ALLOCATING SCARCE RESOURCES. Betsy Newmark.

[T]he first lesson a student learns in introductory economics is the concept of scarcity.

Camille Paglia.

Obama's aggressive endorsement of a healthcare plan that does not even exist yet, except in five competing, fluctuating drafts, makes Washington seem like Cloud Cuckoo Land. The president is promoting the most colossal, brazen bait-and-switch operation since the Bush administration snookered the country into invading Iraq with apocalyptic visions of mushroom clouds over American cities.

You can keep your doctor; you can keep your insurance, if you're happy with it, Obama keeps assuring us in soothing, lullaby tones. Oh, really? And what if my doctor is not the one appointed by the new government medical boards for ruling on my access to tests and specialists? And what if my insurance company goes belly up because of undercutting by its government-bankrolled competitor? Face it: Virtually all nationalized health systems, neither nourished nor updated by profit-driven private investment, eventually lead to rationing.

Profit-driven private investment implies rationing by price, and a different set of trade-offs. Public policy, however, trades off higher prices in order to allow additional choices, at least where goods such as oil or steel or aluminum or dry goods are concerned.

Christopher Beam.

In many countries, the government actually puts an explicit dollar amount on saving a life. Britain, with something called the "quolly," is the clearest example. The metric is the Quality-Adjusted Life Year, or QALY, basically a measurement of time adjusted to account for your health. Everyone gets a rating between 1 and 0: One means you're perfectly healthy. Zero means you're dead. Anything in between stacks the quality of your life against that of a healthy person. For example, if you have "some problems with performing usual activities, some pain or discomfort," you get a rating of 0.76. If you're depressed as well, your score drops lower. Someone in extreme pain or discomfort who can't wash themselves and is depressed might even get a negative rating. (For a better explanation, see here. For an even better one, here.)

Medical treatments are then assessed according to their cost per QALY. Say you have cancer and there is a $100,000 treatment that would extend your life by five years, but those years would be painful. You might get a score of 0.20, which would make those five years equal to 1 QALY. Under the British system, then, this treatment would not cost $20,000 per year—it would cost $100,000 per QALY. This system allows doctors to compare the efficiency of treatments for different diseases, whether it's HIV or depression or Alzheimer's, on the same scale. It also gives the government a metric by which to cap spending. Right now, the British health care system generally doesn't cover treatments that cost more than about 30,000 pounds per QALY. (That's about $50,000 at today's exchange rate. This is what people mean when they talk about rationing.)

Such a policy implicitly involves capital rationing. Consider a research project that could reduce that 100K (60,000 pounds) to 30,000 pounds for the same outlay as another research project that reduces 35,000 pounds to 25,000 pounds. Which one gets funded?