OF CAVIAR AND CHEMO.

Al Hubbard, one of John McCain's advisers and one of the architects of his health care plan, made a revealing slip at a Center for American Progress panel last week:

When a third-party pays for a service or product—we consume it as if it was free…It’s interesting, if you would think about, the employers rather than providing health care insurance they provided food insurance. So every time you go to the grocery store you just take out your food insurance card, you give it to the cashier, she scans it, and you’re outta there. Pretty soon, you would start buying caviar, expensive steak, and you start buying more than you need, and also pretty soon the supermarket would discover that you really didn’t care about price, so the supermarket would remove price, because it doesn’t affect your decisions about what to buy and what not to buy.

A lucky I-banker who walks into a specialty foods store with corporate credit card heads for the caviar and oysters because caviar and oysters are delicious, and he wants more of them. They are luxury goods, sensual pleasures that we love to experience when finances permit, but understand we can do without when incomes tighten. By contrast, colonoscopies and MRIs aren't a good time. If I won a $5,000 spending spree from my local bank, I would not rush to for a gastrointestinal check-up, even if it came with a side of general anesthesia. But if my doctors told me I need a colonoscopy or an MRI, I'd get one. Diagnostic tests and medical treatments are not luxury goods. They are necessities. They do not feel like a choice. Which is why some many of us go into debt, take out second mortgages, and draw down savings. Hubbard characterizes the purchase of medical tests as "our decisions," but that's inaccurate. They are our doctor's decisions. We don't want to make those purchases; we're informed that we need to make them. Then we try and figure out how to pay for them. But the economics around luxury goods are quite different than the economics around necessary goods; you can't compare chemotherapy with a sumptuous steak. Which is why it is why it's so cruel and illogical to try and cut costs by making care more expensive for individuals. In luxury goods, it's true that the relevant decision, for demand, comes at the point of individual purchase. But in medical goods, the relevant decision, for demand, comes at the point of prescription. The question for spending, in other words, is what we're being told we need to buy. Making those things inaffordable is not an acceptable solution. Image used under a Creative Commons license from Ulterior Epicure.