Let’s take a step back from the day-to-day battle on health care reform battle to focus on a core question. As I wrote earlier, I believe most of the health care debate boils down to the following:

Resources are constrained, and so someone has to make the cost-benefit decision, either by creating a rule or making decisions on a case-by-case basis. Many of those decisions are now made by insurers and employers. The House and Senate bills would move some of those decisions into the government. Changing the locus of the decision does not relax the resource constraint. It just changes who has power and control.

The value decision that underlies most of this debate flows from the question: Who should decide whether additional medical care is worth the cost?

Unfortunately, some high-level rhetoric has obscured this question.

Former Governor Sarah Palin highlighted one extreme. She created an image of government bureaucrats on “death panels”denying sick seniors life-saving and affordable treatment. By focusing on the possible denial of low-cost high-value care, it’s easy to inflame passions.

The President spent much of August rebutting this straw man. While doing so he highlighted the other extreme: when a chemically identical generic drug can be substituted for a more expensive brand name drug, one can save money without any medical downside. His “red pill – blue pill” example is less provocative but equally unconstructive. If there are cost savings with no medical difference, then it doesn’t matter who makes the decision, because the decision is a no-brainer. His reassurance is a false one.

Both leaders ducked the harder questions. Today I will illustrate the hard choices with two examples. In a follow-up post I will discuss your policy options for who should make these hard choices.

Example 1: You break your wrist (the one you write and type with). You have a doctor visit and an x-ray, which combined cost $300. There are two treatments available:

  • The first is a traditional cast. Healing time = 6 weeks. Additional cost = $100.
  • The second is a