Monday, July 8, 2013

Shifting the Long Run Debate on Healthcare

Healthcare and Robotics

                American economic debate over the last few years has been defined in large part by considerations of the government’s role in healthcare, with much justification. Healthcare makes up 17.9% of the United States’ GDP as of 2011, and with a population that is both aging in terms of the percentage of people above 65 and the increasing life expectancy at reaching that age, demand for healthcare services will continue to rise.  If politicians in the United States are elected (or not) because of their policies and views on health care spending thirty years or more away, why not consider the entire system as malleable? Mechanization of labor stands to play an extremely important role in reducing the cost/unit of medical care, with important consequences for domestic politics, macroeconomic planning and society that should be looked at.

                In economic analysis there are several different time horizons that can be used to explain the movements and flows of the economy. Roughly, the first horizon is the known as the short run, defined as a time period where capital, such as machines and buildings, and labor, cannot be changed. Most projections of future health care costs are based off of extrapolating the current healthcare system into the future, from the education of physicians to the prescription of medicine, into the future, rather than a long run analysis which permits for a flexible reimagining of the system that might be more sensible in light of technological advancement.

                Much talk recently has been made of the relevance of the costs of medical care. Paul Krugman identifies the costs of procedures as the most important part of the health care equation, and controlling these costs as the key to fixing healthcare1. There are many reasonable explanations for the high cost of medical care—advanced technology such as MRI machines are expensive to create, companies need money to fuel future research, and so on. Many of these concerns are intractable in the short term, but it is a mistake to think that they cannot be overcome in the future with far sighted policies.

                As an example, there is a strong case to be made for the obsoletion of the highly-skilled physician.  Doctors, the engines of the health care system, account for around 80% of healthcare spending2.  There are many reasons why doctors command such high incomes in the United States, enumerated elsewhere3, but it is unclear exactly why the duties of a doctor cannot be performed with equal or higher ability by sufficiently sophisticated robotics (See previous post as to see why other positions within healthcare might still be filled by humans). A doctor probably spends over twenty years in education before he prescribes her first dose of aspirin—a robotic envoy could conceivably download terabytes of information in a few seconds and be ready to perform flawless procedures. Not only would the operating cost of a robot be significantly less for a robot, they would have no opportunity cost and require no return to education. Every task in a hospital that could be mechanized as opposed to performed by an MD could be an immense savings.

                Even if, grimly, this somehow only translated into a mechanical doctor only being a few percent cheaper than a human one, the implications for the national budget, and more importantly, accessible healthcare for all would be tremendous. Developing policies and hospital structures that will be able to manage the transition from human medicinal practice to mechanized practice stands to have an impact on national or even international healthcare greater than any of the current topics of discussion which focus distributing costs.