Notes From Babel

Health Care, Markets, and Guaranteeing Outcomes

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Here’s John Goodman on the complaint that we can’t leave health care to the market (h/t Avik Roy):

Nothing follows from the fact that there is “market failure.” To make the case for transferring decision making power to government one would have to show that the likely “government failure” would be less harmful.  In health care, that’s hard to do — particularly given the track record of government in health in the twentieth century.

Overall, the market and the government have comparative advantages in certain areas and the sphere where government has a comparative advantage would appear to be very small.

We could extend the analysis of process vs. outcomes that I discussed recently to health care.  It’s too late at night to attempt a serious treatment, but recall that the premise generally is that process-oriented fairness looks to ensure merely that we have a sufficiently fair process in place to engage in certain activities and, once we have that, outcomes are basically irrelevant.  Outcome- or substance-oriented fairness works in reverse, imposing a firm notion of what sorts of minimum outcomes are necessary in a just world, and working backwards to guarantee they are achieved.

Markets are the extreme example of a just system as determined by process:  no single person defines values or outcomes, and instead, everything is automatically determined by the imperceptible force of countless discrete choices.  I’ve also posited that mainstream Americans generally perceive justice in terms of process, noting that except in unusual circumstances, Americans are not overly bothered by the idea that someone, somewhere, might be very rich, so long as they are convinced they did not accede to those riches by unfair procedures (e.g., fraud, kickbacks, illegality, etc.).  Because mainstream Americans generally have at least a slight bias in favor of process-oriented justice, they are generally willing to tolerate a certain amount of “market failure.”

Even if I am right that mainstream Americans tend toward process-oriented fairness, however, I suspect they tend less in favor of process when it comes to health care.  They might perhaps be split, in fact, or even tend more in favor of outcome-oriented fairness.  I will mention, purely anecdotally, that several people I know who are generally conservative/libertarian have significantly more sympathy for Medicare, Medicaid, and Obamacare than their underlying pro-market ideologies might suggest.  Too many people are just not content to let the chips fall where they may when it comes to health care as they are with, say, wealth distribution.  (I think this is deeply problematic, because once we are willing to let ourselves be carried away from our fealty to process-oriented fairness with respect to one industry, there’s little to stop us from letting that thinking overcome our approach to another industry, and then another, and so on until there is no meaningful emphasis on process at all.)

I’ll take one more liberty with the process/outcome distinction and note that our nation’s biggest expenditures—health care insurance and retirement insurance—all trend more toward achieving some notion of acceptable outcomes rather than fixed processes. Military, too, is an area in which conservatives tend to break from their aversion to government and entrust the executive with lots of power.


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