categorized by which health care sector they prefer to target and blame.  From the Left , private insurers take most of the heat. From the Right,  hospitals are the main target . Pharmaceutical firms may take shots from either side, depending on which (and whose) recent administrative pricing deals are being saluted or criticized. Some of these reform proposals have merit, but their reach and impact may remain limited even if they overcome substantial enactment hurdles. Moreover, the history of targeting one health sector at a time suggests that the political food chain of camouflaged cross-subsidies and regulatory restrictions on competition may just be redirected and reassembled in due course, albeit with the transaction costs of tearing down and building back up. The more fundamental driving forces behind pernicious health care politics and chronically disappointing health care performance include faithless agents, limited time horizons, time inconsistency, codependency, and a well-honed tolerance for suppression of cognitive dissonance. We might need to consider more of a longer stay in rehab for the body politic, followed by the early parts of a regular twelve-step program to deter relapses, before we launch another pursuit of reform through the limited tools of electoral politics and Washington-centric policymaking. Let’s start with some better admissions and pledges: It’s not you, it’s me, but breaking up is hard to do. We  don’t know much about history  (don’t know much about biology or basic math either). Money actually is no object in paying for health care, as long it’s supposed to be supplied by someone else. Our bodies come manufactured with product defects of uncertain time lines, but we hope that receiving winning medical lottery tickets for special treatment can make us exceptions. Opaque government cross-subsidies outsourced through sticky private channels fail to deliver the welfare gains they promise.  Targeted, visible direct assistance may cost less but deliver more. Hiding and moving health care costs is easier and more tolerable than actually reducing them.      When we delegate the burdens of managing our health care choices, those intermediaries want to get their slice of the pie, too. The cost of wetting their beaks (Don Fanucci-style in The Godfather, Part II) not only adds up; it becomes the primary business objective. Why do we continue to over-rely on promised solutions through political channels that fail so consistently (except in justifying the next round of corrections while keeping their assigned intermediaries and partners in business)? Once a larger set of voters, consumers, and patients can master their own sobriety, we might hope to assign them the more essential tasks of holding others to the promises they make and taking their business elsewhere if and when they do not fulfill them. Or at least make more of the implicit tradeoffs in managing their own health more explicitly themselves. To displace the one-sided dictates of the Caesars of health care decision-making, we might heed the exhortation of Cassius: “The fault lies not in our stars, but in ourselves that we are underlings.” Okay, that’s still two steps short of full recovery, because there are indeed more specific policy changes that can help, particularly placing public subsidies more in the initial control of their purported beneficiaries and making information transparency more relevant and actionable. But the bigger hurdles to reclaiming accountability and responsibility in health care decision making reach beyond conventional politics. They involve overcoming our own human  shortcomings and dependencies , one day at a time. The post Health Care Costs and Conflicting Cycles of Responses: Back to the Future, Part 2 appeared first on American Enterprise Institute - AEI .