Tuesday, January 29, 2013

Catastrophic Care: A Serious Problem and an Economism-Restricted Answer

            A colleague of mine asked my opinion about a recent article in The Guardian newspaper in the UK, reporting the appearance of a book by David Goldhill, Catastrophic Care: How American Health Care Killed My Father—and How We Can Fix It:

As I did not have time to acquire and read the book, I turned instead to the article Goldhill wrote for the Atlantic Monthly in 2009, which appears to have been a brief synopsis of what the book contains:

Goldhill is a businessman, as he tells us, and not a health policy expert. So when his 83-year-old father died after being admitted to the hospital with pneumonia, spending 5 weeks in the ICU and getting complicating infections one after the other, despite what seemed to be smart and compassionate physician and nursing care, Goldhill went to work trying to figure out for himself what was wrong with this system. First he made a catalog of all that he found wrong with the way US health care is organized; then he proposed a solution that seemed to make sense to him as a businessman. His assessment of the problem is largely on target, so I want to talk only about his solution, which shows what happens when we put on the blinders of economism.

Briefly, Goldhill favors a system where we’d each buy (or be given by the government if we were too poor to afford it) a health savings account to manage predictable, normal health expenses, plus a catastrophic insurance policy to cover unforeseen emergencies. This is basically the health savings account idea as its advocates call for it today. He’s sure that if we restored the consumer to the driver’s seat, we’d have a system that actually responded to consumer needs and no longer wasted huge sums of money while providing unnecessary or error-ridden “care.”

An obvious rejoinder is, first, that this assumes that health care can be tamed by a healthy dose of free market competition, while smart economists ever since Kenneth Arrow back in the 1950s have piled up lots of reasons why the market will not and cannot work in health care. Second, while errors and hospital-acquired infections are too-common problems all over the world, most other countries control costs much better than we do, yet none of them has found the health savings account, or the consumer-driven model, the right way to do this. So Goldhill needs to explain why the US is such an exceptional case.

Goldhill’s article in The Atlantic in fact mentions the existence of any country besides the US only twice.  He briefly considers the pros and cons of a single-payer health system, but decides it’s no good, first, because it would be “Medicare for all” and Medicare has been unable to control costs effectively (which might be precisely because Medicare is not the only game in town, and could control costs much better if it were). Second, he notes that the health costs have been rising in other nations and not just in the US. That’s true, but the steepness of the curve is generally less in those other countries, again showing that a single-payer system does not merely lead to administrative efficiency savings; it also gives the health system leverage over prices generally in a way that can constrain costs more effectively than our patchwork nonsystem.

The only other place he mentions any other nation is to note that the US has a lot more MRI scanners than countries like Germany—only to go immediately to the conclusion that more free-market competition in the US would take care of that.

This article is a good example of how one can do a reasonable job of deciding that a problem exists and why; and yet be so severely constrained by economism as a belief system that one cannot see anything like a wide range of solutions. (Since Goldhill is obviously suspicious of the US health insurance industry, you’d think he’d also be suspicious of the idea of health savings accounts—since the only people pushing them are conservative-economism ideologues, and lobbyists for the big insurers who know they can make a mint off HSAs.)

If you’ve been following this blog, you might imagine that I’m simply beating up again on Republicans. So I should add that Goldhill admits in his article to being a Democrat. Economism, it seems, is a bipartisan affliction.

Racism and Economism—Cozy Bedmates

            A talk with colleagues recently sent me back to the book by Michael K. Brown and several colleagues, Whitewashing Race: The Myth of a Color-Blind Society (University of California Press, 2003). The Introduction to their volume is an excellent discussion of the phenomenon of what scholars call “whiteness,” the privileges that whites enjoy by living in our present American society, which is invisible to the whites because they don’t see how it is built on systemic discrimination aimed at nonwhites. What I want to talk about in this blog post is how closely the conservative response to the challenge of “whiteness” relies on economism as its fundamental ideology.
            Brown and colleagues spend most of their Introduction addressing what they call “racial realism,” the position advocated primarily by conservative opponents of affirmative action and similar government programs. Racial realism, they say, claims three things:
·         Contrary to the liberal myth that America is basically racist, the country has made great strides in rectifying racial inequality in recent years, so the problem has been solved and we really need to move on.
·         Any persistent inequalities in income, employment, housing, health care, etc. can no longer be explained by white racism and must be due to unwise, irresponsible choices made by individual people of color.
·         Current failures of the civil rights movement are caused by the self-serving behavior of its leaders, who don’t serve the interests of their constituents and merely want to keep themselves in power.
Brown et al’s book is basically a set of essays designed to refute all these claims, and they briefly go over the evidence against each in their Introduction. In the process of refuting the claims, they make clear how much those making the conservative case rely on the belief system of economism.
            A central tenet of economism is that if you’re poor, you got that way through your own individual actions and not because of any institutional or systemic factors; and if you’re rich, you got that way because of your own hard work and responsible behavior. So the most threatening thing to say to any economism true believer is that a person might be hardworking and deserving and still end up poor, or vice versa. Therefore, any suggestion that our society remains racist, so that blacks have an automatic disadvantage that’s outside of any individual’s control, has to be fought off with everything in the economism arsenal (like assembling all the evidence of progress toward racial inequality, and ignoring the mountains of evidence on how much inequality still exists).
            The second major belief of economism is that the free market is the solution for all human problems, and government regulation always makes a problem worse. If despite some recent progress (which Brown and company hardly deny), America today remains rife with institutional racial prejudice, it seems pretty clear that the marketplace has not fixed it and that the only way to level the playing field is through some form of government policies. But such a conclusion is simply not acceptable to this group of thinkers, so they need to deny the problem rather than admit the possible need for solution (just as they have done with climate change).
            Brown and colleagues, in passing, tell a story that I think goes to the heart of the claims of “racial realism.” Prof. Andrew Hacker, in his book Two Nations (Ballantine, 1992), describes an experiment he performed with his white college students. He asked them how much money they would demand as fair compensation if they were to be changed from white to black; and they replied that they’d consider it a fair deal if they received $1 million a year.
            I assume that as part of this experiment, the students took for granted that they’d stay the same people in all other aspects of life other than skin color. That is, if they had succeeded in college thus far by hard work and responsible behavior, they’d continue to act that way after the color change. So if racial realism was a true description of U.S. society, they might see the level of disadvantage they’d face as something easily compensated for by much less than a cool million a year.
            Obviously, these students, based on their own up close and personal view of how society works (and perhaps also informed by looking into the secret recesses of their own racial thinking) were having none of this. They knew how little all their individual good behavior, and positive upbringing in white schools and white homes, would count as soon as they could be found guilty of “driving while black,” or went out on the job market as a black person, or went to see a doctor or got admitted to a hospital.
            The Hacker experiment should be especially persuasive to believers in economism, because it’s a free market answer. He got a free-market estimate from his students as to the actual cost of being black in America.

Saturday, January 12, 2013

Tackling Economism Head-On: Porter in the NY Times

            In The Golden Calf, I discuss how economism has wormed its way into the fabric of what Americans view as “common sense” about public policy, so that most of what we hear and read in the media simply takes economism for granted as gospel. Hence any major media piece that challenges economism directly is worthy of note. Such an article, focusing on health care, appeared recently in the New York Times, courtesy Eduardo Porter:

            Porter begins by talking about how for-profit health care often delivers worse results for patients than nonprofit. In this, had he wished, he could have cited the work of economists at least as far back as Kenneth Arrow in the 1950s who declared that the health care sector represents a market failure, where laws of supply and demand simply fail to operate. In economism, of course, there is no such thing as a market failure; whatever the market determines is simply what’s true and right, as if it were Divine will.
            But Porter actually has bigger fish to fry: These profit-maximizing tactics point to a troubling conflict of interest that goes beyond the private delivery of health care. They raise a broader, more important question: How much should we rely on the private sector to satisfy broad social needs?”
            Porter then goes into a series of analyses that show how much the US suffers in comparison to other nations, through our insistence in turning social services over to the private market. He notes, for example, “Consider bail bondsmen and their rugged sidekicks, the bounty hunters. American TV audiences may reminisce fondly about Lee Majors in “The Fall Guy” chasing bad guys in a souped-up GMC truck — a cheap way to get felons to court. People in most other nations see them as an undue commercial intrusion into the criminal justice system that discriminates against the poor.”
            Porter’s conclusion: Our track record suggests that handing over responsibility for social goals to private enterprise is providing us with social goods of lower quality, distributed more inequitably and at a higher cost than if government delivered or paid for them directly.” Note the “higher cost”—Porter is telling us that the shibboleth that the private market is always and necessarily more efficient than the government is simply a myth (as we have for a long time demonstrated in health care particularly).
            How our love affair with the so-called “free market” snookers us is nicely analyzed: “In a way, private delivery of health care misleads Americans about the financial burdens they must bear to lead an adequate existence. If they were to consider the additional private spending on health care as a form of tax — an indispensable cost to live a healthy life — the nation’s tax bill would rise to about 31 percent from 25 percent of the nation’s G.D.P. — much closer to the 34 percent average across the O.E.C.D.”
            Let me cut away from Porter for a minute to emphasize this point. US health care spending roughly consists of two components—about 55% is government and about 45% is private. If you compare just the 55% government share, you see that it’s about equal, per capita, to what other countries like Canada pay for health care systems that provide universal insurance coverage for all citizens. So then on top of that we pay an extra 45% in private funds, to create a system that excludes 30-40 million Americans from getting insurance coverage. Some single-payer advocates call this “paying for national health insurance but not getting it.” The economism-inspired myth, of course, is that we cannot possibly afford national health insurance because it would add prohibitively to current costs.
After more comments on health care policy, Porter concludes: With both Democrats and Republicans unwilling to raise taxes on the middle class, the discussion is quickly boiling down to how deeply entitlements must be cut. We may want to broaden the debate. The relevant question is how best we can serve our social needs at the lowest possible cost. One answer is that we have a lot of room to do better. Improving the delivery of social services like health care and pensions may be possible without increasing the burden on American families, simply by removing the profit motive from the equation.”
            This article should be required reading for all pundits and politicians. It goes directly in the face of what has passed for conventional wisdom ever since the late 1970s. We have been told ad nauseam that it is precisely by injecting a profit motive into social services, just like everything else in the economy, that we’ll succeed both in improving quality and saving money. Here’s Porter to tell us that that emperor has no clothes.