Dying words on health

Posted: Jul 06, 2002 12:00 AM
The health question is a mess. The GOP, for all that it is fighting a rear-guard action, has no real handle on it. The Democrats are progressively lured to some variant of the position that medicine should be free. It is only left to define "free." My own definition, used before in this space, is that free medicine is medicine paid for by somebody else.

The problem is rough already, given the high cost of drugs. But consider this. An informed scientist advises a friend that "drugs are now in the pipeline that will cure heart disease in five years. This will add 13 years to the actuarial tables for longevity." At this rate, they're going to have to come up with a medicine that will allow us to die.

To focus on relatively mundane problems, in search of perspectives:

The typical senior who lacks drug coverage pays less than $600 a year for medicine. The easiest way to handle that problem, surely, would be a government grant of $600 to that body of Americans, with the frosting that any amount of it not actually spent on medicine is the recipient's to keep. That way there's an incentive.

But what about the person who spends more than $600? The government could provide him with insurance for expenses above that amount, charging realistic premiums, deductibles and co-payments (with allowances for poverty).

But we aren't headed in that direction. Under the lash of the American Association of Retired Persons, the political vector is toward subsidies. By economic law, the multiplied availability of a product reduces the price of the marginal unit -- up to a point. When that point is reached, prices begin to rise, not decline. If you put in an order for 1 million Cadillacs normally priced at $50,000, the price will swoop down. But after reaching a certain point, the price will rise, because infrastructural resources have been strained. That is the moment when the political component steps in to control prices. Two things then happen: The product becomes scarce because profits are reduced, and the investment in fresh products declines.

Now the bizarre case could be made that any arrest in devising fresh life-prolonging drugs should be philosophically welcome, since we can't live forever. But finding the cure for heart disease or cancer or AIDS isn't going to reduce the demand for cures for acne or corns. The public will reasonably look for medicine to assuage any physical (or indeed, mental) problem, even though the pursuit of health is asymptotic -- you can't stop death.

But in the meantime, you can impose great pain on the public, unrelated to disease. We face very large problems, one of them being how actually to pay the cost of medicine; the second, how to pay for it without stultifying young and middle-aged Americans' lives.

The conceptual problem is ever so easy to describe. In a society in which people stop working at, say, age 65, the longer they live, the greater the drain on those who are less than 65. Medical costs and Social Security are paid for in part by contributions while under 65, but after a while, the elderly are wanting subsidies. These the Democratic Party would profusely provide, the GOP more sparingly, with certain inducements to shop around for cheaper care.

But as the bulletin from the heart specialist reminds us with a thunderclap, we can't keep this up for very long. The penalty on the productive quarter of the working force would be intolerable. If our lifespan increased by 13 years, the burden of maintaining the elderly would be roughly the equivalent of the cost of raising the young. A newborn does nothing except create expenses for his parents until about age 16. Children are passive economic members of the community during that period, and when they reach 65, they will again become passive economic members of the community.

For how long, is the question. Will our political leaders suggest serious revision in the retirement age? Let us say, to 72?

Run on that platform in the next election, and you'll be ready for one of those killer pills.