On Heath Reform Costs and Human Nature

I am on a train from New York City headed to points north. I have just finished reading John Adams, David McCullough’s epic biography of our second president. Adams was an astute observer of human nature.

To Adams nothing had changed about human nature since the time of the ancients. Inequities within society were inevitable, no matter what the political order. Human beings were capable of great good, but also of great evil. Thus it had always been, thus it would always be…Such were the weaknesses and folly of mankind.

Which brings me health reform and its costs.

There are three great “weaknesses” or “inequities” besetting mankind.

One, the first “weakness,” perhaps “inevitability” is a better word, is “aging.” All of us will age, all of us will die, and most of us will develop chronic diseases towards the end of life. Such is the human condition.

Two, a second “weakness,” perhaps “inequities” is the better word, is “poverty.” In health reform, these weaknesses and inequities, translated, are Medicare, Medicaid, and the costs they incur. This weakness accounts for most regional variation in Medicare cost.

Three, a third weakness, perhaps “susceptibility” is the more appropriate word, is our tendency to engage in fraud, abuse, and overuse when federal entitlement programs beckon. If man perceives something to be “free,” with other people paying for it, he will take advantage of it. It should surprise no one that fraud and abuse eat up 15% of the expenditures of CMS (Centers for Medicare and Medicaid.

The older we get and the poorer we become, the more health care we require, and the higher the costs. The more compassionate we become, the more we spend, especially if a third party is paying. We will continue to do so until we run out of other people’s money. This may simply be the cost of running a civilized society. It is not because we are a venal people; it may be because spending other people’s money is the politically correct and humane thing to do, or because ripping off the government is easy. It may be because we do not do anything until we perceive the expenditure directly affects us. It is human nature at work.

One remedy for managing high costs is to have people spend more of their own money and thus to know the true cost of things. This is the principle of health savings accounts with high deductibles and money set aside for retirement. Unfortunately, the high reform bill curtails and complicates health savings accounts. This may be because of another law of human nature. Politicians and others in power feel they have superior knowledge to the people and to the average health consumer. That is also human nature at work.