Peter Singer on Health-Care Rationing

Via Conor Clark, I find Peter Singer in the NYT saying this:

If the Department of Transportation [followed the principle that it was impossible to put a dollar value on human life] it would exhaust its entire budget on road safety. Fortunately the department sets a limit on how much it is willing to pay to save one human life. In 2008 that limit was $5.8 million. Other government agencies do the same. Last year the Consumer Product Safety Commission considered a proposal to make mattresses less likely to catch fire. Information from the industry suggested that the new standard would cost $343 million to implement, but the Consumer Product Safety Commission calculated that it would save 270 lives a year — and since it valued a human life at around $5 million, that made the new standard a good value. If we are going to have consumer-safety regulation at all, we need some idea of how much safety is worth buying. Like health care bureaucrats, consumer-safety bureaucrats sometimes decide that saving a human life is not worth the expense. Twenty years ago, the National Research Council, an arm of the National Academy of Sciences, examined a proposal for installing seat belts in all school buses. It estimated that doing so would save, on average, one life per year, at a cost of $40 million. After that, support for the proposal faded away. So why is it that those who accept that we put a price on life when it comes to consumer safety refuse to accept it when it comes to health care?

I find this bizarre and confused. Maybe I've missed it, or I run in the wrong circles, but I never had the impression that the argument against government rationing of medical treatment was that you can't put a price on human life. Of course you can! Individuals do it all the time through their rationing–through occupational choices, consumer choices, residential choices, transportation choices, and health and medical choices, all of which reveal how much the individual is willing to pay to avoid an X% risk of death. As Singer mentions, this is how the Consumer Product Safety Commision comes to estimate the cash value of a life: by taking an average of revealed willingness to pay in these kinds of individual choices. The argument against government rationing of medical care is not that life is infinitely valuable, but that government has no legitimate authority to decide how much an individual should be allowed to pay.
Suppose Peter Singer came along and told you that the data show that, on average, Americans value their lives at six million dollars, and that therefore you shouldn't be able to spend seven million dollars on yourself, since your whole life isn't even worth that much. Would you be impressed? I hope not!
Individuals trade reductions in risk of death against other goods in the context of their own limited budgets. (I.e., they ration their resources.) What you are willing to pay to reduce the risk of death depends in large part on how much you've got to spend. If individuals with a ton of money spend boatloads on medical care, they are thereby revealing how much they are willing to pay to reduce the risk of death and are thereby pushing up the average willingness to pay for extra life. For the government to step in and limit spending on medical treatments on the basis of the fact that the limit reflects the average willingness to pay for extra life is exactly like government stepping in to limit how much individuals can pay for extra safety features on a car on the basis of what people do tend to pay. This stupidly takes an evolving average as normative while cutting off the possibility of further evolution.
Of course, the government, like individuals and families, has a limited budget. So if the government is going to pay for medical care, it has to ration. And that very fact is an argument for limiting the government to only paying for the care of people who are unable to pay for a minimum of care themselves.

Author: Will Wilkinson

Vice President for Research at the Niskanen Center