I really wish the New York Times would stop printing articles apologizing for the sad state of American health care on a weekly basis. Today’s, by economist Tyler Cowen, is a particularly egregious example.

Cowen attempts to rationalize our astronomical health care spending with the standard conservative talking point that America is a world leader in innovative medical discoveries because of the thriving private sector. This is undoubtedly true, as a significant chunk of our research is privately funded. However, there’s a fundamental flaw in this approach.

Cowen cites the number of Nobel Prizes won by American research as a measure of health outcomes. This is perhaps the most meaningless statistic one could use. The World Health Organization ranks health care systems in many categories, and Nobel Prizes aren’t included for a reason.

He makes the assumption that innovation at any expense makes all of society better off. This is simply not true. New medical innovations are tremendously expensive compared to their benefits. Many big name prescription drugs cost thousands of dollars a year and are only slightly more effective than existing drugs available at a fraction of the price. New diagnostic procedures require hundreds of thousands of dollars worth of capital investments for hospitals, driving up costs for everyone. Hospitals and doctors have no choice but to offer the procedures and drugs because patients demand them, whether or not they are medically necessary. This leads to technological arms races between hospitals in large markets, resulting in gross overcapacity. Incredibly, Cowen tries to justify our obsession with unnecessary diagnostic procedures:

Compared with Europe, the American system involves more tests, more procedures and more visits with specialists. Sick people receive more momentary comforts and also the sense that everything possible has been done. This feeling is of value to the family even when the patient does not improve. In contrast, European countries have not created comparably high expectations about the medical process. If we count “giving people what they would want, if they knew it was there” as one measure of medical value, the American system looks better.

I find it very surprising that an economist would place more value in “comfort” than empirical data and science, both of which clearly show that we do “all that can be done” for little reason.

This approach is great for Americans with insurance plans that will pay for it, but tens of millions are either uninsured, or have plans that don’t offer adequate coverage. New discoveries benefit the privileged in our society, and take decades to trickle down to the masses.

At this point, some would argue that this is how things ought to be. While I find that reprehensible, it’s a different battle. The critical flaw of Cowen’s argument is that the stratification of American health care is acceptable because it is cost-effective.

The American system also produces benefits that are hard to find in the numbers. The economist Arnold Kling in his “Crisis of Abundance: Rethinking How We Pay for Health Care” (Cato Institute, 2006) (catostore.org/index.asp?fa=ProductDetails&method=cats&scid=37&pid=1441301) argues that the expected life span need increase by only about half a year for the extra American health care spending to be cost-effective over a 20-year period.

This is absurd. Think about how much more more cost-effective it would be to raise the life expectancy of broad swaths of the population by extending universal health insurance to all Americans, as opposed to curing rare diseases for the richest Americans at astronomical costs. Cowen seems to think that it’s OK for us to lag behind the rest of the industrialized world in every conceivable measure of health, as long as we are slowly inching ahead with our boutique medicine. He takes the easy way out and blames our unhealthy lifestyles:

Given that many Americans walk less and eat less healthy food than most Europeans, the longevity boost from health care in the United States may be real but swamped by the results of poor lifestyle choices. In the meantime, the extra money Americans spend to treat allergy symptoms, pain, depression and discomfort contributes to personal happiness.

There are certainly cultural issues at play, but he makes no mention of the insurmountable barriers to care than uninsured Americans face. Preventive care and public health will do more to raise the average life expectancy in the United States than a $20,000 a year pill to fight hypertension ever will. If poor, unhealthy people are able to see doctors on a regular basis, they will be alerted to the dangers of their lifestyle in enough time to take action, rather than waiting until it’s too late.

It’s a tough pill to swallow, but the benefits of American medical research really aren’t worth the costs. We need to get our priorities straight and focus on improving the health of all Americans. Economists like Tyler Cowen and the Cato Institute crazies he cites may never grasp this, but the New York Times ought to know better.

- Zach Shoup

UPDATE: If you seek credibility in your health care libertarian bitch-slaps, Matthew Holt is similarly enraged, and we eerily wrote the same post at the same time.