The "Lump of Health Care" Fallacy

Seemingly in the wilderness, I have written about ObamaCare:

Bottom line, Ezekiel [Emanuel, a key Obama health care advisor] looks at the world as though there is just one lump sum of money to be divvied up for healthcare, instead of the potential for individuals to make individual choices based on individual circumstances as to how much healthcare to buy. No one decides how to divide up a lump some amount for the purchase of designer jeans, ice cream or high definition televisions. Markets for things in demand tend to expand over time. Ezekiel wants to destroy this expansion in the world of healthcare.

This is the key fallacy that Obama and Ezekiel are operating under, yet I have not seen it discussed anywhere else, until today.

Today, WSJ carries an Op-Ed by London-based strategist Robert Darwall, who writes:

The usual justification for socialized health care is to provide access to quality health care for the poor and disadvantaged. But this function can be more efficiently performed through the benefits system and the payment of refundable tax credits.

The real justification for socialized medicine is left unstated: Because health-care resources are assumed to be fixed, those resources should be prioritized for those who can benefit most from medical treatment. Thus the NHS acts as Britain's national triage service, deciding who is most likely to respond best to treatment and allocating health care accordingly.

It should therefore come as no surprise that the NHS is institutionally ageist. The elderly have fewer years left to them; why then should they get health-care resources that would benefit a younger person more? An analysis by a senior U.K.-based health-care expert earlier this decade found that in the U.S. health-care spending per capita goes up steeply for the elderly, while the U.K. didn't show the same pattern. The U.K.'s pattern of health-care spending by age had more in common with the former Soviet bloc.

A scarcity assumption similar to the British mentality underlies President Barack Obama's proposed health-care overhaul. "We spend one-and-a-half times more per person on health care than any other country, but we aren't any healthier for it," Mr. Obama claimed in his address to Congress last Wednesday, a situation that, he said, threatened America's economic competitiveness.

This assertion is seldom challenged. Yet what makes health care different from spending on, say, information technology—or any category of consumer service—such that spending on health care is uniquely bad for the American economy? Distortions like malpractice suits that lead to higher costs or the absence of consumer price consciousness do result in a misallocation of resources. That should be an argument for tackling those distortions. But if high health-care spending otherwise reflects the preferences of millions of consumers, why the fuss?

The case for ObamaCare, as with the NHS, rests on what might be termed the "lump of health care" fallacy. But in a market-based system triggering one person's contractual rights to health care does not invalidate someone else's health policy. Instead, increased demand for health care incentivizes new drugs, new therapies and better ways of delivering health care. Government-administered systems are so slow and clumsy that they turn the lump of health-care fallacy into a reality.

This, my friends, is how you explain the problem of ObamaCare. It will limit spending and reduce options and new innovations, and thus result in an evil kind of rationing that will kill off the very young and the elderly.