Do People Who Want to Balance the Budget Hate Innovation and Capitalism?

Recently, I feel like I’ve been having the same argument over and over again. I start by agreeing with someone else that we need to find a way to reduce future health care spending. From there, though, it goes downhill. Every mechanism by which I suggest we reduce said spending is rejected by a “do you want to kill innovation?” or “do you want to drive the smart people out of medicine?” retort.

Let’s say I favor an Independent Payment Advisory Board-like panel to suggest ways that will reduce payment on things that don’t work. That will keep people from innovating because they will find such a panel will not allow for money to be made for potentially incremental gains. Let’s say I suggest stricter rules for ACOs to penalize wasteful spending. That will make doctors want to leave medicine for other fields. Let’s say I bring up changing the way we pay for pharmaceuticals or negotiate with drug companies. That will stifle innovation, because without those payments, the drug companies can’t do research.

Basically, every time I try to suggest a way we can reduce spending, my opponent gets upset because that will mean that someone will make less money.

Um… yes?

Do people really not get that every dollar that we spend on health care is going into someone else’s pocket? It’s not being burned in a pile, nor is it vanishing into the ether. Even the “waste” is someone else’s livelihood. If you eliminate all of it, and all of the fraud, you will still have a long, long way to go. The money we spend on health care is going into the bank accounts of doctors and hospitals and nurses and pharmaceutical companies and medical device companies everyone they employ. It’s all someone else’s wages and profits in the end.

No matter how you cut spending – even if it’s entirely in the hands of the individual – that will mean someone else is going to make less money. If you go all the way to the barter system, doctors will make less money. If you drop Medicare Part D, less money will be spent on pharmaceuticals, and drug companies will see revenue decrease.

If you reduce spending, less money will go into the health care system

There’s nothing magical about government money compared to the money in your pocket. If I, as a physician, get a dollar from Medicaid, it looks the same, it smells the same, and it has the same purchasing power as a dollar I get from Anthem. I am totally open to the argument that reducing spending through government intervention impact the levels of health care spending differently than private sector intervention might, but the overall outcome will generally be the same. We will spend less money on health care. People in the health care system will see less in revenue and profits. Period.

If you can’t identify anyone in the health care system who you think could take a pay cut, or who could be fired, then you can’t be for reducing health care spending.

[Cross-posted at The Incidental Economist]