Megan McArdle has a post up grousing about how ‘but we have rationing already’ arguments are facile. Pardon me for not seeing her point (although I am willing to concede there may be overuse of the term, as we shall see). Let’s say the rationing in question is some guaranteed minimum coverage (public option). Obviously minimum is not maximum. That’s what people mean when they call it ‘rationing’, and that’s an ok use of the word. But lets start by noting that, paradigmatically, rationing needs two elements: it provides a minimum for everyone in a group by forbidding anyone from getting more than a certain maximum. Rationing means using the latter mechanism to ensure the former result. In that sense, the proper thing to say is that the guaranteed minimum coverage doesn’t really involve rationing.
Suppose, instead, we were talking about a guaranteed minimum income (as was proposed in the 70’s, and as such free market luminaries as Milton Friedman thought made a certain amount of economic sense, if memory serves.) Lots of folks would be opposed to guaranteed minimum income today (to put it mildly), but would anyone say a guaranteed minimum income was bad economics because it would amount to ‘rationing of the money supply’‘? And fiat rationing (as McArdle says) is inefficient. I don’t think economists would see this as a problem. Why not? Because there is no reason why the volume of money overall should be a function of – critically constrained by – some minimal income provision. That’s just not how the money supply would be determined: there wouldn’t be some iron economic law that there couldn’t be more money than everyone times the minimum.
Guaranteed minimum healthcare doesn’t forbid anyone to seek more on the private market – paying out of pocket, extra insurance. No more so than a guaranteed minimum income would forbid you to get a job to earn more than the minimum. So guaranteed minimal healthcare doesn’t ensure its minimum by positively forbidding anyone to get more. So it isn’t really rationing. (Is any of this getting through?) To put it another way: rationing is a response to scarcity. But the scarce item in the healthcare case isn’t healthcare, it’s money. (If you want to accuse the goverment of rationing taxpayer money, that would be closer to the truth, but still a weird way to talk, I say.) There just isn’t going to be any attempt by the government to ration healthcare, as opposed to its own spending of taxpayer money. Because: why would there be?
Let’s try again. McArdle is worried about decline in quality. Why would that happen? The government mandates that every patient is entitled to two aspirin (let’s say this is as far as the public option extends, after the Blue Dogs have done with it). But the government is only willing to reimburse doctors 1 cent to provide those aspirin (I see the penny-pinching Blue Dogs at work again!) Now you have a problem of doctors cutting aspirin with sawdust to make ends meet.
We have an underfunded public mandate.
But this isn’t what McArdle says she is worried about. She has apparently mistaken concern about an underfunded public mandate for a public mandate of private underfunding and sort of mashed them together in her mind. That is, she thinks the government will drive doctors to sell shoddy aspirin and at the same time (very likely? surely?) forbid the sale of better aspirin on the private market. But where the hell is that second bit coming from? Unless I’m missing something, it’s as crazy as the ‘killing old people’ alarmism, because it’s just as divorced from any potential motive lawmakers might have. What possible motive could legislators have to force people not to top up their own healthcare on the private market to the degree that they deem prudent? What would be in it for the legislators, even the most Machiavellian of them? “If you design a formula to deny granny a pacemaker, knowing that this is the intent of the formula …” Now here McArdle has to be talking, not just about a formula that omits to promise granny a pacemaker, but a formula that positively forbids it to her – removes it from the market. Gives her a ration book without a pacemaker ticket. And says only ration book tickets may purchase health care items. McArdle might come back and say she actually meant the other thing, that some piece of legislation might merely not promise a pacemaker. But hell, most legislation doesn’t do that. Practically everything congress has ever done doesn’t give granny a pacemaker (usually because it isn’t about healthcare at all). We don’t say it follows that almost all acts of congress are attempts to ration pacemakers. That’s a crazy way to use the word ‘ration’.
And yet here is Megan McArdle, complaining about people overusing the word ‘ration’. It’s a funny old world, I say.