Dr. Carson’s Speech

I went to Grant Davies’ blog, What We Think and Why, and watched all of the nearly 28 minute Dr. Carson speech. I recommend watching it. I just had to re-post it here:

Here are some of his major themes:

1. Political correctness keeps us from saying what we really think and that keeps us from talking about important things.

2. But, we should be respectful with those who we disagree. That’s a major theme of this blog. Hostility just tends to entrench people in their beliefs.

3. Carson’s Mom taught him to use his brain to solve problems, which resulted in him thinking his way out of poverty by not accepting excuses for his poverty status, taking advantage of education, educating himself and thinking himself out of poverty.

4. He and his wife put their money and talents where their mouths are to help others to the same. They started the Carson Scholarship Fund.

5. Why is education so important? He encourages us to learn from ancient Rome, which died from within.

6. He mentions we have a fourth branch of government: Special Interests.

7. Everyone should pay some tax, we shouldn’t punish the guy who puts a billion dollars into the pot and with health care we should empower individuals.

8. He closes with a great story about the origination of our National Anthem and a very nice imagery of the bald eagle as the nation’s symbol.

An enterprising reporter ought to ask President Obama what he thought of Dr. Carson’s speech. However, I think I can predict the answer. My guess is he’d say he liked it and agreed with it, and then say that’s why Federal government needs to help do those things.

RomneyCare lessons

Here’s another opinion piece worth-reading from the Wall Street Journal this morning. Key snippets:

The health reform that Mitt Romney passed in 2006 in Massachusetts presaged President Obama’s, and its results are showing what we can expect nationwide. The latest warning comes in a huge new tax increase proposed by Governor Deval Patrick.

But last August Beacon Hill was forced to impose new price controls and a cap on overall state health spending because “health-care spending has crowded out key public investments,” as Mr. Patrick puts it in his budget.

He’s right about that: Health care was 23% of the state fisc in 2000, and 25% in 2006, but it has climbed to 41% for 2013. On current trend it will roll past 50% around 2020—and that best case scenario assumes Mr. Patrick’s price controls work as planned. (They won’t.) In real terms the state’s annual health-care budget is 15% larger than it was in 2007, while transportation has plunged by 22%, public safety by 17% and education by 7%. Today Massachusetts spends less on roads, police and schools after adjusting for inflation than it did in 2007.

 

Another reason we spend so much on health care

We hear lots of reasons why the U.S. spends so much on health care. But, there’s one obvious reason that I don’t recall hearing all that often.

On a recent EconTalk podcast, guest Esther Dyson offered this reason:

…one reason health care costs so much in the United States is that we are so unhealthy.

Could be.

It would be interesting to break down health care spending across various indicators of a person’s health to see if there’s anything to that.

This would have been nice to know

I love experiments. The results can be instructive.

In the Wall Street Journal, Merill Matthews and Mark Litow wrote about some health care experiments conducted in various states.

We compared the average premiums in states that already have ObamaCare-like provisions in their laws and found that consumers in New Jersey, New York and Vermont already pay well over twice what citizens in many other states pay.

I’ve written about insurance in New York before. Here’s one instance.

 

Health care for all?

Is everyone in Venezuela covered for Cuba’s health care or just Hugo Chavez?

“I hope that works out for you”

Subtitle: Ideas are cheap; results matter

I’ve worked in many places that have an unhealthy incentive problem where ideas are rewarded and results are not.

People with fresh, new ideas were the movers and shakers. They could do even better if they could argue in hostile forums why their ideas would work  (folks who gain success at this are also called bullies).

The problem was that nobody asked these folks to prove their ideas with actual results.   Ideas won and lost by how passionately their champions fought for them and how good they sounded, not whether they worked or not. Often, ideas won out because the champions essentially repeated over and over, “I just know it will work! We have to try it.”

If your idea was selected by management, you were golden. If the idea later failed, there were plenty of excuses used. It was executed poorly. The messaging wasn’t right. It just wasn’t the right time. Rarely did the idea champions or the management who green lighted the idea ever just come out and say, maybe this just isn’t something customers value.

This environment generated lots of ideas and lots of infighting to get ideas selected, but not a lot of results.

I was never in charge, but I had the ear of some of the folks that were, once or twice removed, and I started a subtle campaign to curb this toxic, non-results driven, environment.

I suggested that the folks who had the ideas be responsible for proving them out with real world results and, since they usually felt with such passion that their ideas would work, I suggested they carry out their ideas within their own budgets. Why not? You are so sure it’ll work, put your money where your mouth is. If this will work so well, this should help you achieve your targets.

I coined a phrase, “You should give it a try. I hope that works out for you.”

The folks with the ideas use to win when someone in management would say, “Okay, we’ll try your idea.”  Now they started hearing, “You should give it a try. Let us know how it goes. I hope that works out for you.”

Suddenly, the folks with the great ideas were more open to criticism of their ideas and shooting holes in them before they got started proving them out, because they were more concerned whether the idea would actually work and less concerned if a few decision-makers in management would pick it.

I was reminded of this when I read a recent blog post on Arnold Kling’s askblog, The Left’s Post-Election Self Examination, where he comments on a leftist’s suddenly (post-election) more critical examination of Obamacare.

When Obamacare passed, it was easy for Democrats to claim victory that they had “fixed” health care. The actual results of their great idea wouldn’t be known until after the next election cycle, since that’s when it would start kicking in. They were like the folks at my work who got their idea selected by management.

One positive to this year’s election outcome is that many of the people in the Senate and the person in the White House responsible for passing Obamacare will still be here when the Obamacare realities begin to materialize and they may be held to account for the results of their great idea.

I wasn’t surprised to hear talk of Nancy Pelosi considering stepping-down as House minority leader shortly have the election. She’s probably thinking it would be good to get out of the spotlight before the Obamacare stuff starts to hit the fan.

Not surprising either that the leftist that Kling commented on is becoming more critical of Obamacare. This is what I saw happen to the idea-folks when they were faced with answering to the results of their ideas.

So, perhaps one unintended positive outcome of this election is that the American people are told the folks responsible for Obamacare, “Let’s give this a try. I hope that works out for you.”

Government caused the pre-existing condition problem

In this post I explained why I think the tax advantage to employer-provided health insurance, over individually purchases health insurance, is the government-induced cause of the pre-existing condition problem that most folks prefer to solve by introducing even more government, rather than addressing the root cause.

In John Cochrane’s health care essay, he agrees.

Before ACA, the elephant in the room was the tax deduction and regulatory pressure for employer‐based group plans. This distortion killed the long‐term individual market and thus directly caused the pre‐existing conditions mess.  Anyone who might get a job in the future will not buy long‐term insurance. Mandated coverage, tax deductibility of regular expenses if cloaked as “insurance,” prohibition of full rating, barriers to insurance across state lines – why buy long term insurance if you might move? – and a string of other regulations did the rest.

 

Anecdotes are powerful political tools — but shouldn’t be

I just had to add this passage from John Cochrane’s health care essay:

The critics adduce a hypothetical anecdote in which one person is ill served, by a straw‐man completely unregulated market, which nobody is advocating, with no charity or other care (which we’ve had for over 800 years, long before any government involvement at all).  They conclude that the anecdote justifies the thousands of pages of the ACA, tens of thousands of pages of subsidiary regulation, and the mass of additional Federal, State, and Local regulation applying to every single person in the country.

How is it that we accept this deeply illogical argument, or that anyone in making it expects it to be taken seriously? If you can find one person who falls through the cracks, the government gets to regulate the whole market, not that we craft a minimal solution to fix that person’s problem.

But wait, will not one person fall through the cracks or be ill‐served by the highly regulated system? If I find one Canadian grandma denied a hip replacement, or someone who can’t get a doctor to take her as a medicare patient, why do I not get to conclude that everyone must be left to the market?

 

What if it doesn’t work?

A moderate/liberal, but mostly uninterested in politics, friend of mine recently told me that he may not vote for Obama next week.

Why?

I’ve worked with this friend for years.

One thing I influenced him on over the years was the idea of emergent order. I pointed out that success stories are often a matter of random luck and the best way to ensure a company’s success is to try as many of the happenstance of random luck as possible.

We saw it over and over at our business. Many things that seemed like they should have worked, didn’t. Some things that seemed like they shouldn’t have worked, did. Many of those things were discovered by accident.

I pointed out to him that centralized management and politically powerful constituent groups in the organization stifled the emergent order that is evolutionary, random, experimental discovery. Stifling that process led to lackluster results — unless the company happened to be very lucky.

My friend said health care was the issue that made him reconsider his presidential vote. Obamacare is a centralized system that will stifle discovery and innovation. It doesn’t allow us to experiment with plans B, C, D, etc. if Plan A doesn’t seem to be working. It only allows for us to keep tweaking Plan A — which puts us on the same path as a mature company that can only manage to tweak its core products, rather discover new ones.

My friend has seen Plan A not pan out enough times that he thought Romney’s approach of letting the states experiment seemed to make more sense.

I don’t know if he will follow through, but it’s good to know that I’ve at least caused him to think about it.

Free Market Masterpiece

I agree with Don Boudreaux, of Cafe Hayek, that John Cochrane’s health care essay is a must read.

I first titled the post, “Health Care Masterpiece,” but then changed it to “Free Market Masterpiece”. In his essay, Cochrane does a masterful job of contrasting free market success stories to our government-restrained market for health care.

Here are a few snippets.

I bet you didn’t know:

About 70% of hospitals and 85% of health‐care employment is in non‐profits,whose legal and regulatory treatment protects much inefficiency from competition.

Maybe for‐profit companies pay too much attention to stock prices. But non‐profits can go on inefficiently forever, with no stockholders to complain.  The whole point of a non‐profit is to pursue goals other than economic efficiency.

Here he summarizes the competing goals of various government actions in health care:

…here we have the government forcing small size in order to boost competition with one hand, stopping entry to protect hospitals from competition with another, trying to force larger “networks” through “Affordable Care Organizations” to obtain the needed economies of scale with the third, but laws preserving doctor independence with the fourth.

And:

On reflection, it’s amazing that computerizing medical records was part of the ACA and stimulus bills. Why in the world do we need a subsidy for this? My bank computerized records 20 years ago.

Why, when you go to the doctor, do you answer the same 20 questions over and over again, and what the heck are they doing trusting your memory to know what your medical history and list of medications are?

He answers that question (read it to find his answer) and OMG:

No, we did not get cheap and amazing cell phones by government ramping up the pressure on the 1960s AT&T. Southwest Airlines did not come about from effectiveness panels or an advisory board telling United and American (or TWA and Pan AM) how to reorganize operations. The mass of auto regulation did nothing to lower costs or induce efficient production by the big three.

When has this  ever worked?  The post office? Amtrak? The department of motor vehicles? Road construction? Military procurement? The TSA? Regulated utilities? European state‐run industries? The last 20 or so medical “cost control” ideas? The best example and worst performer of all,..wait for it…public schools?

I will post more quotes later. But, I also agree with Boudreaux that you should take the time to read the whole thing.