Trade offs
Tuesday, February 17 2009
I was all set to take down this article by Virginia Postrel in the March issue of The Atlantic, but Merrell Goozner has done a better a job than I could have. Goozner’s post is long, but worth reading in full.
Goozner makes clear that Postrel is wrong wrong wrong on the science, but she’s also wrong on the economics. Postrel implies that the incentive structure of the U.S. health-care system creates a unique market for “complex new drugs” – which, presumably, are more effective than simple old drugs. But the U.S. market is only unique in that it creates very expensive drugs. The drug companies don’t have any incentive (much less a requirement) to produce drugs that work better than older cheaper medicines, so they make drugs that cost a lot more with only marginal benefits. Goozner gets at this in his discussion of the studies behind Herceptin: there’s only an 8.4% improvement from the new drug over the old ones, at an additional cost of $60,000. This is a major flaw in our system: we’re spending a lot more money but not getting much more benefit. This is a manifestly unsustainable system, yet Postrel celebrates it because it “cured” her cancer.
The worst part of this article – even more than the shoddy science and economics – is Postrel’s appalling self-absorption. For all her talk about difficult “trade-offs” she yet ignores the fact that the system that makes her over-priced cancer drug available comes at the cost of tens of millions of people who can’t afford health care at all. The reason trade-offs “get harder” in public systems is that those decisions are foreordained in our system: rich people get health care, poor people don’t, and sick people get squeezed for every penny they can afford. The difference in publicly-financed systems is that these trade-offs are subject to public debate. Postrel might not like her chances in that system, but for the rest of us it’s more or less the definition of “democracy”.
