Thursday, September 9, 2010

A Conversation

Coworker: I want to get back to that thing you said about liberals having short time horizons.

FLG: Sure.

Coworker: On something like health care, aren't the Democrats thinking long-term about costs?

FLG: First, the lowering costs argument has basically been discarded by health care reform supporters. Second, can you really tell me that lowering long-term costs was really what motivated the Democrats continuing and long running desire for universal health care? Above and beyond the sad stories without insurance right now? No.

Coworker: Alright. Maybe it was the sad stories about people without insurance right now. But is there anything wrong with that? It's not fair that people are suffering and dying right now because of lack of insurance.

FLG: Okay, now we're getting somewhere. That's the best argument for universal health care right there. But now let's imagine that the government policies to expand health care access in the short-term also harm medical innovation in the long-term. I won't go into a whole explanation about it, but let's say that higher taxes, increased regulation, and other cost cutting measures reduce the ability for people who create new medical breakthroughs to make a profit. Not eliminate it entirely, but just reduce it. Whether you agree with that, can you see the argument?

Coworker: Sure. Cost cutting means that drug companies won't make as much in profits.

FLG: Okay, now let's say today the effectiveness of our medical technology is 1. Furthermore, let's say that without universal health care our medical technology increases at 2% a year. Then 1.02 to the 100th power gives us how much better our medical technology will be in the future. That number is approximately 7.25. So, medicine would be 7.25 better than today. What's a reasonable number for how much technology will increase with more government involvement?

Coworker: You said 2% without it?

FLG: Yes.

Coworker: Let's say 1.9% then.

FLG: I'd say that's a bit optimistic, but okay. That's 1.019 to the 100th power. And technology in a 100 years will only be 6.57 times better than today.

Coworker: Wow. That's way lower. But wait, what's the point?

FLG: If universal health care inhibits medical advancement by diminishing the profit motive by the amount you chose, then 100 years from now people will only have access to medical technology 6.57 times better than today when they could've had 7.25 times better. That difference means the death and suffering of a lot of people in the future. If this is true, then our ability to alleviate the suffering of people today increases the suffering of people tomorrow. Is that fair? Again, these are just rough numbers and based on assumptions, but the basic premise, I believe, is sound.

Coworker: I'd never thought of that. It never occurred to me.

FLG: Of course you didn't, because you have short-time horizons.

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