On Friday I attended the U.S. Monetary Policy Forum in New York City. I will be posting some material about the paper I presented at the conference later this week. But today I wanted to mention an interesting talk at the conference by Harvard Professor Greg Mankiw on health care costs.
If we could figure out a way to deliver the same quality of medical care at a lower cost, that is certainly something we should be trying to do. But Mankiw argued that much of the rising cost of medical care is a result of advances in technology that offer new but expensive ways of treating our old health problems.
Mankiw suggested an interesting way of thinking about the economic and moral challenges for which we are trying to come up with solutions. He asked the audience to consider what we would do if the world made a new technological discovery that he called the Dorian Gray pill, named for the Oscar Wilde tale of a gentleman with a dark secret that gives him immortality. Each day that you take the Dorian Gray pill, you won’t get sick, you won’t age, and if you continue to take it, you’ll never die. The only problem is it costs $100,000 to manufacture a year’s supply.
How would we use such a technology, if it existed? It’s obviously not feasible to give it to everybody– the resources simply don’t exist to do that. One system we might consider is that the people who get to take the pill are the ones who can afford it. Some would defend that system by arguing that it is the best way to increase incentives for people to make the things or provide the services that society values highly. If someone responds to this inducement by personally creating the resources necessary to pay for their expensive tastes, why not allow them to do so? Perhaps the greatest path to riches in such a world would be for someone to figure out how to make the pills for $50,000, or $20,000. Wouldn’t we want to unleash the collective talents and resources of the world to try to produce such a prize?
But for other people, the only feasible way to get the pills would be through zero-sum or negative-sum economic activity. Keeping your $100 K bottle from getting stolen would itself require major resources. Surely a likely outcome would be that military and police power would be the ultimate resource that makes sure that the valuables end up in the hands of the elites in charge.
Or perhaps the best answer is that humans just aren’t equipped to play God in this way. The original Dorian Gray arrived at his situation through a pact with the devil. Maybe we’d be better off if we never had such a technology?
I’m not sure what the answer is, and I pass along Mankiw’s hypothetical question in part because I’m curious to hear how our readers would answer it.
But here’s one thing I am persuaded of: the fact that we’re not sure as a society how to answer such a question is related to the fact that we can’t agree on how to control rising medical costs.