Health Care Rationing For Beginners

“Obama-care kills Medicare as we know it. Obama-care raids $500 billion from Medicare to spend on Obama-care, puts in place a 15-panel board to ration Medicare by unelected bureaucrats.

“Our budget, repeals the raiding, gets rid of the rationing board, preserves this program, makes no changes for a person 55 years of age or older and saves Medicare, by reforming it for our generation, so it’s solvent. The president’s plan does not save Medicare, it allows it to go bankrupt, rations the program and raids the program. We get rid of the rationing, we stop the raiding and we save the program from bankruptcy.”

That wasPaul Ryanon Fox News recently.

Ordinarily this wouldn’t be worth responding to, except to point out, asSam Steindid, that Ryan’s proposed budgetalso ”raids $500 billion from Medicare,” so the statement that “we stop the raiding” is, um, a lie. But it isn’t news that Paul Ryan has an issue with honesty, except perhaps forDavid Brooks.

But there’s a theme that is surfacing that goes something like this: OK, Ryan’s plan is extreme and has no chance. But we all know we spend too much on health care, and we have to spend less, which means that we have to ration care one way or another. Ryan does it by scrapping Medicare in favor of indexed vouchers; Obama does it by reducing Medicare payment rates and, more ominously, with “a 15-panel board to ration Medicare by unelected bureaucrats.”

On one level this seems true. We are projected to spend too much on health care, and we need to reduce those projections. And in one sense, we can call that “rationing.” As you learn in Economics 101, economics is about the allocation of scarce goods and primarily about using markets to allocate scarce goods. If you define rationing as the allocation of scarce goods (where everyone can’t get everything she wants), then obviously we have to ration health care. But just as obviously, we ration it already: we ration health care by denying most of it (except emergency care) to poor people, people without good jobs, people with preexisting conditions, and so on. So the statement that we have to ration care is unexceptional to the point of being meaningless.

But let’s move on to the issue of “we have to spend less on health care.” I’m going to get to the Affordable Care Act (“Obama-care”) and the Ryan budget, but first we need to take a detour through free market fantasy land.

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