Saturday, July 18, 2009

Why We Must NOT Ration Health Care: A rebuttal to Peter Singer

The other night, I was browsing through Center for Inquiry program director, D.J. Grothe's, posted links on Facebook and happened upon an article that was already generating a fair number of positive comments.

The article was Peter Singer’s recent contribution to the New York Times Magazine, entitled; “Why We Must Ration Health Care[1]

The title itself is provocative, as it was intended to be no doubt, and I dutifully "clicked" away at my own peril. Knowing Peter Singer's previous work in animal rights and his love for collectivist utilitarianism, I have never been particularly impressed by the man. I remain unimpressed, as you will soon discover.

Singer writes:

"In the current U.S. debate over health care reform, “rationing” has become a dirty word. Meeting last month with five governors, President Obama urged them to avoid using the term, apparently for fear of evoking the hostile response that sank the Clintons’ attempt to achieve reform."

His thesis is that regardless of how it happens, each time you are unable to access a particular level of health care, you are a victim of "rationing”, and therefore we should simply accept government rationing of medicine as inevitable (and somehow better than market “rationing”) and learn to acclimatize ourselves to the realization that some lives are going to be more valuable to our benevolent central planners than others.

Unfortunately, like so many of his other
ethical positions[2], this one fails at its root primarily because he has never been able to recognize any distinction between using force and voluntarism to achieve a desired end. So in failing to understand the difference between wildly different methods of resource allocation, Singer misrepresents and possibly entirely misunderstands the word "ration" itself.

To be fair, economists have often used the word “ration” more broadly to describe any form of resource allocation, and as a result have adopted the terms “price” and “non-price” rationing to differentiate the two ideas. Personally, I believe that this is a poor choice by economists because it leads to exactly this sort of miscommunication.

So let's clear this up right now. To most people, the word rationing has a specific meaning, and that is this:

1. a fixed allowance of provisions or food, esp. for soldiers or sailors or for civilians during a shortage: a daily ration of meat and bread.
2. an allotted amount: They finally saved up enough gas rations for the trip.

That definition is what economists might refer to as “non-price” rationing. So when Peter Singer uses the word “ration” with no qualifiers in the New York Times, the average reader immediately assumes the Webster’s definition. And thus without thinking about it, readers are subtly lead to believe that there is no difference between price rationing (markets) and non-price rationing (government or other agent of force).

Non-price rationing is a concept that can, by definition, only apply to an entity with centralized control of the provision in question. Thus the word applies to top-down monopolistic systems such as government, which can control all supply of a given good and then distribute an "allotment" to people by fiat, leaving you unable to get the good otherwise.

By contrast, a decentralized free enterprise system for that same good is in fact quite the opposite of that definition of rationing!

In a free market system (and even in most aspects of our current hampered market “mixed economy”), it’s you - not the government or any other authority – who decides what value a good or service has, and you are not limited by anything other than reality and your ingenuity.

While grouping these two ideas together allows for a creative support of the state & central planning, leading people to believe that there's no difference between these two distinct methods of allocating resources is criminally oversimplified... Sadly, this is not the only mistake Singer makes - it's only the first.

From here on out, in an effort to be clear and avoid making the mistake that Peter Singer makes, I – like Wikipedia – will use the term “rationing” to apply in the sense that most everyone uses the word, using the “non-price” definition, and will refer specifically to markets when speaking about “price” rationing.

Free Market "Rationing" according to Singer

Professor Singer repeatedly rests his case on a number of mistaken ideas, but to establish his thesis, he opens the article with the following hypothetical scenario:

“You have advanced kidney cancer. It will kill you, probably in the next year or two. A drug called Sutent slows the spread of the cancer and may give you an extra six months, but at a cost of $54,000. Is a few more months worth that much.

If you can afford it, you probably would pay that much, or more, to live longer, even if your quality of life wasn’t going to be good. But suppose it’s not you with the cancer but a stranger covered by your health-insurance fund. If the insurer provides this man — and everyone else like him — with Sutent, your premiums will increase. Do you still think the drug is a good value? Suppose the treatment cost a million dollars. Would it be worth it then? Ten million? Is there any limit to how much you would want your insurer to pay for a drug that adds six months to someone’s life? If there is any point at which you say, “No, an extra six months isn’t worth that much,” then you think that health care should be rationed.”[1]

Persuasive, right? I bet you now think health care should be rationed.

That is… Until you realize that Singer is exploiting the average person’s definition of the term “ration” while actually using it to mean something completely different.

By ignoring the difference between individual choice (free markets) & supply-controlled central planning (rationing), Singer is setting up a false argument from the beginning. Since he fails to make that significant intellectual distinction, he - and thus the casual reader - is lead to believe that virtually anytime someone says "no" to a request for service, that you're experiencing rationing.

If that were true, then of course it would follow logically to say that an insurance provider denying the $54,000 treatment to extend someone's life by 6 months is "rationing health care". From there it’s easy enough to suggest, as Singer does, that if it’s already being “rationed” by the market then why not let the government do it instead? The end result is going to be the same – some people will get care and some people won’t, except now you can be sure that it won’t be your own hard work, generosity and perhaps a little luck that determines who gets treated, but the cool, intelligent reasoning of a government bureaucrat. That’s what we really need though, right?

Now, first of all – like much of the article, this idea requires you to abandon the more complex distinctions between concepts and just accept that freedom and control are the same things because the end result of both is the distribution of resources in one form or another. As one might expect of a
utilitarian[3] – ends are all that really matter, means are irrelevant.

However, the idea that an insurance company can “ration” health care also rests on the flawed premise that health care & insurance are actually synonymous. They aren't.

Consequently, when you are denied insurance, you are being not being denied health care as you are with rationing – you are instead being denied someone else’s money.

Medical insurance is supposed to be a voluntary (explaining why this is actually not the case in the United States must unfortunately wait for another time) risk pool in which contracts are agreed to up front - including maximum costs willing to be paid out in coverage in the event of an emergency. So while a company denying a claim is (as Singer rightly points out) making a judgment on the value of another person's life or quality of life – the reality that resources and money are scarce means that this is something they must do to function as intended for the bulk of their customers. We all already know this.

But in that scenario, no one has actually limited your choices - you are still free to obtain the treatment and extend your life by 6 months if you wish, or not... You simply have to choose other avenues of payment. Fortunately, there are still dozens of payment options available to most people: Is 6 more months of your life worth $54,000 out-of-pocket to you? Is it worth cashing out your 401k? Is it worth selling your house or your car? Is it worth cutting into your children’s inheritance?

And if you don't have that kind of cash lying around in assets or in the bank, is it worth hitting up everyone you know for donations? Is it worth writing applications to a charity? Is it worth asking people at your church or community groups?

Most people would agree that 6 months isn’t worth robbing a bank over, but who knows – if you value 6 more months of living over morality & over incarceration then technically that’s an option on the table as well I suppose… That’s certainly not a choice I would make, but I’m in no position to tell you what price is too high to pay for 6 more months of your own life.

The point is; it’s up to you.

All of this comes down to extremely personal decisions about what you value… And those are decisions no one else can possibly make for you. Not a government bureaucrat and not even someone as reportedly brilliant as Professor Singer.

Value is Subjective, not Intrinsic

At this point; Peter Singer has already rested his claims on a significant number of flawed premises: He's muddled the definition of "rationing" to fit his narrative. He's failed to recognize the difference between force & voluntarism. He's conflated "insurance" with health care. And underneath every bit of that, he's simply taken it for granted that the value of your life should be able to be determined by someone else – and thus it's perfectly ok for a state health care plan to deny an individual treatment so long as the "greatest good" is accomplished (which of course is the utilitarian position at its core).

But in my personal estimation, the greatest mistake of all rests with Singer's very conception of "value".

Singer, it would appear to me, generally hangs much of his conclusions on the idea that all value is intrinsic and based on an "objective" standard of utility. You see, for central planning to work at all requires a world in which all value has a fixed and quantifiable definition which can be used by rationing agents (central planners) to create their cost-benefit rubrics to begin with… And so, as if by serendipitous magic, exactly such a metric was invented -
QALY (Quality of Life Adjusted Year) units![4][5] This provides the “scientific” veneer that will allow a public servant with a slightly higher pay-grade than your local DMV worker the “tools” they need to decide whether or not your life is worth saving.

However, one needn’t look too hard to find proof that value isn’t subjective[6][7], in fact, let me offer my own humble rebuttal: Based solely on what I know of Singer's work in the social sciences, I disagree with virtually all of what he considers "utilitarian". In other words, Peter Singer & I hold different standards of values. You might find his ideas abhorrent as well, check out this one for example (from the same article):

"As a first take, we might say that the good achieved by health care is the number of lives saved. But that is too crude. The death of a teenager is a greater tragedy than the death of an 85-year-old, and this should be reflected in our priorities. We can accommodate that difference by calculating the number of life-years saved, rather than simply the number of lives saved. If a teenager can be expected to live another 70 years, saving her life counts as a gain of 70 life-years, whereas if a person of 85 can be expected to live another 5 years, then saving the 85-year-old will count as a gain of only 5 life-years. That suggests that saving one teenager is equivalent to saving 14 85-year-olds."[1]

It seems to have slipped Peter Singer's mind that he is neither omniscient nor master of the universe, nor is he clairvoyant, and hasn't the right nor the ability to judge which of those two lives is more valuable.

To Singer's credit he briefly presents the lone "counter argument" that possibly the teen in his example might be a murderer and the 85 year old still a productive citizen, but he dismisses it by saying that;

"decisions about the allocation of health care resources should be kept separate from judgments about the moral character or social value of individuals."

Ironically, his utilitarian position is doing nothing but assessing the social value of individuals... Unfortunately, just as he's glossed over numerous important distinctions thus far, he rests this argument on lumping all people into collectivist categories - and as such doesn't actually see people as unique, self-owning individuals with a right to make their own decisions, but instead as nothing but members of various groups. This schema belies the idea that value is an objective trait independent of trading and is intrinsic to people belonging to the "right" groups based on utility to society (ostensibly in terms of productive capability – much like the value one might assign to a herd of Clydesdales based on how much work they can each do in a day with a yolk around their necks).

So in Singer's own example; if you happen to be an intrinsically valuable teenager - you're safe! Happen to be geriatric or disabled? Notify next of kin.

In this version of the world, value isn't something you get to decide for yourself, but something that your omniscient, and (hopefully) omni-benevolent overlord (Singer himself perhaps?) will choose for you. Under rationing, someone else decides not only what you should value, but what your worth to society is as well… And in Singer's world if you're 85 years old and you value 6 months of life over $54,000 you're probably wrong.

Thankfully, Peter Singer is simply wrong. In reality value is subjective and varies widely from person to person and may even change depending on the day or circumstance for a single individual.

Let me explain by asking you to please consider a bottle of

Consider that hypothetically, you and I have both caught colds.

For me personally, NyQuil or its generic equivalent is the only medicine I would generally take when I have a cold. I don't get sick often, and when I do I usually like to just get some rest and let my immune system kill the illness on its own. So I place pretty low value on cold medicine. Thus, to put it in easy-to-understand & standardized monetary terms, when I have a cold, my maximum value for treatment is the cost of that bottle - typically around $5.00.

You might be completely the opposite however. Perhaps you're a worrier... Perhaps you believe that a cold could lead to something more severe like Bronchitis or a Pneumonia. I wouldn't blame you - those are risks I willingly accept, but I get that you might not be comfortable with those risks yourself. So as a result, you might not only be willing to buy that $5.00 bottle of NyQuil to get you through the night, you might additionally be willing to pay $100.00 for a doctor's appointment, and subsequently get the $15.00 package of drugs that the doctor recommended you go buy. Perhaps you decide also that just to be safe, you should get that hot water bottle for $20.00 and a $5.00 box of salt for the hot bath you'll want to take when you get home.

All said and done, if you were that person - it could be said that you value $145.00 worth of treatment when you have a cold. Alternatively, I only value $5.00 worth of treatment.

Now consider that our options aren’t either $5.00 or $145.00 – but could be anything. Every individual on the planet will do something different, will be willing to spend more or less money & time treating their cold and will have different ideas on what helps them get well.

You will note that even something as mundane as "treatment for a common cold" does not have a standard value in the above example - it has one value for you, and one for me. It’s the same for everything else as well… And you don’t need to measure value in dollars either, I often like to measure the things in my life based on the number of working hours they take me to achieve (for example my rent is about 23 hours of work).

There are great implications for understanding this reality - also known in economics as the Subjective Theory of Value[8][9].

One implication is that there is no such thing as the "correct" value for anything. Value is not something that can be arbitrarily determined, or even measured externally in QALY units, but something which can only be revealed by each person through individual ordinal preferences. As a result, this implication actually means that any effective rationing is quite impossible due to the simple limits of the knowledge of those doing the rationing.

Government planners cannot know what you value. They cannot know if you want the $145.00 cold treatment or the $5.00 one, like me. So how are they going to make decisions for you that you actually want or need? They can’t of course, which is precisely why people like Professor Singer wind up promoting useless, but scientific-sounding metrics.

Further, without getting excessively into free price theory[10], it's extremely important to note that because value is subjective, the average prices that people are willing to pay for goods carries a great deal of information about people’s various preferences and needs. High prices indicate high value and/or scarcity of supply. Low prices indicate the opposite. Higher prices compel the consumer to consume less while simultaneously encouraging producers to produce more. Low prices compel the opposite. But it’s worth noting that these signals and the potential responses can be easily skewed by government intervention.[11]

For those of you who realize that I just gave a lesson in Econ 101 from what would invariably be the first day of class, I apologize… But understanding how price functions in an economy is extremely important.

The Actual Answer to the $54,000 Question:

So by now, I hope I’ve convinced you that Singer’s arguments are tremendously flawed.

However, we’re still left with solving the ethical problem presented in his hypothetical example. Singer establishes that treatment costs $54,000 for 6 months. This is a price far above what most individuals could pay – so what does that price tell us?

It tells us that the real the problem itself is scarcity!

Peter Singer unquestioningly assumes that availability of medical treatment is constant and that resources (especially the man-made ones) are fixed – that the resources of the world as they are today are inflexible. The world’s wealth isn’t static however, and failure to understand that is something that seems to plague a great deal of academia (not to mention is the root of confusion for Marxist economic thinking). Singer assumes that $54,000 for this treatment is unavoidable and unchanging, and because he never questions that assumption he completely misses the one actual problem that needs solving in every economic equation:

“How do we make enough for everybody?”

To paraphrase Thomas Sowell[12]; why does Peter Singer start his story in the middle?

There’s not a “fixed” amount of any medicine in the world, so why does Singer simply assume that excessively high cost for medicine is just inevitable and then proceed to make arguments that could only ever apply to a good that is impossible to reproduce? Why doesn’t he instead ask why it’s expensive now[13], and what can be done about it?

My guess is that Singer doesn’t ask this question because his mindset is so geared towards a top-down approach and can’t conceive of the idea that anything but more planning and more control will solve any problems. But creating more of the drug cannot be done effectively by force – and instead, will have to be accomplished by removing the controls on the market that exist already. As I said earlier, high priced items encourage more production – but only when people are free to produce more. New companies have to be allowed to enter the market, and prices have to be set voluntarily through trading agreements, and not by government fiat. We need to allow competition and innovations in efficiency to drive the cost of medicine down. And we don’t… We haven’t since FDR imposed price & wage controls[14] in the 1940s.

The fact is, we simply don’t hear about the high cost of medicine as a consequence of government intervention very often.

For example, when was the last time the New York Times bothered to mention that it costs around 6 years and $1 Billion[15] to get a new drug approved by the FDA? The American public rarely hears that the FDA has more than doubled[16] the number of clinical trials needed for new medicine. No one bothers to mention that Medicaid & Medicare chronically underpays[17] private health care providers for their services – forcing them to make up their losses by charging private insurers & patients more than they otherwise would. Nor does anyone remind the American public that with the help of congress & funding of the US taxpayer, the AMA restricts[18] the number of medical licenses granted and thus the number of available doctors is always kept at a minimum – a standard tactic for any union to keep out competition for labor and force employers to pay higher wages to the members of their club. These are just a few of literally hundreds of examples where government intervention has directly caused a significant increase in the cost of medicine in the United States.

There are so many similar competition & market killing interventions that it’s almost impossible to choose which to leave out. And that’s all without really discussing the perverse incentives throughout the entire system by spending other people’s money.

But these topics aren’t even addressed by Peter Singer! Nope… The assumption readers of his Times article are required to hold is that Sutent costs $54,000 and that’s that. The cost of the drug is high, fixed, and there’s nothing to be done about it. Singer presents a world where you have Option A: Let greedy insurance execs “ration” health care, or Option B: Let a (non-greedy?) government bureaucrat do it.

But Professor Singer forgets to give you Option C: Get rid of the ridiculous government interventions into the market. Allow insurance companies to compete nationally, allow competition in medical licensing, allow nurses & other non-MD health professionals to treat minor injuries & illnesses and set up their own practices, remove the barriers to new competition, make it easy for drug companies to license their inventions to other manufacturers and get the government out of the business of paying for health care entirely.

Do all that (and more) and we can reap the benefits of the massive increases in the supply of doctors, medical machinery, drugs & available choices to patients – and the lowered prices that will result.

When that treatment is mass-produced, widely available and only costs $5,400 instead of $54,000 – I have a feeling not too many insurers are going to deny you the extra 6 months… And even if they do, at that price, how hard is it going to be to find someone else to pick up the tab?

The answer to Peter Singer’s scenario is not to sit around deciding who we should let die. The answer is to produce enough so that everyone can live.

Final Thoughts

Singer’s arguments seem intelligent on the first glance, but much less so when you realize that they are the wrong arguments entirely. So I hope I’ve convinced you to take a deeper look at what Peter Singer is saying in the NY Times piece and at the premises he simply takes for granted and expects you to avoid questioning. But if you’re still on the fence, let me leave you with one last hypothetical scenario to illustrate my point:

Imagine you have 10 of your closest friends over for dinner. You’ve set up the dining room and laid out placemats when the doorbell rings… Your friends have arrived and as a surprise, one of them brought a date! You’ve only set 10 places and are not prepared for 11 people… So what do you do?

Someone will clearly have to sit on the floor. So how do you decide who it’s going to be?

Do you choose the shortest or the tallest one? Do you pick the oldest or the youngest? Do you choose the person you saw most recently, the one you like the least or the one who isn’t all that hungry anyway? Do you let them fight it out amongst themselves or draw straws to see who gets to eat alone?

I suspect you could pick any one of those fine options and successfully ration your limited seating.

…Or... You could just go get another chair.

Works Cited:

[1] Singer, Peter. "Why We Must Ration Health Care." New York Times Magazine 15 July 2009.

[2] Staudenmaier, Peter. "Peter Singer and Eugenics. " Institute for Social Ecology. 18 July 2009

[3] "The History of Utilitarianism." Stanford Encyclopedia of Philosophy. 18 July 2009.

[4] "Quality-Adjusted Life Year." Wikipedia, the free encyclopedia. 18 July 2009.

[5] McGregor, Dr. Maurice. "Cost-utility Analysis: Use QALYs only with great caution." Canadian Medical Association Journal 168 (4) (2003).

[6] Von Mises, Ludwig. Epistemological Problems of Economics. New York City, NY: New York UP, 1981. Originally Published 1933, 1960.

[7] Von Mises, Ludwig. Human Action. New Haven, CT: Yale UP,1949

[8] "Subjective Theory of Value." Wikipedia, the free encyclopedia. 18 July 2009.

[9] Menger, Carl. Principles of Economics. Libertarian Press, Incorporated. June 1999.

[10] "Free Price System." Wikipedia, the free encyclopedia. 18 July 2009

[11] Friedman, Milton. Price Theory. New Brunswick: Aldine Transaction, 2007.

[12] "YouTube - Thomas Sowell - Welfare." YouTube - Broadcast Yourself. 18 July 2009

[13] Wasley, Terree P. "Health care in the twentieth century: a history of government interference and protection." National Association for Business Economics Journal April (1993). 18 July 2009

[14] "Records of the office of Price Administration [OPA]." National Archives and Records Administration. 18 July 2009

[15] Katiin (Ph.D), Kenneth I., Dr. Christopher-Paul Milne (DVM, MPH, JD), Joseph A. DiMasi (Ph.D), Ken Getz (MBA), Janice M. Reichert (Ph.D), and Dr. Richard I. Shader (MD). Outlook 2008. Rep. Boston, MA: Tufts Center for the Study of Drug Development, 2008. 26 June 2009.

[16] Miller, Henry I., and David R. Henderson. "The FDA's Risky Risk-Aversion." Stanford University: Hoover Institute - Policy Review 145 (2007). Hoover Institute - Policy Review - The FDA's Risky Risk-Aversion. 26 June 2009.

[17] "GAO Report Confirms: Medicare Underpays for Anesthesia Services." Bio-Medicine - latest biology and medical news/technology. 18 July 2009

[18] Cauchon, Dennis. "Medical miscalculation creates doctor shortage." USA Today 3 Feb. 2005.

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