Megan at From the Archives has written two pieces on libertarians and choice that are, predictibly, stirring up a lot of angst in the libertarian blogosphere. From the first piece:
People live in denial, do not do good risk analysis (as evidenced by my erratic use of bike helmets.) They do not conscientiously save against medical emergencies, even though they could. They do not have the capacity to compare fancy-dancy medical treatments (I should figure out what chemo regimen is best for me? I DO NOT WANT TO, because that is outside my expertise and BORING. I want to trust an expert, if it comes to that.), especially if the pain has already started. They do not have any interest in comparing not-fancy treatments. (When I broke my arm, I realized I had no information whatsoever on which of the four local emergency rooms had good reputations. None. I had never cared until it was too late.) I derive zero utility from comparison shopping for health care; I want someone else to handle it.I figure people are roughly like me, non-savers, bad risk assessment, more than willing to delegate their health care. (I am not willing to delegate my fitness or nutrition, but that is different from disease or injury.) You know what makes good sense for that model of the individual? Government based health care that does a decent job by me. You know what doesn't make sense? For profit insurance agencies who do not have my best interests at heart.
And from the second:
This is the other thing I don't get about small government types. You protest so vociferously that government takes choices away from you. But a whole lot of choices are BORING. If I never once think about car bumper safety standards for 25mph crashes, I will never miss it. I do not want to carefully match my car safety standards to my most likely driving patterns and save two grand in the process. I would not enjoy that process. (Perhaps you would, and you would rather have the money.) I've never been a comparison shopper or a meticulous consumer. Maybe my model of the individual is too biased by my experience. But I don't want to figure out how much coliform bacteria I can tolerate on my spinach, given my health. I don't want to do that even if it saves me money. I don't want to figure out what goes into paint in nephews' toys. I don't even want to handle my health care.People talk about being rational health care consumers, but they are maximizing some combination of health outcomes and money. I want to maximize my utility. My utility is optimized by going outside to play while someone who is interested in health care gets paid to balance my health care and money. I'll pay a little extra to cover that person. I come out well ahead in that deal*.
This is true of almost everybody. My model of the individual is that they do not always make the best choices. (Obviously). Most people are not driving the car, watching the television, or taking the vacation that would make them happiest. Most people pay too much to avoid risk (witness the preferences for low insurance deductibles and extended warranties), assume that anything their neighbours do is probably a good idea, and spend money on expensive features they then do not use. And I think that virtually everyone, from anarcho-capitalist to anarcho-syndicalist, agrees that this is so.
But this is not an argument for turning those choices over to someone else, necessarily. Most people probably do a better job at picking what is right for them, most times, than even a polished expert. Have you ever gone shopping with a friend who had beautiful taste in clothes, only to end up with a closet full of things that you can't quite pull off?
On the other hand, in many cases there may be an argument for turning over the choice to someone else. I neither know, nor care, about the inner workings of my Bose sounddock; I bought it because a friend I respect said it was the best thing short of an expensive stereo kit I couldn't afford.
Megan is making an argument for turning many of those choices over to the government. Libertarians would argue that most of those choices could be safely left in the hands of consumer reports or an equivalent. My question is, when does the government work, and when do private agencies work just as well or better?
Megan works in one of the areas where I, at least, would say the government is probably the best solution: water management. There's a reason that irrigation systems seem to have given rise to the first large states: water is no respecter of property lines. Given the coordination problems and hazily defined boundaries inherent in water rights, I'm pretty comfortable having the government take care of this, though as Megan might put it, I find the topic too BORING to decide whether I think the government is doing it well.
(Sorry, Dad. Try to think of it as my outsourcing my opinions to you. Gains from trade!)
On the other hand, Consumer Reports does a pretty good job with my blender. And what they don't take care of, tort law seems to be pretty good at. Jack in the Box doesn't try to track down the source of e. coli outbreaks in its food because it's afraid that the government will shut it down; it's afraid the government won't need to, because people will already have stopped eating there.
Private ratings firms do have drawbacks. For example, I was told by a marketing professor one story about Yahoo in the early days, which used to sell its search rank order. There was one chap who wanted "Garden City Financial Planner", which wasn't, as you can imagine, a frequently requested search. They checked their listings and saw that that search term was only requested about 25 times a month, and decided to charge him a dollar a search--back in those days, the prices were also set kind of haphazardly. (Note: as I'm telling this from memory, the numbers are very approximate). The next month, he cheerfully came back and reordered. And the next month. So they doubled the price. He went on paying. They doubled it again. He ponied up without a protest. Eventually, they signed a two year contract at something like $2,000 a month. And at the signing, they asked him to explain why he was willing to pay so much for so few hits.
"Easy," he explained. "People who use that search term really want a Garden City financial planner. Out of those 25, maybe 15 click on the link. Ten of them ask me for information. And five of them sign up. Those five have a median net worth of $350,000, and I make about $5-10,000 a year providing them advice and services. They'd be worth it to me at twice the price."
How many of those five would have paid $400 for an unbiased search? As long as it is worth more to the provider to keep you misinformed, than you are willing to pay to be informed, private ratings are subject to corruption. Particularly since if you knew how to tell whether you were getting a good rating, you wouldn't need the rating. That's why equity research ratings from investment banks were useless: no consumers were willing to pay as much as the fees the banks got from security underwriting and merger advisory, and as long as the market kept rising, they couldn't tell the difference between good and bad advice anyway.
Also, private firms may just not care. Does it really matter to them if your blender breaks in two weeks?
Megan clearly places a higher faith in the incentives of government agencies than in private firms or ratings agencies. I'd say government regulations have different problems, not better ones. Usually, government bureaucrats care; no one goes to work in the engineering department of the NHTSA unless they're pretty interested in cars, or the water bureaucracy of the state government of California unless they think water's pretty fascinating.
But government bureaucracies have other problems that private firms suffer less from, or not at all. Many of them get a new boss every two to four years. They are generally punished only for the things they have allowed to happen, but not for the things they have prevented from happening, so they tend to be far too risk averse, even when that reduces welfare. This is compounded by the fact that the people who staff bureaucracies tend to already be risk averse; many chose government over the private sector at least in part because they value the job security. There's nothing wrong with being risk averse--but remember, risk averse does not equal "better outcomes". It just means "less variance". It can, and often does, mean "worse, but more predictible outcomes".
At some level, for example, most of us seem think that the FDA is probably too cautious. I know this because contra Megan, most cancer patients seem to be fairly eager to get into clinical trials of unapproved drugs, especially once they have exhausted the approved treatments. These trials take place after the drug has been tested for toxicity; what they represent is the FDA delaying approval on treatments that could save peoples' lives, not for safety reasons--though nasty side effects sometimes do show up in later clinical stages, this is of fairly small concern to terminal cancer patients--but in order to put its "this works" stamp on it. If this ordering of values were really the majority preference, we'd all go home to die instead of trying remedies, whether they are drug trials or alternative therapies, that haven't gone through double-blind testing. This could happen to private firms, as well, of course, but competition and price signals seem to curb that tendency. Private insurance firms are quicker to approve "off label" uses of drugs than the FDA, which requires an entirely fresh round of clinical trials to do so.
And while private firms are probably in more danger of outright corruption, government ratings agencies often do serve corporate interests rather than the consumer. They do so in a different way: usually, they protect insiders against competition, which raises costs and lowers quality for everyone. It's a phenomenon called regulatory capture, and it's nearly universal, though to varying degrees. It's not malicious--it's just that the bureaucrats spend a huge amount of time with the companies they regulate, and so naturally, they sort of come to see things their way. Also, all entities, government or otherwise, hate change in their industry. Change is uncomfortable, and makes years of carefully acquired expertise useless. Regulators, however, have slightly more latitude than most organizations to prevent change from occurring.
Governments also have the problem of divided attention: none of the people voting on the laws are experts on what they're voting on. Low profile issues often see the laws written by lobbyists; high profile issues often see them written by panicked staffers who don't really know what they're doing. That's why the financial regulations written after crises are often so, well, weird; whatever the appropriate level of financial regulation, it's hard to see what benefit America derived from separating underwriting from banking for 60 years, which was a prominent feature of Glass-Steagall, the 1930's Congress' response to the Great Depression.
Knowing all that, it's hard to come up with a pithy theory of when government agencies will do a better job of providing information or regulation. Tenatively, I'd offer this: government works better when the coordination problems are large, and failures are hard to observe, such as dealing with e. coli outbreaks; private firms work best when the failures are easy to observe and directly affect the purchaser, such as auto safety and blenders. This being about what the public choice people have been saying. Of course, that still doesn't explain why financial regulation is such a mess.
"I've never been a comparison shopper or a meticulous consumer."
"It's the 'Free Ride', when you've already paid"
The above is a pretty compelling argument. Vendors of medical insurance in this country don't generally have consumer interests as a primary motivator. I doubt that it's possible to conceive of a viable private system in which my interests are also compellingly their interests. I can easily imagine a government run system in which the decision makers do have my interests at the top of their list. Even if a single-payer system has other flaws, (and I think that there's plenty of evidence that those flaws can be minimal - see the French system, for example) I don't believe that private systems have fewer or lesser problems. On the contrary.
This might be true. It also might not be as important as the above.
AemJeff wrote: I doubt that it's possible to conceive of a viable private system in which my interests are also compellingly their interests.
I can, and it's a market where there's a credible option of taking your business elsewhere, and negotiating medical services directly with the service provider, instead of having everything written on two tablets of stone by the inflexible hand of medicare/medicaid price fixing, and interpreted through the mysterious oracle of the insurance agency.
Example: Until recently, when I started a full-time job with limited medical benefits, I was paying roughly $140/month out-of-pocket for a basic high-deductible HSA plan. Since I never encountered a medical emergency that drove my expenses anywhere near the $1000 deductible during a given month, all that money ever did was (1) cover my backside, just in case and (2) cover the administrative expenses of dealing with a routine physical and an antibiotic prescription for a severe sinus infection. In each case, the doctor's office submitted the highest possible bill to the insurance company, the insurance company dickered it down to the allowed coverage, and the doctor's office then mailed the final bill to me.
I would have happily purchased just (1) at a reduced cost and dealt with (2) directly, in the same manner that I might negotiate with the owner of the muffler shop to perform work on my car, but the current regulatory structure of healthcare in the US makes it impossible.
AemJeff wrote: I can easily imagine a government run system in which the decision makers do have my interests at the top of their list.
That's quite an imagination. It's certainly one possibility, especially if it functions semi-private a la United States Postal Service, but another possibility is that you'll be trying to obtain medical services from the DMV.
These trials take place after the drug has been tested for toxicity; what they represent is the FDA delaying approval on treatments that could save peoples' lives, not for safety reasons--though nasty side effects sometimes do show up in later clinical stages, this is of fairly small concern to terminal cancer patients--but in order to put its "this works" stamp on it.
And the value of that "this works" stamp isn't to you, but to future patients. They limit those taking the new drug to their clinical trials because otherwise desperate patients would have no incentive to participate in the trials--which yield information useful for future patients.
That might be cruel and unfair, but it's not the same kind of public choice failure the rest of this post is talking about. (Which is why I find it a more compelling complaint than something you'd have to say about auto safety, for example.)
Also, clearly you can see the appeal in trying experimental and potentially dangerous medication for those with terminal illness that doesn't exist for those who are sick but not terminally so.
Mouse, you’re making the point for me. This isn’t an idea that leads to a viable system that serves the needs of more than a few people. Your example posits a reasonably healthy person who doesn’t experience a catastrophe and who can afford the out-of-pocket expenses. If you want to make that kind of bet, more power to you. Creating markets that encourage those bets is a horrible idea.
Health care is frighteningly expensive. It’s not a luxury. The only reasonable, fair approach is to share the burden.
It’s a risk. Until the problems achieve Kafkaesque proportions, I think the net misery will be less than what’s caused by the current system. You need to keep in mind that something like half of US healthcare is already paid for publicly. My indirect experience is that my mother’s care hasn’t suffered under Medicare.
I should add that I’ve had excellent care through the current system. Top-notch, life-saving intervention, in fact. I’ve also faced termination by an employer and the loss of coverage, without which, particularly in the absence of income, means I can’t get the many hundred dollars per month of medications on which my health depends, not to mention covering the quarterly trips to specialists which my particular health problems entail. I would have fellated the SOB who fired me, if that would have meant keeping the coverage. One of the many problems I see with the current system is that people with chronic health problems can become virtually enslaved to employers.
Have you ever been to the DMV in New York City? It generally involves an hour wait to get assigned to the queue, and a two-hour wait to actually get called to the window. Appointments must be made for tests but can't be made for more routine transactions.
I'm curious what you think the government's motives would be. For a private company, it is to maximize revenue and minimize expenses, and too much of the latter prohibits the former in a competitive market. For the government, it is what?
I've read some of those libertarian critics on this issue of health care.
I am disappointed that their main argument is that if government provided a single source of health care - consumer would have less to chose from - and therefore their only decision would be magically better?
Additionally - knowing different government systems in Europe - it ALWAYS will depend on the individual doctor of how certain guidelines are to be interpreted and implemented... You can achieve these results by all sorts of regulation - other than having a single payer system in place - and these two issues are to be discussed separately?
The weak attacks that I have stumbled upon are usually accompanied by bad attempts to disguise the hot air with "humor"?
I just want to suggest that this post would have benefitted from a cut/jump/fold.
"I should figure out what chemo regimen is best for me? I DO NOT WANT TO, because that is outside my expertise and BORING. I want to trust an expert, if it comes to that.)"
There are so many things wrong with this Megan's argument that it's hard to know where to start...
1)Megan wants someone to make her decisions for her.
2) Therefore the government should take over the health care system.
Is it just me, or does there seem to be a premise or two missing there? I've always thought that logic should be a required course in high schools and colleges across the country. Now I'm certain.
We need to fix the health care issue but we cannot fix it unless we know how it is broken. For the answer, please see http://www.InteliOrg.com/
It does seem like it ought to be possible for people like Megan and Megan to contract with a decision agency to make their decisions for them. All their decisions, if they want. Just call and ask any time, for what to do, and the agency could look up a decision-tree and walk them down to an answer from its big black book.
This would not help them decide whether to vote for socialized medicine or not, unless they asked. But it would help them find an emergency room, choose a car or blender, etc.
Of course, this might be an expensive service. I could imagine it might cost as much as a few hundred dollars a year, although there would probably be levels of service. Some people would rarely ask for help, perhaps only asking about emergency rooms. Others might be asking every day for decisions like whether to wear the pink outfit or the blue one.
It's "anarcho-syndicalist."
Signed,
Probably the only anarcho-syndicalist reading this.
Yeah yeah yeah, informed consent is BORING. Just decide for me. Unless you decide wrong, then I'll sue you.
Seriously, isn't Google working on this? It's like Amazon recommendations, but omni and meta. Plus, people can pay to insert their nodes and outcomes. As long as they're not evil. Trust us, it's for your own good.
I'm curious as to how anyone can say that the government will always have the end consumer of services best interest at heart.
In point of fact, I can find no evidence that government (as a whole) ever has any interest but its own at heart - and that interest is "how can I continue to get funding for my empire while doing as little as possible".
Maybe governments are different in Europe, but I doubt it. It is most often the lazy and corruptible that are attracted to lifetimes of public service. The public servants that are dedicated to the interests of the public are badly outnumbered.
And the first Megan scares me. Her argument is essentially "I'm lazy, so I want the government to make your decisions for you."
"Megan works in one of the areas where I, at least, would say the government is probably the best solution: water management. There's a reason that irrigation systems seem to have given rise to the first large states: water is no respecter of property lines. Given the coordination problems and hazily defined boundaries inherent in water rights, I'm pretty comfortable having the government take care of this"
Of course there is also quite a body of literature on how water management by the state leads to tyranny - examples included Egypt, China and Mesopotamia.
The argument against state control of economic resources and decision-making is not just on grounds of greater efficiency but also to prevent to concentration of power.
Not having choices is a lot worse than BORING.
Is this other Megan 14 years old?
Does she also write about how things aren't FAIR?
Kwyjibo, I live in PA and my last several trips to DMV have entailed 10 minute waits and documents with photographs being generated before I left. My experiences with the local gas company - privately owned, albeit publicly supported - have been the nightmares. My bank thinks it's OK to make any charges it deems necessary and to take the money from my account directly. On the other hand, my mother's publicly provided medical care is first-rate.
Good question. Bureaucracies are driven by legislative and regulatory frameworks. Legislators want to get re-elected. Some government run systems work better than others. Competition doesn't have to be ruled out and there is an obvious feedback mechanism. There seems to be plenty of empirical evidence that government run medical financing can work pretty well. There are probably counter-examples, too.
they limit those taking the new drug to their clinical trials because otherwise desperate patients would have no incentive to participate in the trials--which yield information useful for future patients.
That seems like a horrible reason to make potentially lifesaving treatment unavailable. Other incentives could be found. The US should not restrict access to any drugs to terminally ill patients provided the patients give proper informed consent (and assuming the drugs wouldn't make the patient danger to themselves or others, of course.) Assuming for a moment that getting participants for clinical trials really is the reason for restricting access, there are serious ethical issues here. It's deeply wrong to withhold medical treatment to a population in order to coerce a few individuals into a research study.
Health care is frighteningly expensive. It’s not a luxury. The only reasonable, fair approach is to share the burden.
Except for emergency care, cancer care, neonatal and well-patient checkups/early detection, spending on healthcare does very little to increase lifespan, particularly compared to diet and lifestyle. It is more productive to spend money improving diet, exercise, etc. than it is to try and treat problems once they've occurred. The only lifestyle-related problem that extra money probably wouldn't help with here is reducing sexual promiscuity.
One time the government definitely shouldn't decide is when that would entail me being forced at gunpoint to accept that decision just because some functionary of a water monopoly empire is too lazy or immature to accept responsibility for running her own "boring" life or getting a keeper.
If she's ready to abandon free will, then she must have already discarded any need for free speech or other liberties. That's not the kind of person I want to decide when the government should step in and what it should be allowed to do.
Mouse, you’re making the point for me.
Not even slightly.
AemJeff wrote: This isn’t an idea that leads to a viable system that serves the needs of more than a few people. Your example posits a reasonably healthy person who doesn’t experience a catastrophe and who can afford the out-of-pocket expenses. If you want to make that kind of bet, more power to you. Creating markets that encourage those bets is a horrible idea.
I can see you ignored or twisted the actual substance of my post in order to make some snippy point about markets and gambling, so I won't waste our valuable time repeating it to no consequence. I mean, what good would it do to note that even most of your problems have their origin in government meddling in the healthcare system (employee-sponsored health benefits, medicare/medicaid price fixing, etc.)? So instead, let's get straight to the meat of your post:
Health care is frighteningly expensive. It’s not a luxury. The only reasonable, fair approach is to share the burden.
And now we get to the real heart of the matter: You have some unpleasant and unfortunate medical expenses, and they apparently meet your definition of "frighteningly expensive", and you would rather see someone else pay for them rather than have your standard of living impacted. Or I should say, you post rather too often to be using public transportation to visit a public library, so I assume you've maintained reasonably modern computer equipment and monthly Internet service somehow.
As long as we're playing that game, I'd like to point out that I've recently had substantial expenses starting a new job and moving into an older and modestly-appointed apartment; my savings are low since I was only marginally employed at contract labor previously, which means I'm nominally one emergency (of any sort) away from disaster; and my car is over 225k miles, due for about $1000 in very-necessary maintenance (of which I've only obtained and paid for about $300 so far), and has body rust that is rapidly approaching any reasonable definition of "severe". One major failure or roof rust-through, and I'll be encountering some very significant expenses that I really don't want to pay for right now.
So my question is, which of those magic keywords you employed are the ones that transfer my responsibility to manage my lot in life as best I can over to the guv'mint, and by extention all taxpayers such as yourself? Can I define a replacement vehicle as "frighteningly expensive" (well, it frightens me, so that's good enough for this level of argument), "not a luxury" (even though mankind was obliged to find his own horse from time immemorial or do without when he couldn't afford one), or maybe should I call it "reasonable and fair" (words snatched out of clear thin air and pressed into a most ignoble service) for you to share my expenses in this matter?
Well, Megan, I'm sorry you think determining your health care, making decisions for yourself, is so very BORING. You are being very human when you describe your foibles, but what I've just read makes me respect you less, because you are making it sound as if your mind is sloppy and lazy. I find that a little hard to believe, but I guess its possible.
I do care about my health care, and would rather make rational decisions about it. It does not take an expert to make a decision. The best managers get information from the experts, then they make the best decision based on the expert advice. They do NOT let the experts make the decision for them, because they realize that is very poor headwork.
I hope that deciding who to vote for is one of those things that's too BORING to do and that she won't. This is an example of why low voter turnout doesn't concern me.
The arrogance of most of these negative posts is dizzying. Do all these posters believe that they think coherently about every abstruse issue that could be brought up? If they do, they lack even minimal self awareness.
Assuming this is true, the question is whether there is any role for authority in society? Why have drunk driving laws? Why have speed limits? Why have any kind of safety regulation whatever?
The conviction here appears to be that all that is good flows from a free market --but there really is no reason to believe this. In the first place, it is strongly vulnerable to what are known as "externalities" --as was documented in "The Tragedy of the Commons" many years ago. Pollution and Carbon Markets are attempts to rectify this problem. However, note that they require government intervention to exist at all.
What markets do very well is efficiently allocate resources of production within the constraints set by society. So they are great if your top goal is productive efficiency without values. If it troubles you to see people crippled by curable diseases, however, you may prefer to see the market exercise its efficiencies within certain constraints.
Is it possible to overdo the constraints? You bet. Anyone with any knowledge whatever of Operations Research is familiar with the overconstrained --and thus insoluble --problem.
However, it is at least as possible to have an unconstrained market solve the WRONG problem. It's a tough life children --and balance amid ambiguity are unavoidable.
This was a good post, Megan, but on the FDA's apparent slowness:
These trials take place after the drug has been tested for toxicity; what they represent is the FDA delaying approval on treatments that could save peoples' lives, not for safety reasons--though nasty side effects sometimes do show up in later clinical stages, this is of fairly small concern to terminal cancer patients--but in order to put its "this works" stamp on it.
Here, you're slighting the dangers of an unregulated market for uncertified drugs, even lifesaving experimental drugs. There are places where uncertified drugs are more easily available to patients outside of strict regulatory supervision; they tend to be in the third world. One side effect is a vicious and dangerous environment of rumor and misinformation about foreign scientists testing toxic or poisonous drugs on people, which sabotages the relationships of ordinary people with the health care system. In South Africa, rumors surrounding unconfirmed deaths in a drug trial at Kalafong Hospital in 2001 made a major contribution to public suspicion of routine, certified antiretroviral drugs. Without a trusted government regulatory authority to investigate and pronounce on the safety of drugs, rumors about toxicity spread like mad, and it becomes impossible for the public to differentiate between real and fake information.
It's a tough life children
Not if you're an insurance company executive. :)
Megan McArdle wrote:
Also, all entities, government or otherwise, hate change in their industry. Change is uncomfortable, and makes years of carefully acquired expertise useless. Regulators, however, have slightly more latitude than most organizations to prevent change from occurring.
Pithy, but aren't you failing to acknowledge that (1) recognizing, managing, and accomodating change is itself a form of expertise; and (2) one of the primary functions of good regulators is to acquire and utilize precisely that type of expertise, i.e., to "turn and face the strange?"
To put it in terms the private sector types would understand: Isn't one of the stated selling points of the private financial markets the ability to adapt to changing circumstances and derive a profit therefrom? Isn't that what every would-be entrepreneur secretly masturbates to before falling asleep?
I don't see where you get off claiming that people have a vested interest against change when people could just as easily have a vested interest in seeing change occur...
anony-mouse writes:
So my question is, which of those magic keywords you employed are the ones that transfer my responsibility to manage my lot in life as best I can over to the guv'mint, and by extention all taxpayers such as yourself?
We really should have an constitutional "opt-out" provision giving people like anony-mouse the option to completely forgo paying all taxes in exchange for forgoing all public services, like clean water and police protection and firefighting services. He seems perfectly content with "manging his lot in life" without the aid of "guv'mint," and I for one would be all too happy to oblige him. My conscience would then be absolutely clear if he then found himself in such a destitute lot that he were forced to live on the streets and eat garbage and drink contaminated water, without the aid of public welfare or regulation, knowing that he had made his choice freely and without coercion, in perfect accordance with libertarian principles.
Anony-mouse's posts here illustrate the phenomenon I noted earlier in the abortion post yesterday: the willingness of conservatives to repeat their dull, simplistic, inaccurate nonsense over and over and over, hoping to win political battles by wearing out the opposition.
"the question is whether there is any role for authority in society? Why have drunk driving laws? Why have speed limits? Why have any kind of safety regulation whatever? The conviction here appears to be that all that is good flows from a free market --but there really is no reason to believe this."-Tim Connor
"We really should have an constitutional "opt-out" provision giving people like anony-mouse the option to completely forgo paying all taxes in exchange for forgoing all public services, like clean water and police protection and firefighting services."-Immoralist
These arguments are just as bad as Megan's (From the Archives) above. Each of these commenters seems to think that anyone who is not an anarchist must accept socialized medicine. Anyone who rejects Hillarycare must also oppose speed limits, drunk driving laws and, in general, must be willing to forgo all public services.
But that doesn't follow. Happily there is a middle ground between socialism and anarchy.
Private ratings firms do have drawbacks. For example, I was told by a marketing professor one story about Yahoo in the early days, which used to sell its search rank order. There was one chap who wanted "Garden City Financial Planner", which wasn't, as you can imagine, a frequently requested search. They checked their listings and saw that that search term was only requested about 25 times a month, and decided to charge him a dollar a search--back in those days, the prices were also set kind of haphazardly. (Note: as I'm telling this from memory, the numbers are very approximate). The next month, he cheerfully came back and reordered. And the next month. So they doubled the price. He went on paying. They doubled it again. He ponied up without a protest. Eventually, they signed a two year contract at something like $2,000 a month. And at the signing, they asked him to explain why he was willing to pay so much for so few hits.
"Easy," he explained. "People who use that search term really want a Garden City financial planner. Out of those 25, maybe 15 click on the link. Ten of them ask me for information. And five of them sign up. Those five have a median net worth of $350,000, and I make about $5-10,000 a year providing them advice and services. They'd be worth it to me at twice the price."
So, according to your account he was paying $24,000 per year to make $5,000 to $10,000 per year?
Makes as much sense as the rest of your posts.
I correct myself: he was getting $5000 to $10,000 per month in new business? OK. And Yahoo was charging $2000 per click-through? (That is what is meant by "search").
I don't believe this story for one minute.
From a 1996 SEC filing (Yahoo started in 1995). Note the bolded item: max-per click price $0.08 which is not very close to $2000.
http://www.sec.gov/Archives/edgar/data/1011006/0000912057-97-011353.txt
You and the other Megan are both missing the point entirely. Only in the most extreme circumstances is it even relevant who does 'better' job of making these decisions. There is a general principle that forbids us from giving the power to make these decisions into the hands of government.
If Megan doesn't' want the responsibility of choosing her insurance, fine, she can let someone else make it for her. But I'll be damned if I'm going to give up my own freedoms because, on average, people don't look out for their own best interests.
People have got to start realizing that freedom requires you to work a little harder sometimes, and that all of the hard decisions aren't going to be made for you. But what you get in exchange is a guarantee that when the time comes that a choice you make falls outside the majority opinion, you will be free to decide what is best for you.
But perhaps your "professor" meant "banner ads"? Well, let's check the, you know, internet thingy and maybe they were charging $2000/month for a spiffy banner ad?
Nope, no $2000 here.
Memo to Atlantic: along with a spell-checker and proof-reader, you need a fact-checker for McCardle's posts.
I correct myself again: $2000 per month for 25 "impressions" = would be $80 per click-thru. But Yahoo never had a flat-rate scheme as described. To say they had demonstrates ignorance not only of the history of Yahoo (and Google) but a lack of understanding of how ad-revenue based search engines work.
That U of Chicago MBA is AWESOME!
Just to clarify, government run healthcare does not have to be "hillarycare". The VA is the best large scale health system in the US and it is run by the government. See Longman at
http://www.washingtonmonthly.com/features/2005/0501.longman.html
Donald Clarke
I really want to fair here. Perhaps, after all, this financial planner was paying $2000/month to Yahoo for a banner ad or search impressions. In that case, he would (at their top rate of .07c) be getting 28, 571 click-thrus per month. Well, that's only off by 28,546.
Steve, the is the second time you've angrily caught me in a non-error. No, the story was not about banner ads, it was about selling search rankings.
be fair, above. A typo from an unpaid commenter.
Most of use understand that keyword advertisements and banner ads are not search result rankings, but your commenters have to amuse themselves somehow.
Megan: It never happened the way you described. Common sense should tell you that. Search-rankings have to do with actual searches, not like ads in magazines or newspapers who can charge what the market will bear. Search engines charge "per impression". The more unique the search term the less you have to pay (authorize) per click to "be on top". As the 1996 SEC filing shows, Yahoo was in the range of .03 to .07 cents per impression.
Steve, I don't really know what to tell you, except that the details of the story don't really matter, and I've no guarantee that I got them right (which is why I said the numbers are very approximate). The point of the story is that it's hard to get markets in information when the content of that information is worth more to someone else than the consumer. Are you debating that?
Good morning Megan,
Wow, what a hotbed of seemingly perturbed criticism this blog can be! And for your backbone in taking the slings and arrows of some who get so bent about your being paid to share your thoughts, I commend you.
It seems a shame that there are people who, instead of looking on a thing like this blog as a chance to participate in a process where many people can try to learn and grow through dialog, they look on it as a forum for intellectual competition.
That is all.
No, I'm not debating "that". But I disagree the "details of the story don't really matter" when those details misstate not only the early business model of Yahoo, but the essential history of the internet and how the search engines became the financial titans they are today.
It's all too easy to imagine a ridiculous argument with someone saying: "but I read it on the Atlantic website" pushing a false premise. And saying "numbers are very approximate" is ducking the issue.
Look, I don't want to be mean or beat up on you, so I have some advice. Don't post so much. Think more before you post. Don't worry so much about what "other bloggers" are saying. Do more research before you push the button. Be more in touch with your "deeply proletarian roots" and less with the cafe society of the Upper West Side, albeit transposed to Washington. Do good work.
It seems a shame that there are people who, instead of looking on a thing like this blog as a chance to participate in a process where many people can try to learn and grow through dialog, they look on it as a forum for intellectual competition.
That is all.
Ms McArdle would be so lucky.
Well no. I have medical conditions that require medications and medical follow-up which, if anything happens to my either my source of income or my medical insurance I’ll find difficult to obtain. It’s not generally possible for a person with chronic illnesses to get medical insurance on the open market; if they can it’s prohibitively expensive.
I’ll quantify “frighteningly” for you – in my case, about $200K during an eighteen month period, and maybe another $50K over the next three years. That’s not for drugs and checkups, which run an additional $10K annually. I’m not whining – I’m bloody well lucky and I’m well aware of that fact – but it’s a good frame of reference. There’s no way I could have paid out-of pocket for the care I’ve received. Without it I would have died. There were two major surgical interventions for unrelated problems – a rational insurer would have dropped me after the first. Markets don’t work in cases like this. Most people will eventually need significant medical intervention – cardiac, oncological [is that a word?], endocrine, neurological, immune-related, something… Insurer’s incentives are not coincident with patients’ concerns. What good is a medical system that’s out-of-reach for people who actually need it? Public financing democratizes access.
What’s up with the snide asides?
Immoralist:
We really should have an constitutional "opt-out" provision giving people like anony-mouse the option to completely forgo paying all taxes in exchange for forgoing all public services, like clean water and police protection and firefighting services.
Or in other words, there is a slippery slope to only one side, but in that direction, it's very steep indeed.
Brooks Foe:
the willingness of ... to repeat their dull, simplistic, inaccurate nonsense over and over and over, hoping to win political battles by wearing out the opposition.
I'm sorry, could you repeat that?
AemJeff:
Health care is frighteningly expensive. It’s not a luxury. The only reasonable, fair approach is to share the burden.
Excuse my ignorance, but doesn't a deductible enable you to control precisely this? You are insured against disastrous costs, but will have to keep a buffer against low-cost (non-deductible) expenses. A high deductible means, presumably, lower insurance costs.
Tom, my premises are universal access and coordinating incentives. Deductibles are a marginal mechanism that extends the class of people who have access. It doesn't help people who either can't afford (higher deductibles won't reduce costs to zero) or who can't get access to insurance at any cost. They don't do anything to help create incentives for insurers that are consonant with the needs of patients.
Megan, I think you're missing a critical distinction between search services such as Yahoo and Google, and rating services such as Consumer Reports. If it became widely believed that CR was taking bribes for ratings, they would be out of business. No one could trust any rating from them if they were corruptible.
OTOH, Yahoo's ranking doesn't mean that much. If there is only one Garden City in the world, and a dozen financial consultants there, then the ideal result for "financial consultant Garden City" is a listing of those twelve firms and no other. One of them has to come first, but it doesn't imply that one is any better than the twelth one. They're all 100% hits, but in any list one has to be first and one has to be last.
The smart consumer will either call them all and compare their offerings, or find some quick ad hoc procedure for reducing the list to a manageable number and thoroughly check those ones out before committing. Idiots might just call the first one - and that's all that pay for ranking gets you, is clients that are either too stupid to comparison shop, or don't care enough to spend the time. I don't see how even these stupid/careless customers are hurt by taking bribes for first place versus giving out first place randomly.
Of course, with the non-mind-reading search engines of today, the search results won't be quite that clean. Mixed in with the dozen true 100% hits you might get a financial consultant in Boyne City, Michigan who blogs about his hobby, gardening - a 100% hit by the search algorithm, but a long way to travel for a consultation. You'll also get a long tail of thousands of imperfect matches, apparently just in case you haven't figured out how to write the perfect search string and need to find a particular item badly enough to read through the whole list. So, the question is how much do Yahoo's or Google's pay-for-rank scheme affect position in the list. If they just put the payer at the top of all the web pages with equal ranking by the search criteria, it's not something I'd worry about. If they move a 75% match up to the top over a 100% match, I'm eventually going to notice that this search engine is wasting my time - and use another one.
There's an old stock market maxim that ends "but pigs always are slaughtered". It applies to this issue also. If you run an information service, you can get away with taking payments to make trivial changes, but the payments won't be that large, either. If you get greedy and take big payments for distorting the information so it hurts your users, they'll eventually figure it out and you'll lose them.
...Unless, of course, you've got a monopoly, like the DMV does on driver's licenses and AemJeff's gas company does on gas supplied by pipeline - both monopolies enforced by the government. But government-enforced monopolies don't work so well for information in the internet age, short of a totalitarian system that can firewall the whole country and take hackers out and shoot them.
"my premises are universal access and coordinating incentives"
For most people, housing is equal to or greater than medical care in daily importance. And, averaged over the course of a lifetime, housing is generally more expensive.
So to ensure universal access to housing, the government could just put us all in drab government apartments, designed and managed to government specifications. And since the middle class would no longer have to pay for their detached homes, or the wealthy for their mansions, the government could just take that unneeded money and use it for better purposes. Like healthcare. Or approved landscaping. Or something.
Tom, my premises are universal access and coordinating incentives. Deductibles are a marginal mechanism that extends the class of people who have access. It doesn't help people who either can't afford (higher deductibles won't reduce costs to zero) or who can't get access to insurance at any cost. They don't do anything to help create incentives for insurers that are consonant with the needs of patients.
So why can't we help the people who can't afford the deductible and leave everyone else alone?
So why can't we help the people who can't afford the deductible and leave everyone else alone?
Because means-tested benefits only increase the constituency of the Democrats by a small amount, if anything. The Democrats learned long ago that the optimum solution is to make every person a ward of the state in one way or another. Then they have a huge constituency in perpetuity. As long as there are lazy fools who conclude that everyone else is equally lazy and stupid and thus must be saved from their own ignorance, then it's a winning strategy.
AemJeff really gets to the heart of the matter, no? Are we better off as a society paying for the healthcare of those that get sick with ailments needing expensive healthcare. Furthermore, should care be provided without regard to cost? What if the person needing such care needed it as a result of riding a motorcyle without a helmet? These are essential questions requiring discussion without rancor in order to develop widely supported solutions.
AemJeff - Your argument flies right into the inherent problem with socialism.
The appearance of infinite availability of a finite resource causes said resource to dry up.
Which means that someone who needs service won't get it because someone who merely wanted it got there first.
If health care had a real and visible cost to the end user (which HMO/PPO insurance all but eliminates, and a single-payer system completely eliminates) then people would self-ration.
Under your model of "universal access" (which I presume to mean universal _free_ access) there would be rationing, Canada-style. Where are Americans supposed to go for care when we hit the run-out point, Mexico? Where are the Canadians gonna go? Christ, man - won't someone at least think of the Canadians?
Of course, I'd argue we have universal access now, as there is nothing stopping you going to the doctor.
MichaelW - If everyone were able to contract for their own insurance without the government getting in the way, then the insurance companies would be able to deny coverage "If you have taken any of the following excessive risks" and have things like base jumping and riding without a helmet in the exclusion list, then people could buy cheaper insurance.
As it is, my insurance would be required to pay for my rehab, PT, and everything else up to the lifetime maximum (which is something like 5 million) if I pop my brain-box open on someone's hood because I decided to leave my helmet at home that day. And since they aren't allowed to ask if I have a motorcycle, they aren't allowed to build that risk into their charge structure.
Believe me, if they told me that riding without a helmet would result in denial of coverage, I'd have the brain bucket on every time I started that motor - even to move the bike across the garage.
Steve Kelso - Back in 2001, my employer at least claimed to be paying for rank on search engines. I never looked into the service, and it could have been hokey. I was just getting into the IT field then. I don't know the details, but it seems Yahoo was offering paid placement within its category pages. Are you sure that all purchasing of traffic invovled banners or clickthroughs?
http://searchenginewatch.com/showPage.html?page=2164441
You know what makes good sense for that model of the individual? Government based health care that does a decent job by me. You know what doesn't make sense? For profit insurance agencies who do not have my best interests at heart.
And in what deranged universe does she live in, where the Government bureaucrats do have your best interests at heart?
I'm sure all those earmarks are directing money to where it's most useful, not to where political donors want it. I'm sure that bureaucrats are much more interested in helping people, than they are in growing their departments, increasing their budgets, and getting good reviews from political superiors who put their ideology above powerless people's best interests (see welfare reform, and those who fought against it).
Oh, and hte Eastr Bunny comes by every day and gives me nice chocolate bunnies, that are calorie free.
The only person who consistently has your best interest at heart is you. That's why you, as an adult, are responsible for your own life. What Megan is calling for is infantilizing all of us. Having the government be our mommies and daddies, because she's not competent to live life as an adult.
If she just wanted to have that done to herself, it would be sad. But she wants to screw the rest of us too.
And that's wrong.
"These arguments are just as bad as Megan's (From the Archives) above. Each of these commenters seems to think that anyone who is not an anarchist must accept socialized medicine. Anyone who rejects Hillarycare must also oppose speed limits, drunk driving laws and, in general, must be willing to forgo all public services.
But that doesn't follow. Happily there is a middle ground between socialism and anarchy."
Well Isocrates old boy, the use of logic, by anyone actually trained in its application, is known to require precision. "Socialism" as used in this post, does not meet the requirement, since it is not defined in any other meaningful fashion other than "--what I don't like."
The issue to be addressed is what the most effective method for delivering health care might be. Understandably, different factions have different definitions of the term effective. My definition, to be precise, and thereby allow the actual application of logic, is as follows:
1. Able to meet benchmarks of performance (life expectancy, infant mortality,etc.) shown to be reachable by their achievement in multiple other countries, with a variety of philosophies
2. Not engaged in non-transparent rationing, represented in the US by the ever increasing group without any insurance
3. Providing comparable services at comparable costs, as one would expect from a free market. Currently, because of a number of distortions, presumably largely due to the uninsured, those without insurance "PPO" buying plans often pay 300% more for a procedure than those with one.
4. Able to constrain the growth in costs (somewhat inevitable with an aging population) as well as sysytems shown to produce comparable performance (per benchmarks) in a variety of other countries.
5. Acceptable to the majority of the population --although possibly unacceptable to ideologue libertarians.
Fine, now that we have a precise definition of terms. What is it about the "free market" health care system that you propose that makes it comparable to --say -- France, Germany, or Taiwan?
Or is it merely not "socialism"?
Like public education? That is an example of a government run monopoly that fails to adequately serve the interests of its consumers. Instead, it has become a source of political patronage for the Democratic party. Both teacher's unions and the Democratic Party have refused to reform the system. They demand more money and no standards.
Public Schools should educate children. Unfortunately, that seems to be a lower priority for bureaucrats and politicians than their own interests. No, it is not possible to conceive of a monopoly (government run or private sector) that would ever have your "interests at the top of their list."
What if the person needing such care needed it as a result of riding a motorcyle without a helmet? - Michael W
I'm not sure where you're coming from. If sustaining a brain injury is not a sufficient disincentive to someone not to engage in a certain behavior, nothing will be; making head trauma victims pay for their own care is not going to add any extra deterrent for the kind of person who is irrational enough to ride without a helmet. Conversely, no decent, wealthy society will allow someone who has sustained a brain injury to go without treatment. America is simply not going to let itself become a country where people with massive brain lesions loll around, homeless and drooling, on the street. (Wait! Bad example -- we already have. Okay, but at least we make sure people get some treatment, of varying standards, before abandoning them to their fate.)
There are two claims here, a pragmatic one (reducing head injuries) and a rights-based one (no one should be forced to pay for other people's stupid behavior). But in this case, there is no plausible libertarian solution to either. The way to reduce motorcycle-related head trauma would be to pass and enforce mandatory helmet laws; the people who sustain these injuries are clearly not susceptible to rational incentives. And on the rights side, there is no way to ensure that people are not forced to pay for other people's stupid behavior except to allow society to devolve to a level of cruelty which would simply be rejected by the medical profession, among others. This is one of those situations where we are, like it or not, stuck in each others' society, and we are simply going to have to get up in each others' business in order to achieve acceptable outcomes for any of us.
brooksfoe writes: "This is one of those situations where we are, like it or not, stuck in each others' society, and we are simply going to have to get up in each others' business in order to achieve acceptable outcomes for any of us."
Indeed. How much "up in each other's business" do we need to go" before we are impinging on individual freedom? (Nat' I could bring up gay marriage here...but I won't..)
On the subject of health care, I think I was:
1. Noting exactly what you pointed out, namely, is there a way to limit the public wallet to stupid behavior. Isn't there a darwinian argument there as well (said only partly tongue in cheek)?
2. Perhaps more to the point, why can't we have a rational discussion about rationing public health care? If you're rich and can afford it, you'll get better care. That's a fact and we need to stop fussing about it and recognize that my (and others') willingness to pay for every case of post-nasal drip (and the cancer cases) is limited and that is as it should be in a rational world.
should be.....limit 'exposure' to the public wallet
Michael, I think you imagine a pretty ugly world. It sounds like Alphas and Epsilons to me; though, I think you would dismiss that judgment as just a caricature of a hard truth.
I really don’t think most people would find your Hobbesian paradise offering them maximal liberty.
Jeff - on the contrary, I want a world that recognizes our individual needs but without creating huge burdens for the many who will inevitably throw them off in a knee-jerk or violent fashion.
Who would argue that the people who re-build in the same beach spot after twice being destroyed by hurricanes are irrational? Why should they be able to get insurance backed up by my tax dollars or my insurance premiums? If local laws allow, go ahead and build but recognize you're self-insured.
This is similar to my view on health insurance. Catastrophic risks should be spread around equitably, but with limits. The entire system cannot be turned to help those who ignore basic logic about taking care of themselves else we just encourage bad behavior. I don't let my weight go to 300 lbs, or smoke, and I do wear a helmet but I 'pay' for the problems of those who do/don't.
The military has an interesting policy on life insurance payouts. To get the serviceman's life insurance, your death must be in the "line of duty". Usually this is broadly applied, though the example most often brought up was a soldier killed in a traffic accident that was not wearing a seatbelt. Since local laws required wearing one, his actions would be determined to be NOT "in the line of duty" and insurance, therefore, would not be paid.
This seems fair by my reckoning.
Ok, fair enough, I guess. Calling your preferred version of the world a “Hobbesian paradise” was probably unfair, at least partly because you are about the only apparent libertarian I know of with such a distinct nanny-state streak. I really don’t want anybody checking up on my past behavior prior to qualifying for medical treatment. I think you can get a lot of mileage asking a different set of questions, such as “What is the five-year survival rate for persons in this circumstance after this proposed treatment.” So some smokers get their lung transplants - that particular cost seems to me easier to bear than the intrusion you propose. Also I think there’s a moral hazard, in that qualifying could become a barrier, allowing easy excuses for denial of treatment – which, as ought to be obvious, is a particular bête noire for me in this context.
Your Jack in the Box example is just crap - if the government weren't around, it's unlikely people would have ever learned what killed those people, and it's unlikely Jack would have bothered to tell anybody. Likewise with Mattel - the inherent threat of government action is what made them do their due diligence. Consumer Reports is a poor substitute for basic regulations - they do their best work a couple levels above that.
It's one thing to make sure that products are safe and that companies are being truthful in their claimes. These are good things for the government to do, along with enforcing contracts and maintaining order (by enforcing laws against theft, assault, murder, kidnapping, etc...).
What the government shouldn't do is make decisions for us that are essentially matters of discretion or cost/benefit. I don't want the government making decisions that involve preferences and quality.
Admittedly, there's a blurry line between a dangerous product and a low quality product and often the two overlap quite a bit.
My personal preference is for the government to resort to mandating disclosure before regulating availability. Banning things should be a last resort. I suspect that fear of liability does a lot to restrict what is available... probably more than direct government action.
When it comes to choices that might be "confusing", though, the government should butt out.
EI
I suspect that fear of liability does a lot to restrict what is available... probably more than direct government action.
In my experience, fear of liability tends to lead to idiotic restrictions (No swimming in the lake!), while government regulations tend to lead to more reasonable ones (No lead in paint!). The problem with fear of liability is that it's uncertain; organizations will take over-harsh steps to avoid the risk of a gigantic multizillion-dollar suit over the threats they imagine (while failing to pay attention to threats that are less newsy, but more significant, but of which they may be less aware). Most organizations would prefer a more certain, rule-governed environment, of the kind that government regulation establishes.
The thing is, you have to choose one system or the other. You can restrict people's ability to sue, but then you need to empower agencies to prevent the things the people would have sued over. You can't get rid of both; that's just lawless corpocracy, Chinese-style.
Jeff - I think we agree on lots more. Hate the nanny-state, but love my commons and think some compromises on liberty do improve my good. I'm not about to throw up my hands and exclaim "Who is John Galt" whenever I'm faced with a government decision I don't like. I could go on.....
There are two claims here, a pragmatic one (reducing head injuries) and a rights-based one (no one should be forced to pay for other people's stupid behavior). But in this case, there is no plausible libertarian solution to either. The way to reduce motorcycle-related head trauma would be to pass and enforce mandatory helmet laws; the people who sustain these injuries are clearly not susceptible to rational incentives. And on the rights side, there is no way to ensure that people are not forced to pay for other people's stupid behavior except to allow society to devolve to a level of cruelty which would simply be rejected by the medical profession, among others.
Brooksfoe, typically, overlooks the third option, which is to allow people who think it's "cruel" to leave stupid people to their fate to pay for care for those stupid people, and to allow the rest of us not to pay.
The problem is that the people who pretend to be altruistic, aren't; they're willing to be generous because they're not actually spending their own money.
to allow people who think it's "cruel" to leave stupid people to their fate to pay for care for those stupid people, and to allow the rest of us not to pay.
You are going to have to take that one up with doctors. When the guy comes in the door with the head injury, they are going to treat it. Period. They've sworn hippocratic oaths; they have a higher loyalty. They are then going to pass the costs on to whatever customers they have who have money and can't refuse to pay. When you go in for your colonoscopy, if you have money, you're going to get charged five times as much as it costs. You aren't going to get a box to check that says "I refuse to pay for the costs of the no-helmet head-injury guy", any more than the guy in the Prius can say to the gas station "I refuse to pay the higher price for gas caused by other people who don't drive fuel-efficient cars".
The people who are running the service have a basic sense of decency and compassion. You may not, but if you go around whining about how nobody can force you to be decent and compassionate, people should treat you as a stinker. We on the left keep on pointing out to you how you can save money on this deal: if we all move to the kind of system they have in France, where you keep your private health care provider and your private supplemental insurance but payments are harmonized through an electronic chip-card system administered by a consortium of insurance companies and baseline insurance for everyone is provided with a combination of government funding and dedicated tax payments by those who can afford it -- then we can do all of this for 60% of the current price or less. It'll put a lot of call-center workers and claims reviewers out of a job, but that's the price of progress and efficiency. But if you keep plugging your ears and saying "Nyah-nyah-nyah! Europe and Japan and Taiwan and Singapore do not exist! It is theoretically impossible!" -- then you deserve what you get. Which is colonoscopies that cost you five times their actual cost.