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The Knowledge Problem Goes to Court


In her recent post about UnicornCare, MaxedOutMama notes the law puts lawyers and judges out of their element. They’ll have to make economic decisions:

The new health care law ignores all these [fiscal impossibilities], and just mandates that Medicare payments not be increased past a GDP limit. The only way to actually achieve that goal would be to kill expensive older patients, as far as I can see. The problem is that modern medicine works pretty well, but not treating older patients can often be far more expensive than treating them. Also, hospitals are mandated to treat them. And what about nursing home care? If you let an older person degenerate to the point to which the person can no longer live independently, they'll end up in a nursing home on Medicaid, which is going to cost us all a lot and which is not limited under the law.

But how well suited are lawyers to understand all this? I would argue not at all. This is a classic legislative and experimental problem, and the Supreme Court is hardly going to be competent to assess the consequences of the law. They, like everyone else, will have to sit and see how it works out. And once they rule, if it turns out that it does not work in practice, it is not as if they can go back and change their minds unless another case works its way up, and they essentially overrule themselves.

The Supremes lack the power to initiate a review of a bad ruling. They also lack the power to bring back to life any victims of that bad ruling.

Central planning in health care will have the same costs as central planning anywhere else. No panel of experts—or lawyers—can know all the relative valuations people put on all the goods and services available in a modern economy. A sub-optimal allocation of resources is guaranteed. Applied to health care, sub-optimal means people die.