Are adults capable of making choices regarding health care? Many economists would say yes. But this is hard to accept when your instinct is that patients are like helpless children.
In moral dyad theory (which will be explained more below), we tend to see human interactions as taking place between an active chooser and a helpless feeler. In the health care context, the patient is put in the role of the helpless feelers.
Economists are willing to talk about health care consumers. But this seems like a heartless way to describe suffering patients.
Fifteen years ago, I wrote a book on the American health care system. All of my criticisms of that system continue to apply today, notwithstanding that Obamacare and other policy changes took place during the interim. The United States continues to lead the world in money wasted on expensive medical procedures that do little to improve outcomes.
While many other governments limit the availability of the expensive tests and treatments that are routine here, I would prefer instead to see individuals face more of the costs of these procedures and make their own choices to forego them. But this idea runs afoul of the moral dyad that most people use when thinking about health care.
Subsidize Demand, Restrict Supply
Government interventions in markets almost always involve subsidizing demand and restricting supply. The intentions are often good, but the consequences are disappointing at best and perverse at worst. In health care, our cultural model of patients makes it difficult to escape dysfunctional policies.
The rationale for government subsidies is that there are certain goods and services that we think people ought to have. In economic jargon, these are “merit goods.” They include food, housing, education, and health care.
In terms of economic theory, it does not matter whether you increase the consumption of merit goods by subsidizing demand or by subsidizing supply. Either way, you get more merit goods. But in practice it is more politically popular to subsidize demand.
The rationale for restricting supply is to protect people from bad suppliers. We don’t want to subject people to food, medicine, education, or housing that causes harm. We require sellers of these products to obtain permits, certifications, and licenses.
But government tends to get carried away with demand subsidies and supply restrictions. This is particularly true in health care.
Total health care spending is higher in the United States than in any other country. This is mostly because of the way that demand is subsidized, through government provision of insurance via Medicare and Medicaid as well as tax advantages for private insurance.
In the United States, the proportion of health spending that is paid for by either government or by private health insurance is higher than in all but a few other countries. Even Canadians pay for more out of their own pockets for their medical services than do Americans.
On the supply side, we do not limit the availability of services, which would reduce spending. Instead, we limit competition, which raises the cost of services.
Much of our health care regulation is influenced by lobbyists for health care providers. The pharmaceutical industry and the medical profession profit from keeping non-prescription drugs off the market. Medical professionals are able to charge higher prices because of restrictive licensing laws, which keep nurses from practicing across state lines or force someone to get a doctorate in order to become a physical therapist.
How to reduce health care spending
From an economic perspective, the obvious way to get better control over America’s extravagant health care budget would be for government to reduce its subsidies to demand and reduce its restrictions on supply. For example, instead of health insurance coverage kicking in for every medical procedure, we might have means-tested catastrophic coverage. People who can afford to pay for their own medical treatment needs would be required to do so.
On the supply side, deregulation would make it easier to obtain medication without a prescription, for an allied health professional to obtain a license, and for a medical practice to use allied health professionals to provide care. There would be more competition, more consumer choice, and lower costs.
Moral Dyad Theory
The cultural barrier to such reforms is what is called the moral dyad. This concept was developed by Daniel M. Wegner and Kurt Grey in their book The Mind Club. They point out that we think of minds as having two types of capabilities:
the capability to feel—pain, pleasure, joy, and sorrow
the capability to choose—to think, to plan, to decide, and to act
Although we know that adult humans have both sets of these capabilities, we cannot seem to keep both sets in mind at once. Instead, we tend to evaluate relationships in terms of a moral dyad, in which one person is a passive feeler and the other person is an active chooser.
In the case of health care, the patient is cast in the role of passive feeler. The health care professional and the insurance company are the choosers. We see the health care provider as having no feelings and the recipient of medical services as having no capacity to choose.
The problem with the moral dyad is that it suffers from a truncated view of the human being who obtains medical services. We are not mere helpless feelers. Instead, most of the time when we get medical services we are capable of thinking, planning, deciding and acting. I do not have to go for an MRI when I hurt my back lifting furniture. I can decide whether to get a colonoscopy to screen for colon cancer. I can choose to try using exercise and diet rather than seek medical services to treat the symptoms that come from poor lifestyle choices.
Economists often have views on policy issues that many people find difficult to accept. I think that is because the laws of supply and demand give a different perspective than the moral dyad reaction. In health care policy, if you want to understand economic thinking, you have to be willing to detach yourself from moral dyad instincts.