Health insurance and sports

On Marginal Revolution, it is asked which system should be redesigned from scratch?

My first answer: health insurance.

Many problems in health care (like cost inflation) and employment stems from one simple design flaw: the tax benefit companies receive for buying health insurance that individuals do not receive when they purchase it on their own.

This has caused an unproductive melding of health insurance and employment that aliens would find strange, but we accept as normal.

We don’t expect companies to provide home and auto insurance and those markets are not nearly as mucked up.

My second answer is soccer in the U.S.

Somehow, unlike most of the rest of the world, we wedded sports and schools together from about high school on, including soccer.

I don’t have much problem with it for American sports that are not played widely around the world.

But, it has been detrimental to soccer development. If anyone wonders why the U.S. isn’t in the World Cup and, when we do qualify, we don’t make it far, I believe part answer is school sports.

Our youth soccer culture has emerged to prep players for college soccer rather than World Cup competition, which is a different game (the checkers/chess analogy applies), in several dimensions.

It also changes how the market for players and development of players works at crucial ages.

The U.S. is the Galapagos Islands of soccer.

To the inattentive, it looks like to the sport played elsewhere.

But, being cut off from the rest of the world in various ways has caused it to evolve along a slightly different path, which happens to not be optimized for producing the chess players that operate on the world stage.

Iceland is a good example of a country that went another way. Literally an island, it opened itself up to the soccer cultures of soccer-playing countries and from its tiny population has produced a World Cup team that played to a draw against Argentina last week, which is like Emporia State beating KU in basketball.

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Experts vs Trial and Error

Writing in the Wall Street Journal, Nina Teicholz casts doubt on the ‘conventional wisdom’ that saturated fat causes heart disease (thanks to The Pretense of Knowledge for the pointer).

Of course, Gary Taubes laid out much of the same story line in his book, Good Calories, Bad Calories. I mention it here and here.

Teicholz mentions President Eisenhower’s heart attack. She didn’t mention the additional detail that Taubes provided. His doctor cut his cholesterol intake and his cholesterol levels went up.

Teicholz, perhaps, summarizes the beginning of the Type II diabetic and obesity trends when unreliable health studies were used to guide the American diet:

As Harvard nutrition professor Mark Hegsted said in 1977, after successfully persuading the U.S. Senate to recommend Dr. Keys’s diet for the entire nation, the question wasn’t whether Americans should change their diets, but why not? Important benefits could be expected, he argued. And the risks? “None can be identified,” he said.

This is where I’ve gained much appreciation for what Nassim Taleb identified as the expert problem, as he describes here.

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Sebelius

When I saw the alert that Kathleen Sebelius is going to resign her post as Secretary of Health and Human Services, the classic Warren Buffett quote came to mind:

When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.

The business of attempting to solve problems caused by government intervention with more government intervention is a business with bad economics.

More good stuff from Cochrane on health care

I recommend reading John Cochrane’s op-ed in today’s Wall Street Journal, What to do when Obamacare unravels. It’s a great follow-up to my health care reforms.

Here are a couple quotes from Cochrane’s piece that addresses some common concerns over non-government medicine.

What about the homeless guy who has a heart attack? Yes, there must be private and government-provided charity care for the very poor. What if people don’t get enough checkups? Send them vouchers. To solve these problems we do not need a federal takeover of health care and insurance for you, me, and every American.

And (emphasis mine)…

No other country has a free health market, you may object. The rest of the world is closer to single payer, and spends less.

Sure. We can have a single government-run airline too. We can ban FedEx and UPS, and have a single-payer post office. We can have government-run telephones and TV. Thirty years ago every other country had all of these, and worthies said that markets couldn’t work for travel, package delivery, the “natural monopoly” of telephones and TV. Until we tried it. That the rest of the world spends less just shows how dysfunctional our current system is, not how a free market would work.

“I promise a chicken in every pot (chicken not included)”

Tyler Cowen was ‘somewhat surprised‘ to find out that a higher percentage of the uninsured disapprove of Obamacare. I’m not sure whether his surprise was that the disapproval wasn’t higher or lower.

I wasn’t surprised that more disapprove.

As I wrote in my “Wait…What?” post in July of 2012, Obama won votes by promising to solve the problem of the uninsured. Those voters didn’t realize that his solution would be to penalize the uninsured for not buying insurance.

It’s like the old Doctor joke.

Patient: Doc, it hurts when I do this. Can you fix it?

Doc: Yes I can.

Patient: Really? Great! How?

Doc: Stop doing that.

In July 2013, I didn’t think many people had made that connection, yet. I predicted they might when they had to pay the fine. They haven’t paid the fine yet, but are discovering that Obama’s solution was the same as the Doc’s above. Stop not buying insurance.

I offered what I think is a better medical mandate in this post (edited slightly).

If you choose not to purchase insurance and you need medical care, you will be expected to pay for your medical care.

Mine isn’t that much different than Obama’s. But, it doesn’t require government intervention.

Update: James Taranto, at the Wall Street Journal, does a great job of making my first point:

In short, what ObamaCare means to the uninsured who were not uninsurable is higher prices for a product they already were disinclined to buy, along with a punitive tax on not buying it. That seems more like a mugging than a benefit.

Avoiding reality sometimes works

Good blog post from Clay Shirky about the Obamacare website (Thanks to Russ Roberts @ Cafe Hayek). Here are a few excerpts.

Shirky demonstrates another lesson from The Croods, on why executive paid him to collect information from their own employees. Here he describes an instance where he is with a company’s programmer in the presence of its executives (emphasis mine):

…the programmer leaned forward and said “You know, we have all that information downstairs, but nobody’s ever asked us for it.”

I remember thinking “Oh, finally!” I figured the executives would be relieved this information was in-house, delighted that their own people were on it, maybe even mad at me for charging an exorbitant markup on local knowledge. Then I saw the look on their faces as they considered the programmer’s offer. The look wasn’t delight, or even relief, but contempt. The situation suddenly came clear: I was getting paid to save management from the distasteful act of listening to their own employees.

Humility is not common in the executive suite.

On bottoms up vs. top down (trial and error, specifically):

The idea that “failure is not an option” is a fantasy version of how non-engineers should motivate engineers. That sentiment was invented by a screenwriter, riffing on an after-the-fact observation about Apollo 13; no one said it at the time. (If you ever say it, wash your mouth out with soap. If anyone ever says it to you, run.) Even NASA’s vaunted moonshot, so often referred to as the best of government innovation, tested with dozens of unmanned missions first, several of which failed outright.

Failure is always an option. Engineers work as hard as they do because they understand the risk of failure. And for anything it might have meant in its screenplay version, here that sentiment means the opposite; the unnamed executives were saying “Addressing the possibility of failure is not an option.”

Unfortunately, every once in a while, avoiding reality sometimes works. Sometimes people get lucky when they exclaim that ‘failure is not an option’ and actually create something successful. Those people can be dangerous.