This New York Times opinion article is an economist making the somewhat offensive argument that maybe poor people should not be offered the same access to newer more expensive health care technology as rich people. I say offensive because that is the gut reaction. But part of the article’s point is that newer, higher-tech and more expensive don’t automatically mean a big benefit in terms of outcome and effectiveness. If they do improve outcomes, it is often just by a little bit compared to the lower-tech alternative, and at a much higher price. So it is an argument that a small increase in health is not worth a high price, or at least people should be helped to understand that tradeoff and then decide for themselves. It’s the economist’s basic argument that we live in a universe with finite resources available and we have to decide how to allocate them, and a large number of people making small decisions in a relatively free market will do that efficiently, if not necessarily fairly. Fairness is not really an economic argument, after all.
Consider, for example, treating prostate cancer with proton-beam therapy. It’s more expensive than alternatives like intensity-modulated radiation therapy, but isn’t proven to be any better. If given the choice, many people — especially those with lower incomes — might rather buy health insurance plans that exclude high-cost, low-value treatments.
The trouble is that insurers rarely sell those sorts of plans. Even insurers that try to exclude a particularly expensive and unproven technology from coverage are often rebuffed by legislatures and the courts.
This one-size-fits-all approach to insurance coverage disproportionately hurts low-income people, many of whom might reasonably prefer to devote their scarce dollars to housing or their children’s education. To some extent, subsidies and other monetary adjustments can mitigate this problem. Medicare and Medicaid, for example, are financed in large part out of federal income taxes. And within the Affordable Care Act marketplaces, lower-income people receive subsidies that cover some of their costs.
One way to handle this, which is not suggested in this article, is for the government to provide a minimum level of cost-effective treatment to all citizens, plus catastrophic coverage for the really big stuff like heart attacks and car accidents. The private health insurance market could still exist to cover everything in between, which you could argue is the stuff people want but don’t necessarily need. Which is the proper domain of economics. Distinguishing between high value treatments that prolong and improve the quality of life, and shiny new technologies that we might want but don’t necessarily all need, may become more and more important as technology continues to accelerate.