Priceless: Chapter 3


by Austin Frakt and Aaron Carroll

Source: The Incidental Economist

If you haven’t read my prior posts on John Goodman’s book Priceless, catch up using the Priceless tag. This post pertains to Chapter 3.

My impression from this chapter is that John likes to paint himself as a warrior against the muddled health policy community. That, in fact, may be an accurate depiction of John, if not the health policy community. It lends itself to a strong sense of purpose and a forceful, argumentative style. Things seem black and white to John. Those who don’t call his black “black” and his white “white” are, in his words, “paternalistic” or “social engineers.” John would have us believe there is no other sensible way to contemplate the world than the economists’ way. Actually, he’s more specific than that: his view of the economists’ way. You can find many smart, capable, health economists who do not agree with him on economics grounds.

Don’t get me wrong. I like the economists’ way. It can be useful and clarifying. But it is not the only way. It is not in any sense the uniquely right way. That the tone of John’s book suggests otherwise makes it hard for me to read. I don’t see it as a strength. I see it as an overreach. I’m happy for you to interpret this to be a commentary on me.

For example, John rails against mandated benefits. In a pure economic sense, and provided you accept a host of other assumptions John doesn’t specify, they are inefficient. They drive up costs. Insofar as contraceptives are concerned, there are other ways to increase access, which John lists.

Fine. If this is John’s black then I say “black.” But is anyone who is for mandated benefits necessarily wrong-headed? If this is John’s “white,” I’m willing to say “tan.” If I need to take off my economist hat to say “tan,” so be it. People have different values. Economic efficiency (again, assuming certain assumptions which may not hold in health care) isn’t the only one. To be sure, I think it would be preferable if more people learned what economic efficiency means and implies, but I don’t demand they check their other values at the schoolhouse door.

John writes about the visceral dislike “many people in health policy” have for Medicare Advantage. He raises this in the context of what he thinks is a double standard. Some people, he says, let public insurance off the hook for the same crimes committed by private insurers. (By the way, some people do the exact opposite.) To him, it seems, you’re either for Medicare Advantage or against it. You’re either anti-government or pro-government, either in John’s camp or not. It’s black or white.

Well, sorry. Some of us are neither. Some of us can acknowledge the value of Medicare Advantage to beneficiaries but still lament the large increase in taxpayer funds spent on them in recent years and for a relatively modest increment of additional benefit. Some of us can say critical things about the stewardship of Medicare Advantage while extolling the virtues of a competitive bidding regime for its plans. Some of us can analyze a Medicare reform idea to illuminate both its strengths and limitations.

I just don’t see myself on the other side of the front in the war John is waging. I don’t see myself in his camp either. In short, I’ve yet to find myself in his book. And again, this is as much or more a reflection of me as it is John. I just wonder if he’s aware how off-putting, even insulting, his approach can be for some readers. (Am I alone?)

Moving on, he wrote,

Entrepreneurship cannot be replicated. [...] Bill Gates, Warren Buffett and Sam Walton. If we could discover what they did right, and everyone copied their behavior, then we could all become billionaires.

I agree with John that an expectation that this could work is total nonsense. However, I recall that in a prior chapter, he analogized health care to the iPhone, an analogy I found wanting. Still, if John believes the analogy is apt, then let’s play it out. The iPhone was and is a huge success, earning Apple and its management billions. It paved the way for what one might reasonably call “replication” by other companies. Android and Windows phones are different, but not all that different. The important aspects of the iPhone — what makes a touch screen smart phone great — were in some sense replicated. The market expanded. There is more competition. It’s great! So, is health care more like the iPhone or more like Warren Buffett?

As this post is getting long, let me move to the lightening round:

Do you care whether I have health insurance?

In fact, I do. Same goes for many other people I get to know. In fact, I’m even happy that people I don’t know have health insurance. It solves a problem for me. It helps me sleep at night. Mark Pauly uses this very same expression about this very same issue. Mark Pauly is not muddle-headed!

[T]here is virtually nowhere you can go to find a rational, well-thought-out, consistent analysis of why you should care whether or not I have health insurance.

Ouch! That smarts, and especially in light of this:

If we are concerned that the uninsured will impose an external cost on the rest of us, there is a simple remedy: impose a fine equal to the expected cost of any unpaid medical bills they might incur.

Sounds familiar. But I can’t quite figure out if it is a penalty or a tax.

Massachusetts cut the number of uninsured in that state in half through then-Governor Mitt Romney’s health reform. But while expanding the demand for care, the state did nothing to increase supply. More people than ever are trying to get care, but because there has been no increase in medical services, it is more difficult than ever to actually see a doctor.

It may be difficult to see a doctor in Massachusetts today. But if it is, it appears as if it was just as difficult even before Romneycare was implemented. (This link is to a piece by Jon Cohn based on a Massachusetts Medical Society report, the same one, I believe, that John Goodman mentions in his book.)

Finally,

Imagine a preacher, a priest, or a rabbi who gets up in front of the congregation and gets a lot of things wrong. Say he misstates facts, distorts reality, or says other things you know are not true. Do you jump up from the pew and yell, “That’s a lie”?

No. That would be disrespectful, disruptive, and counterproductive. But, there are other ways to engage opposing points of view. One of them is to exit the dark sanctuary, to mingle among people with less dogmatic presentations of them, and to try to see the light for what it is: full spectrum, not black and white.

I’ll post on Chapter 4 in a few days.

Priceless: Chapter 3, ctd.

By: Aaron Carroll

You should, of course, read Austin’s thoughts first.

Like Austin, my biggest gripe with this chapter is my frustration with how John portrays his “opposition”. I don’t know who he’s arguing against. He portrays the health care policy debate as one in which it’s him against a whole bunch of Soviet-planning-loving-free-enterprise-hating-capitalism-loathing hippies. That’s just not the way it is.

Readers of this blog know that there are shades of gray. I have discussed the positive aspects of “minute clinics“. Austin has acknowledged times when Medicare Advantage works. I’ve freely admitted that government can stifle innovation and entrepreneurship. It’s not one way or the other. It’s nuanced. Government is good for some things. It’s bad for others.

I could go on and on all day, but that’s a waste. Here’s my lightening round:

1) John makes the all-too-common argument that mammograms can be gotten for $100 and that “a tiny, tiny, tiny portion of the population” can’t afford them. First of all, many, many, many people can’t spare $100. Moreover, that’s not what mammograms cost. Like with birth control, first you need to see a doctor (expensive), then you need a referral, then you need to go get the test. It has to be read. All of that costs money, likely far more than just the “mammogram”.

2) Yeah, I can’t help myself. John is making up the opposition again. He claims that people are upset when private insurance companies deny bone marrow transplants, but not when Arizona Medicaid denied organ transplants. I screamed about those Arizona Medicaid cuts here and here. I even used the words “death panel”.

3) John seems to love entrepreneurs, but thinks they can’t be copied. I don’t think he really believes that. After all, if someone discovers a better way to do something, we replicate that all the time. What he likes is when private people do it, and he hates when government tries to do it. That’s a different distinction.

4) If John hasn’t seen any justification for the rationale for government getting involved in healthcare, then he’s not reading enough. Here’s Austin. He even cites Greg Mankiw.

5) John seems to believe people who disagree with him want change because of process, not outcome. I beg to differ. We’re getting our ass kicked on outcome. Here’s a quote:

What I discovered after many frustrating conversations was that people who like the way healthcare is organized in Canada do not like it because of any particular result it achieves. They like it because they like the process.

Yeah… no. I can’t remember writing a post ever where I argue for a different health care system because I like its philosophy better. Moreover, the outcomes John likes to cite are things like percent of women getting mammograms, women getting cervical cancer screening, people who have had colonoscopies, and men who’ve had prostate screening tests. I can’t think of a better way to illustrate someone who is focused on process more than outcome.

6) Money quote:

If people don’t come to their convictions by means of reason, then reason isn’t going to convince them to change their minds.

That could be a tag line for this blog. Blows me away that John think’s we’re the ones who don’t use reason.