My friend Bill inspired me to clarify my thoughts on the libertarian stance toward paternalism. The word “paternalism” is rooted in the Latin noun “pater,” or father. Today, the word paternalism signifies an act of intervention whereby one party, a well-meaning “benefactor,” violates the liberty of another person(s), a “beneficiary,” in order to provide an unwanted benefit. Benefits can be classified either something generally considered to be good, or the removal of something bad, a harm. The overwhelming majority of paternalistic interventions involve the removal of harms. Therefore, many (if not most) acts of paternalism seek to limit risk-taking by intended beneficiaries.
First of all, two parties are involved in paternalistic interventions: a beneficiary and a benefactor. So let’s break down this dyadic relationship a bit more. Beneficiaries and benefactors can be either individuals (individual paternalism) or groups of individuals (group paternalism). One important for of group paternalism is “state paternalism.” Examples of state paternalism include seat belt laws, drug laws, etc.
Paternalism involves the imposition of an unwanted benefit by a benefactor. On the face of it, this sounds absurd. After all, human beings tend to want benefits and not want harms. So the idea of an unwanted benefit seems irrational. That’s why RATIONALITY plays a key role in justifying paternalistic intervention. But in the real world, benefits and harms are subject to a certain degree of social construction. Thus rationality and social control tend to often overlap. We believe that there are some risks that are irrational. Why would any rational person choose to: kill one’ self, take mind altering recreational drugs, live homelessly out on the streets, refuse chemotherapy, not wear seat belts when driving etc. So the concepts of both rationality and HARM are central to paternalism.
But paternalism is only morally problematic in a social structure that places value on both PERSONAL LIBERTY and BENEFICENCE. Conversely, in cultures that place little or no value on personal liberty, or routinely value beneficence over liberty, paternalism is not regarded as problematic. Indeed, many cultures defer decision-making to husbands, parents, religious leaders, and/or government. However, in most of the Western world, especially, the United States and Europe, personal liberty has at least some value, and therefore, the violation of one’s liberty requires moral justification.
Insofar as paternalistic intervention violates the will of an intended beneficiary, it requires the benefactor to employ a certain degree of COERCIVE FORCE. Here the presumption is that if you do not want the benefit that is being offered, but you do not pose any resistant force to its imposition, it is not paternalistic because no coercive force was required.
And finally, we can explore the nature of interventions. Since all interventions involve costs and benefits, the underlying feature of paternalism is that the benefits offered by intervening outweigh the costs for not intervening. Call it REDOUNDING GOOD. Thus, there seems to be an empirical component involved in paternalistic intervention: either the intended beneficiary will, in fact, benefit from the intervention or they will not.
So we’ve established that there are five dimensions to paternalistic intervention:
1.) The presence or risk of an identifiable HARM.
2.) The value of PERSONAL LIBERTY and BENEFICENCE and the underlying assumption that individuals ought to be able to take at least some risks without being subjected to well-meaning benefactors.
3.) The RATIONALITY of the intended beneficiary and benefactor and/or the risks involved.
4.) The use of COERCIVE FORCE by benefactors
5.) The assessment of costs and benefits, or REDOUNDING GOOD of the intervention.
I’ll explore each of these dimensions in detail in subsequent blog entries.
Saturday, February 27, 2010
Sunday, February 7, 2010
Haiti: A Libertarian View of World Hunger
With some justification, rights-based libertarians have been accused on being chronically insensitive to world hunger. Actually, the issue is much more complex. Take, for example, the ongoing food distribution debacle in Haiti. It seems that much (if not most) of the food aid being funneled into earthquake ravaged Haiti has been plagued by bribery, corruption, and theft perpetrated by gangs of predatory males. (This was true even before the eathquake!) To combat male-dominated food piracy, and maldistributed food aid, relief agencies have been issuing food coupons to women, who in are expected to exchange them for food and distribute it equitably among men, women, and children. Unfortunately, to the surprise of profoundly naive distributers, women are now being robbed by men of their coupons and food rations before they even get home with the goods. As reported by USA Today, these same women are being raped and victimized by these predatory males in the re-settlement camps.
Back in the 1970s, Neo-Malthusians like Garrett Hardin pointed to the intergenerational "ratchet effect" that invariably plagues food distribution. You feed one generation, they have more babies, population increases, and your moral obligation to feed them increases geometrically. But there is also an intrageneration "ratchet effect." In order to feed the hungry, distributers must first clear the rubble out of the streets, then police the roads for gangs that demand bribes for safe passage, set up distribution centers, make certain that the food gets to vulnerable women and children,and then police the camps where the Haitians are living to make sure that women and children are not victimized by men on the way home or at the lawless camps. In other words, at least in Haiti you cannot realistically expect to "feed" anyone without monitoring and enforcing a semblance of "rule of law" and, ultimately, without rebuilding their nation from the bottom up.
If you are a utility-minded libertarian and you want to spend your hard earned money to feed starving fellow humans, is Haiti a good place to send your money, or are there other countries where you'd get more "bang for a buck?" Of course, once the intragenerational ratchet effect subsides (if it ever does), then what? When is the job finished? How long will it take to teach Haitian males not to advance their individual and collective well-being through violence, threats, thievery, and corruption? If you expect the Haitian government to soon rise to the occasion, forget it. It is too busy prosecuting misguided missionaries caught trying to smuggle a few children out of a Malthusian quagmire.
Back in the 1970s, Neo-Malthusians like Garrett Hardin pointed to the intergenerational "ratchet effect" that invariably plagues food distribution. You feed one generation, they have more babies, population increases, and your moral obligation to feed them increases geometrically. But there is also an intrageneration "ratchet effect." In order to feed the hungry, distributers must first clear the rubble out of the streets, then police the roads for gangs that demand bribes for safe passage, set up distribution centers, make certain that the food gets to vulnerable women and children,and then police the camps where the Haitians are living to make sure that women and children are not victimized by men on the way home or at the lawless camps. In other words, at least in Haiti you cannot realistically expect to "feed" anyone without monitoring and enforcing a semblance of "rule of law" and, ultimately, without rebuilding their nation from the bottom up.
If you are a utility-minded libertarian and you want to spend your hard earned money to feed starving fellow humans, is Haiti a good place to send your money, or are there other countries where you'd get more "bang for a buck?" Of course, once the intragenerational ratchet effect subsides (if it ever does), then what? When is the job finished? How long will it take to teach Haitian males not to advance their individual and collective well-being through violence, threats, thievery, and corruption? If you expect the Haitian government to soon rise to the occasion, forget it. It is too busy prosecuting misguided missionaries caught trying to smuggle a few children out of a Malthusian quagmire.
Friday, January 8, 2010
A Libertarian View of Airline Security
In light of the recent avalanche of media coverage targeting airline security, I thought it would be worthwhile to briefly outline a libertarian approach. Here is what we know:
1. Terrorism is not the product of one single group under the direction of one single leader, but a conglomeration of loosely organized, decentralized organizations from the Middle East. They overwhelmingly profess allegiance to Islamic religious beliefs. However, Islam is not only factionalized (Shiite Sunni etc.) but also highly decentralized, and therefore there is no one-single Islamic leader that has control over other groups. The vast majority of these “Islamic Extremists” live in poor Middle Eastern and African countries: Afghanistan, Pakistan, Yemen, Somalia etc. The vast majority of them are poor, male, illiterate, and unemployed. The majority of these potential terrorists have never flown in a plane.
2. All governments thrive on fear, and gain power over citizens by promising protection from threats. Invariably, the illusion of security is achieved at the expense of personal liberty and efficiency. The modern world is rife with both real and imagined threats. Americans have become increasingly risk-averse and therefore expect our government to protect us from an ever-expanding list of potential threats: influenza, balloon mortgages, unemployment, hunger, stupidity, rising gasoline prices, urban violence, sexual predators, contaminated food, and suicide bombers.
3. In the modern world perfect security is impossible because there is an infinite number of potential threats and an infinite number of ways to incite fear through the media. Threat-mongering enjoys a bull market. Therefore, if you watch CNN, or follow Internet news sources, you would think that we live our lives on the brink of disaster, when in fact most of us lead extraordinarily safe lives.
So what would a libertarian conclude about all of this? First of all, most of us would argue that we cannot afford to protect ourselves from an infinite number of potential threats, therefore security-rationing is inevitable. Most of us libertarians believe that the terrorist airline threat is greatly overblown. Moreover, our ongoing wars against local, regional, national, and international "Radical Islamic Groups" tend to manufacture more terrorists. Every time a drone missile kills an innocent (or guilty) woman or child, friends and family members seek revenge. However, they are not likely to buy an airline ticket to the United States. Given what we know about the efficiency of airline security, if terrorists were really interested in (or capable of) blowing up airplanes at will, there would have been many more air disasters. The fact of the matter is that you are safer on an airplane than in a car or a hospital. And finally, I think all libertarians agree that the airline industry is much more likely to be able to make rational assessments of the terrorism threat, and develop reasonable airline security policies than a governmental agency.
So what do we do? End the various instantiations of the “War on Terror” (along with the “Drug War”), let the free market sort out the degree of threat, develop useful technologies such as scanners, and biotechnical identification cards. Then, turn those “no-fly lists” over to the real experts: Federal Express, Wal-Mart, and Disney Corporation. Check out my recent APLS Blog Entry.
1. Terrorism is not the product of one single group under the direction of one single leader, but a conglomeration of loosely organized, decentralized organizations from the Middle East. They overwhelmingly profess allegiance to Islamic religious beliefs. However, Islam is not only factionalized (Shiite Sunni etc.) but also highly decentralized, and therefore there is no one-single Islamic leader that has control over other groups. The vast majority of these “Islamic Extremists” live in poor Middle Eastern and African countries: Afghanistan, Pakistan, Yemen, Somalia etc. The vast majority of them are poor, male, illiterate, and unemployed. The majority of these potential terrorists have never flown in a plane.
2. All governments thrive on fear, and gain power over citizens by promising protection from threats. Invariably, the illusion of security is achieved at the expense of personal liberty and efficiency. The modern world is rife with both real and imagined threats. Americans have become increasingly risk-averse and therefore expect our government to protect us from an ever-expanding list of potential threats: influenza, balloon mortgages, unemployment, hunger, stupidity, rising gasoline prices, urban violence, sexual predators, contaminated food, and suicide bombers.
3. In the modern world perfect security is impossible because there is an infinite number of potential threats and an infinite number of ways to incite fear through the media. Threat-mongering enjoys a bull market. Therefore, if you watch CNN, or follow Internet news sources, you would think that we live our lives on the brink of disaster, when in fact most of us lead extraordinarily safe lives.
So what would a libertarian conclude about all of this? First of all, most of us would argue that we cannot afford to protect ourselves from an infinite number of potential threats, therefore security-rationing is inevitable. Most of us libertarians believe that the terrorist airline threat is greatly overblown. Moreover, our ongoing wars against local, regional, national, and international "Radical Islamic Groups" tend to manufacture more terrorists. Every time a drone missile kills an innocent (or guilty) woman or child, friends and family members seek revenge. However, they are not likely to buy an airline ticket to the United States. Given what we know about the efficiency of airline security, if terrorists were really interested in (or capable of) blowing up airplanes at will, there would have been many more air disasters. The fact of the matter is that you are safer on an airplane than in a car or a hospital. And finally, I think all libertarians agree that the airline industry is much more likely to be able to make rational assessments of the terrorism threat, and develop reasonable airline security policies than a governmental agency.
So what do we do? End the various instantiations of the “War on Terror” (along with the “Drug War”), let the free market sort out the degree of threat, develop useful technologies such as scanners, and biotechnical identification cards. Then, turn those “no-fly lists” over to the real experts: Federal Express, Wal-Mart, and Disney Corporation. Check out my recent APLS Blog Entry.
Saturday, December 26, 2009
Employer Mandates, Individual Mandates and the Return of the Edsel.
The debate over health care reform is almost over. Other than a few minor modifications that will be needed to reconcile the House and Senate bills, the long battle is over. Although I’m reluctant to predict what the final product will look like, there are two reforms that will most likely survive the sausage-making process: employer mandates and individual mandates. As Charles and I suggested in our paper The Modern Health Care Maze, given the perverse systemic incentives present in our health care system, individual and employer mandates are unavoidable. Here’s what we can expect from these mandates.
EMPLOYER MANDATES: It’s not clear is how the government will be able to force small businesses to offer “quality health insurance” at a "reasonable cost," without incentivizing those employers to either: drastically reduce the wages of their employees, cut back the number of full-time employees, or filing for bankruptcy. The only way to prevent any of these adverse responses is for government to either subsidize health insurance for small businesses, redefine “quality insurance,” or both. Both strategies will be in the final bill. No one knows how much future small businesses will be willing or able to spend on employee health insurance. My best guess is that most small-business owners will need nearly a 100% subsidy in order to stay in business. And, let's not forget that the vast majority of small businesses will go bankrupt, regardless of health care reform. Government will try to control health insurance costs by redefining “quality insurance.” A 40% tax on “Cadillac Health Insurance Plans” offered by large employers will almost certainly be in the final bill. But I have very little faith in our legislators’ ability to distinguish between Cadillacs and Edsels. I do predict that Congress will end up with Cadillacs and most of the rest of us will have Edsels.
INDIVIDUAL MANDATES: No one knows how much young, healthy individuals will be willing or able to pay for mandatory health insurance, without defaulting on their student loans, defaulting on their car loans, or defaulting on their home mortgages. Without a 100% subsidy, my best guess is that we’ll see either a massive default rate on loans or a radical decline in college enrollment, new car or home purchases by young, healthy people. Therefore, if I’m right, government will be paying for most of the insurance that it mandates for young, healthy individuals.
So between employer and individual mandates government will be paying for a lot more or Edsel quality health care. And given that there is nothing in the health care reform bills that will force providers to compete based on quality and price, those subsidies will merely add to the inflationary spiral.
EMPLOYER MANDATES: It’s not clear is how the government will be able to force small businesses to offer “quality health insurance” at a "reasonable cost," without incentivizing those employers to either: drastically reduce the wages of their employees, cut back the number of full-time employees, or filing for bankruptcy. The only way to prevent any of these adverse responses is for government to either subsidize health insurance for small businesses, redefine “quality insurance,” or both. Both strategies will be in the final bill. No one knows how much future small businesses will be willing or able to spend on employee health insurance. My best guess is that most small-business owners will need nearly a 100% subsidy in order to stay in business. And, let's not forget that the vast majority of small businesses will go bankrupt, regardless of health care reform. Government will try to control health insurance costs by redefining “quality insurance.” A 40% tax on “Cadillac Health Insurance Plans” offered by large employers will almost certainly be in the final bill. But I have very little faith in our legislators’ ability to distinguish between Cadillacs and Edsels. I do predict that Congress will end up with Cadillacs and most of the rest of us will have Edsels.
INDIVIDUAL MANDATES: No one knows how much young, healthy individuals will be willing or able to pay for mandatory health insurance, without defaulting on their student loans, defaulting on their car loans, or defaulting on their home mortgages. Without a 100% subsidy, my best guess is that we’ll see either a massive default rate on loans or a radical decline in college enrollment, new car or home purchases by young, healthy people. Therefore, if I’m right, government will be paying for most of the insurance that it mandates for young, healthy individuals.
So between employer and individual mandates government will be paying for a lot more or Edsel quality health care. And given that there is nothing in the health care reform bills that will force providers to compete based on quality and price, those subsidies will merely add to the inflationary spiral.
Saturday, December 12, 2009
Why the American Hospital Association and the American Medical Association Oppose Lowering the Age Requirement for Medicare
As health care reform continues it's steady decent into oblivion under the watchful eye of a swarm of lobbyists, let me offer a few comments on a recent news article announcing that the American Medical Association and the American Hospital Association will oppose the expansion of Medicare as an alternative to the proposed “public option.” As reported by David Espo on December 11: "The American Hospital Association and American Medical Association have both criticized the proposed Medicare expansion since it was announced Tuesday night, saying the program pays health care providers less than private insurance companies, and warning against increasing the number of patients."
Although I personally stand to benefit from the proposed lowering of the program's age requirement from 65 to 55, I really can’t defend an expensive government program infested with fraud and grossly over-budget: even if it is popular among those who benefit from it. But I would like to point out that the opposition voiced by the AHA and AMA is exactly what you’d expect from any artificial monopoly.
Artificial monopolies thrive, not because they provide higher quality products and/or services at a lower price than their competitors, but because they convince government to disable competition. It’s a lot easier and less expensive to dispatch an army of well-paid lobbyists to Washington than it is to compete head-to-head. That’s also why the quality of health care in the United States has been in decline while the price continues to rise.
In the case of hospitals and physicians, competition has been long disabled by an extraordinarily convoluted and opaque pricing system. The cornerstone of this system is called price-discrimination, whereby sellers conveniently set their prices based on the buyers’ ability to pay. In the health care industry it’s based the size of the risk-pool. (Keep in mind that price-discrimination only works under conditions where buyers cannot simply refuse to buy these products and services: think cancer treatment!) Hence, under a price-discriminatory system, providers charge different prices to different buyers and buyer groups. If your private health insurance policy has a large enough risk pool, it can force the sellers to charge less. Of course, providers always prefer to negotiate with small risk-groups, and their lobbying efforts invariably reflect that preference. If you are not part of a group you’ll pay to the teeth!
Private insurance companies are currently regulated by state governments; which obviously limits the size of buyer groups. But under this bizarre pricing structure, no one really knows what that final price will be until long after the product or service has been provided. (Go ahead, call around town and ask how it costs to get an MRI!) Imagine going to your auto repair shop and asking how much a new muffler will cost, and the mechanic responds by saying: “Well the price depends on the size of the risk pool that backs up your auto insurance. We currently charge 37 different prices. We’ll replace your muffler and then figure out that price and send it to your insurance company, then they’ll decide how much they’ll pay, then you’ll get a bill for the difference.” After you get through laughing your ass off, you’d probably decide to fix that muffler yourself, or simply drive a noisy vehicle.
So what’s the story with Medicare? Well, it’s a single-payer system (and a so-called "public option") which means that it draws on a national market and has enough bargaining power to negotiate a lower price from providers. It also forces providers to charge a set fee that clearly reflects what Medicare will pay for that product of service. It’s a lot like going to your auto repair shop where the prices are posted on the wall and on their website, and everyone pays the same price. This kind of a pricing structure actually forces providers to compete based on quality and price. Of course, if you are a provider you’d prefer to be paid more per-buyer than less-per buyer, which is why many successful providers simply refuse to take on any Medicare patients. As the number of providers that refuse to participate in Medicare increases, it gets more difficult for elderly patients to find willing providers. When they do find one, they'll probably spend several hours in the waiting room! However, there is one class of providers that thrive on Medicare; that is, dishonest providers that charge the program for unnecessary products and services or for products and services that they never provided. And the government's inability to monitor the system, attracts dishonest providers.
So what’s the solution here? Well, I would argue that the health care industry ought to operate under the same legal pricing constraints as other industries. Most other countries have outlawed price-discrimination and therefore force providers to post their prices. Of course, that won’t happen in the United States because The American Hospital Association and the American Medical Association would descend on Washington like a swarm of locusts.
Although I personally stand to benefit from the proposed lowering of the program's age requirement from 65 to 55, I really can’t defend an expensive government program infested with fraud and grossly over-budget: even if it is popular among those who benefit from it. But I would like to point out that the opposition voiced by the AHA and AMA is exactly what you’d expect from any artificial monopoly.
Artificial monopolies thrive, not because they provide higher quality products and/or services at a lower price than their competitors, but because they convince government to disable competition. It’s a lot easier and less expensive to dispatch an army of well-paid lobbyists to Washington than it is to compete head-to-head. That’s also why the quality of health care in the United States has been in decline while the price continues to rise.
In the case of hospitals and physicians, competition has been long disabled by an extraordinarily convoluted and opaque pricing system. The cornerstone of this system is called price-discrimination, whereby sellers conveniently set their prices based on the buyers’ ability to pay. In the health care industry it’s based the size of the risk-pool. (Keep in mind that price-discrimination only works under conditions where buyers cannot simply refuse to buy these products and services: think cancer treatment!) Hence, under a price-discriminatory system, providers charge different prices to different buyers and buyer groups. If your private health insurance policy has a large enough risk pool, it can force the sellers to charge less. Of course, providers always prefer to negotiate with small risk-groups, and their lobbying efforts invariably reflect that preference. If you are not part of a group you’ll pay to the teeth!
Private insurance companies are currently regulated by state governments; which obviously limits the size of buyer groups. But under this bizarre pricing structure, no one really knows what that final price will be until long after the product or service has been provided. (Go ahead, call around town and ask how it costs to get an MRI!) Imagine going to your auto repair shop and asking how much a new muffler will cost, and the mechanic responds by saying: “Well the price depends on the size of the risk pool that backs up your auto insurance. We currently charge 37 different prices. We’ll replace your muffler and then figure out that price and send it to your insurance company, then they’ll decide how much they’ll pay, then you’ll get a bill for the difference.” After you get through laughing your ass off, you’d probably decide to fix that muffler yourself, or simply drive a noisy vehicle.
So what’s the story with Medicare? Well, it’s a single-payer system (and a so-called "public option") which means that it draws on a national market and has enough bargaining power to negotiate a lower price from providers. It also forces providers to charge a set fee that clearly reflects what Medicare will pay for that product of service. It’s a lot like going to your auto repair shop where the prices are posted on the wall and on their website, and everyone pays the same price. This kind of a pricing structure actually forces providers to compete based on quality and price. Of course, if you are a provider you’d prefer to be paid more per-buyer than less-per buyer, which is why many successful providers simply refuse to take on any Medicare patients. As the number of providers that refuse to participate in Medicare increases, it gets more difficult for elderly patients to find willing providers. When they do find one, they'll probably spend several hours in the waiting room! However, there is one class of providers that thrive on Medicare; that is, dishonest providers that charge the program for unnecessary products and services or for products and services that they never provided. And the government's inability to monitor the system, attracts dishonest providers.
So what’s the solution here? Well, I would argue that the health care industry ought to operate under the same legal pricing constraints as other industries. Most other countries have outlawed price-discrimination and therefore force providers to post their prices. Of course, that won’t happen in the United States because The American Hospital Association and the American Medical Association would descend on Washington like a swarm of locusts.
Friday, November 27, 2009
The Illusion of Costless Benefits: Mammograms, Pap Tests, and the Inspection of Goat Entrails
Last week the results of two major research studies challenged the utility of two cancer screening tests: mammograms and Pap tests. As a libertarian philosopher, I thought I’d add a few caveats.
Scientific predictions of impending downward spirals are subject to two kinds of costly errors that waste time, effort, and resources: false positives and false negatives. Mammograms and Pap tests are subject to a high incidence of both, which raises two questions. 1.) Under what conditions does it make sense for an individual to undergo these imperfect screening tests? 2.) Under what conditions does it make sense for government to encourage or discourage the use of these imperfect screening tests? The cost/benefit ratios for these tests are enormously complex and include both biological and economic determinents. Recent scientific evidence indicates that for individuals, the utility ratios for both mammograms and Pap tests vary based on one's medical history, family history, and age. If you have had cancer before, or if you have a strong family history of cancer, evidence suggests that you probably ought to be tested.
Once it is determined that you ought get routine mammograms and/or Pap tests, then scientists must then determine at what age routine testing ought to begin and end, and how often you ought to be tested? Surprise! The corporations that manufacture these tests and the specialists that interpret the results prefer that more women get tested more often. Third-part payers prefer fewer women being tested less often. As scientists gather empirical evidence over time, the cost/benefit ratios for various groups change and the status quo becomes subject to revision, and some women who were previously recommended for routine may no longer be routinely tested, and/or some who were not recommended for routine tested may be routinely tested.
Although about 3-4 million Pap tests are performed annually, only about 13, 000 cases of cervical cancer are diagnosed, and 4,000 women die from it every year. In the case of mammograms, 1,900 women must be screened for a decade in order to save a single life. In light of this body of statistical evidence, under what circumstances might government encourage women to undergo these tests, or mandate insurance companies to pay for these tests? Here lies the political problem.
For better or worse, we have all been culturally programmed to ignore the economic dimension of health care: an ideology that is reflected in the often cited moral pronouncement: “Regardless of how much it costs, if we can save one life… it’s worth it.” This high-minded ideology has had, not only a devastating effect cost of health care, it has also undermined scientific medicine. Based on the “save one life principle,” if we screen 100 million persons and save one life, it’s worth it! Or, if we spend $50,000 keeping 95 year old Uncle Joe alive in an intensive care unit for three more months, it’s worth it. And, of course the “save one life principle” becomes even more pernicious when someone else pays for the tests and/or hospital bills.
We Americans are more likely to want and/or undergo any screening test if a third party (private health insurance, Medicare, Medicaid etc.) pays for it. Economists call it “moral hazard.” So how do third-party payers decide which tests to pay for? Well, state and federal governments usually decide for them by force third-party payers to pay for certain tests. How do legislators decide which tests to mandate? We would all like to believe that scientific evidence plays a prominent role, but that’s not how our political system works. What usually happens is that the manufacturers of the tests and the would-be beneficiaries of low-probability, costless benefits get together and form coalitions that vigorously lobby state legislators. How hard is it for male legislators to refuse to cover Pap tests and/or mammograms when confronted by an army of female lobbyists?
Libertarians are critical of any system where government presides over the distribution of "costless benefits." If the goat industry and a group of patients that believe in the prognostic value of the inspection of goat entrails could form an effective lobby, third-party payers could be forced to pay for those tests. The fundamental problem in the United States is that health care policy is often forged on the basis lobbying acumen, often at the expense of science. As the goat industry plans its lobbying campaign to force third-party payers to cover the inspection of goat entrails as an alternative to mammograms and pap tests, we can begin to understand why the quality and cost of health care in the United States will remail suboptimal.
Scientific predictions of impending downward spirals are subject to two kinds of costly errors that waste time, effort, and resources: false positives and false negatives. Mammograms and Pap tests are subject to a high incidence of both, which raises two questions. 1.) Under what conditions does it make sense for an individual to undergo these imperfect screening tests? 2.) Under what conditions does it make sense for government to encourage or discourage the use of these imperfect screening tests? The cost/benefit ratios for these tests are enormously complex and include both biological and economic determinents. Recent scientific evidence indicates that for individuals, the utility ratios for both mammograms and Pap tests vary based on one's medical history, family history, and age. If you have had cancer before, or if you have a strong family history of cancer, evidence suggests that you probably ought to be tested.
Once it is determined that you ought get routine mammograms and/or Pap tests, then scientists must then determine at what age routine testing ought to begin and end, and how often you ought to be tested? Surprise! The corporations that manufacture these tests and the specialists that interpret the results prefer that more women get tested more often. Third-part payers prefer fewer women being tested less often. As scientists gather empirical evidence over time, the cost/benefit ratios for various groups change and the status quo becomes subject to revision, and some women who were previously recommended for routine may no longer be routinely tested, and/or some who were not recommended for routine tested may be routinely tested.
Although about 3-4 million Pap tests are performed annually, only about 13, 000 cases of cervical cancer are diagnosed, and 4,000 women die from it every year. In the case of mammograms, 1,900 women must be screened for a decade in order to save a single life. In light of this body of statistical evidence, under what circumstances might government encourage women to undergo these tests, or mandate insurance companies to pay for these tests? Here lies the political problem.
For better or worse, we have all been culturally programmed to ignore the economic dimension of health care: an ideology that is reflected in the often cited moral pronouncement: “Regardless of how much it costs, if we can save one life… it’s worth it.” This high-minded ideology has had, not only a devastating effect cost of health care, it has also undermined scientific medicine. Based on the “save one life principle,” if we screen 100 million persons and save one life, it’s worth it! Or, if we spend $50,000 keeping 95 year old Uncle Joe alive in an intensive care unit for three more months, it’s worth it. And, of course the “save one life principle” becomes even more pernicious when someone else pays for the tests and/or hospital bills.
We Americans are more likely to want and/or undergo any screening test if a third party (private health insurance, Medicare, Medicaid etc.) pays for it. Economists call it “moral hazard.” So how do third-party payers decide which tests to pay for? Well, state and federal governments usually decide for them by force third-party payers to pay for certain tests. How do legislators decide which tests to mandate? We would all like to believe that scientific evidence plays a prominent role, but that’s not how our political system works. What usually happens is that the manufacturers of the tests and the would-be beneficiaries of low-probability, costless benefits get together and form coalitions that vigorously lobby state legislators. How hard is it for male legislators to refuse to cover Pap tests and/or mammograms when confronted by an army of female lobbyists?
Libertarians are critical of any system where government presides over the distribution of "costless benefits." If the goat industry and a group of patients that believe in the prognostic value of the inspection of goat entrails could form an effective lobby, third-party payers could be forced to pay for those tests. The fundamental problem in the United States is that health care policy is often forged on the basis lobbying acumen, often at the expense of science. As the goat industry plans its lobbying campaign to force third-party payers to cover the inspection of goat entrails as an alternative to mammograms and pap tests, we can begin to understand why the quality and cost of health care in the United States will remail suboptimal.
Saturday, November 7, 2009
Group Bias in the Distribution of Health Care in the United States
As I suggested in an earlier blog entry governmentally subsidized health care in the United States is already being rationed. I think it is distributed based on an indefensible group bias; that is, politicians control access to subsidized health insurance based on arbitrary group association. Let's take a closer look at that.
Since the twentieth century, politicians have granted subsidized access to specific groups. In the 1940s, the first “group” to gain that access was comprised of individual white, male workers that worked for large unionized corporations. Later, politicians expanded access by including other groups including: the elderly, the poor, veterans, Native Americans, employees of government, and children. As a result of this irrational group-based allocation system, we now have a “maze” of health care tax-supported programs that provide various levels of health care coverage to most Americans. The current problem is that we now have a growing number of individuals that need access to health care but do not fall into any of these arbitrary groupings. Therefore, in order to gain access these “outsiders” have had to manufacture their own “group,” and lobby government for equal recognition. This new group is comprised of everyone that is not employed by a corporation that offers private health insurance, not elderly, not poor, not a veteran, not Native American, not employed by government, and/or not children.
Now any rational person that is against health care reform within its current framework must argue that these outsiders are not entitled to health coverage, even though these other groups already enjoy subsidized health insurance. Of course, no politician is going to take subsidized health care away from workers, the poor, elderly, soldiers, or children. But many politicians are opposed to adding “outsiders.” Interestingly the rest of us rarely demand that those politicians justify the inclusion of one group and the exclusion of another. Why?
Since the twentieth century, politicians have granted subsidized access to specific groups. In the 1940s, the first “group” to gain that access was comprised of individual white, male workers that worked for large unionized corporations. Later, politicians expanded access by including other groups including: the elderly, the poor, veterans, Native Americans, employees of government, and children. As a result of this irrational group-based allocation system, we now have a “maze” of health care tax-supported programs that provide various levels of health care coverage to most Americans. The current problem is that we now have a growing number of individuals that need access to health care but do not fall into any of these arbitrary groupings. Therefore, in order to gain access these “outsiders” have had to manufacture their own “group,” and lobby government for equal recognition. This new group is comprised of everyone that is not employed by a corporation that offers private health insurance, not elderly, not poor, not a veteran, not Native American, not employed by government, and/or not children.
Now any rational person that is against health care reform within its current framework must argue that these outsiders are not entitled to health coverage, even though these other groups already enjoy subsidized health insurance. Of course, no politician is going to take subsidized health care away from workers, the poor, elderly, soldiers, or children. But many politicians are opposed to adding “outsiders.” Interestingly the rest of us rarely demand that those politicians justify the inclusion of one group and the exclusion of another. Why?
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