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Investor's Business Daily


How The New Medicine Renders Universal Health Care Impossible

October 26, 2007

By Peter W. Huber

Socialized medicine was a smart idea back when medicine was too stupid to halt infectious epidemics, discourage suicidal lifestyles or discern the perils in killer genes.

Berlin established national health coverage in 1883, soon after Robert Koch identified the bacterial cause of tuberculosis. When your neighbor has TB you're happy to buy him a trip to a hospital, preferably in Aruba. Britain's National Health Service was created in 1948, just as a cure — streptomycin— was becoming widely available. The antibiotic was cheaper than Aruba, and more effective, too.

Washington began subsidizing a large chunk of U.S. health care five years earlier, when the IRS ruled that health benefits supplied by employers weren't taxable income for employees. The poisonous effects of tobacco and diet weren't nailed down until well into the 1950s. A systematic science for isolating and addressing perilous genes has emerged only in the past decade.

But we're now past the days when infectious diseases were the dominant killers, and heart attacks and lung cancer seemed to strike as randomly as germs. In affluent countries, most diseases now originate in human chemistry. The cholera of our times is a stew of molecules, concocted by genes, gluts of cigarettes, beer, ice cream and other delicious consumables, and by whatever attitude problems we might have about eating our peas or taking our pills.

No two human stews are quite the same, however, and the problems they incubate are much less evenhanded than the ones spread by sewage and sneezing neighbors.

Contagion is the melting-pot disease. To be as infectious as they are, germs must use public transit — the common water or air, most typically — and they must target common human chemistry — the bacterial peg must fit neatly into some chemical hole that most of us share. Cholesterol and other human choleras are rooted in our private differences. They disassemble our health, fragment treatment and pull us apart.

In Control

Consider these numbers compiled by Harvard's School of Public Health. Asian-American women have a life expectancy of almost 87 years; African-American men, 69 years. The gap between the highest and lowest life expectancies for U.S. race-county combinations is over 35 years.

Some race-sex-county groups typically die in their 90s, others in their 50s. Some are healthier than the norm in Iceland, Europe and Japan, others sicker than Nicaragua and Uzbekistan. Factoring out wealth, race and access to health insurance doesn't eliminate most of these disparities.

Medicine's principal mission today is to provide antidotes to the unhealthy side of human diversity. Biochemists disassemble glut-and-gene diseases into molecules that can be exposed long before they morph into plaques, clots, tremors, tumors, occluded airwaves, clogged arteries and failed muscles.

Drugs follow. Lipitor tunes our cholesterol, anti-stroke medicines tune our platelets, antidepressants our serotonin and dopamine, heart medicines our angiotensin-converting enzymes, contraceptives our estrogen. Cancer drugs tame or kill our own mutant genes.

Other drugs address deficits: insulin for the underperforming pancreas, clotting factors for bleedy blood, Synthroid for the tired thyroid and cancer-suppressing proteins to lend a hand to tumor-suppressing genes. There's still far more of this in the lab than in the pharmacy, but there's a lot out already, and it's going to keep coming.

While it exposes our differences, the new medicine offers something that the old never could: personal control. Germs are always finding new ways to infect and spread, bad luck invariably figures in who gets hit, and epidemics will forever remain sudden and surprising.

Human chemistry is much more complex, but comparatively slow and stable. Molecule by molecule, medicine is now making it visible, predictable and tractable. Cholesterol can be quite as lethal as cholera, but how much of it you have in your own blood this morning, and what it will do to your heart in 2017, isn't a matter of dumb luck — not any more.

Dumb choice is more like it. Health-careless people tend to be as casual with pills as they are with dessert, so Lipitor only widens the gap between people who generally live informed, disciplined lives and those who don't.

For health-conscious people, skipping the Cherry Garcia may be difficult, but it's cheap, and Lipitor at almost any price is much cheaper than a heart attack. The health-careless skip only the pill, not the ice cream, and end up in desperate need of what helps the least and costs the most.

No one-size, one-price insurance scheme can keep people happy forever on both sides of this ever-widening divide. Aetna can't offer uniform coverage to individuals who face radically different risks, and who know it, too. California can't either.

As they line up in emergency rooms, the health-careless will never know what they're missing. But the health-conscious will gradually come to understand that they are paying for yesterday's medicine, which they don't need any more, and not getting tomorrow's, which they do need. Then, inevitably, they will look for coverage tailored to their own responsible behavior.

If they could, private insurers would respond with policies openly tailored to molecular profiles and priced accordingly. Insurers already do quite a lot of that kind of tailoring indirectly, by letting employment segment and stratify insurance pools along health-discriminatory lines. Any private insurer that fails to push this kind of segmentation as far as it can will end up covering all the heart attacks, while competitors underwrite the low-fat or high-Lipitor diets.

Governments don't face the risks of competition, so they can insure as indiscriminately as taxpayers will allow. Or to similar effect, they can — and do — force private insurers to sell only one-size policies at one-size prices, by way of laws that protect privacy, mandate equal treatment and bar discrimination on the basis of sex, race, disability, pregnancy, age, obesity and much else.

But however it's packaged and peddled, universal health insurance requires steadfast public support — and the political center just can't hold.

First, you have the pedestrian problem of costs that rise forever. The passive, clueless and feckless must get ruinously expensive, last-ditch care because they don't show up until it's too late for anything else. The informed and engaged will stay healthy enough to demand better hair, skin and sex along with their Lipitor.

While this is less frantic, desperate medicine, with a quite different price tag, its costs will keep rising, too, for as long as new lifestyles offer new ways to delight our bodies and medicine offers new antidotes to help us survive the pleasure. Vaccines and antibiotics kill their own market by wiping out all the germs. Lipitor just keeps the customer alive to crave more Cherry Garcia.

Then there's the merciless fact of global competition. The cost of health care has a big, direct impact on both the cost of labor and the marginal tax rate. If California defies the new medicine's economics by requiring insurers to ignore everything but age and geography, firms can flee to Texas or Shanghai. Efficient labor markets require efficient health insurance, which will be found only where actuaries are allowed to find out as much as the rest of us can, and craft policies accordingly.

A third, deeper problem is (depending on your politics) either base selfishness or common sense.

The pocketbook-healthy eventually tired of paying for welfare that persistently failed to end poverty; the health-healthy will tire of paying for health care that persistently fails to improve health. However selfless and generous people may be, responsible types eventually despair of trying to cure self-destructive behavior from a distance.

Finally, the new medicine is too hot for even the political Right to handle, and the Left can hardly even acknowledge what it's all about.

To pick just one politically insoluble example among many, scientists have already isolated chemical and genetic links to mental retardation. In due course, they will develop drugs to improve or compensate for genes that help shape intelligence. Then someone will have to decide whether mental acuity, say, is as important as cystic fibrosis, and if so, where insurers must set the IQ cutoff for coverage.

The new medicine can, however, deliver universal health care in the same way that McDonald's delivers universal burgers. Drugs like Lipitor end up very cheap for much the same reason that cholesterol did: There are huge economies of scale in farming cows for milk and fungi for anti-cholesterol drugs, or in brewing up synthetic versions of almost anything.

But it takes a delicate choreography of patent-protected monopoly and cutthroat competition to get the innovation first and the rock-bottom prices later.

At present, the U.S. funds most of the front end. Drug companies introduce most new drugs here first, and affluent Americans pay premium prices while the patents last. Less-affluent Americans, along with public and private insurers in the U.S., Britain, Canada and the rest of the developed world, get a sharply discounted ride on their economic coattails. Three-dollar statins in New York in 1996 get 30-cent statins to London in 2006 and three-cent statins to Kuala Lumpur a few years later.

But governments are impatient, especially when they have promised to supply what they can't possibly afford but can readily seize. In the developing world, the authorities just fail to notice when pirates manufacture knockoffs. Most developed countries have gone halfway there, by instituting a monopoly buyer to bargain against the monopoly patent.

Drug companies, on the other hand, are quite smart enough not to develop three-dollar pills for three-cent buyers. Price-depressing strategies already make it unprofitable to pursue many drugs that treat rare diseases, and drugs for all but the most common diseases earn most of their profit in the U.S. market.

Sickly Illusion

That is the real crisis in health care — not medicine that's too expensive for the poor but medicine that's too expensive for the rich, too expensive ever to get to market at all. Schemes to undercut patents lower the incentive to discover new drugs. They sacrifice long-term global health for short-term political gain. Every last one of them is ice cream today, and never mind about tomorrow.

With almost $30 trillion under management, Wall Street could easily double the couple of trillion it currently has invested in molecular medicine. The fastest way for Washington to deliver more health, more cheaply, to more people would be to unleash that capital by reaffirming patents and stepping out of the way.

On the other side of the pill, molecular medicine can only be propelled by the informed, disciplined consumer. Any scheme to weaken his role will end up doing more harm than good. Foggy promises of one-size, universal care maintain the illusion that the authorities will take good care of everyone. They reaffirm the obsolete and false view that health care begins somewhere out there, not somewhere in here.

Original Source:



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