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.

 

Advertisements

“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.”

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.

Pathologies of the health care system

Another good op-ed from John Cochrane in the Wall Street Journal about health care, What to Do on the Day After Obamacare.

Cochrane agrees that many of the problems in health care are caused by previous government meddling:

Most pathologies in the current system are creatures of previous laws and regulations.

And, he again writes eloquently on how these previous laws and regulations distort the medical care and health insurance markets to cause the very pathologies that Obamacare supporter think more regulation will fix.

From the airwaves

Last night, during a segment about health care and the Obamacare individual mandate, a caller to a local radio station talk show asked:

Let’s say the Supreme Court strikes down the mandate as unconstitutional. Don’t we still have the cost of all those uninsured who get health care? What are we going to do about that?

Here’s how I wish the radio hosts would have responded:

Do you think we would have as many uninsured if we stopped paying for their health care? I don’t. I think most would figure something out really quick.

Is that harsher than a $2,000 fine for not buying insurance?

At the very least, if you think we need some form of government health care assistance for folks who can’t afford insurance, why not use a model like food stamps?

Congress didn’t pass a law fining folks who don’t buy food. I imagine most folks would laugh if they tried. Rather, we provide resources for qualified individuals to buy food from the private food market. Pretty simple.

Singapore uses a similar model for health care and it seems to work.

My Individual Mandate

It’s simpler and more effective than the Obamacare individual mandate. And, it is Constitutional.

Rather than forcing people to buy insurance or pay a penalty to the government, here’s my mandate:

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

Some will say, “But what about the people who can’t afford insurance?”

I have three responses to those people.

First, check out the insurance rates in Missouri. A $5,000 deductible plan for a family of four runs around $300 a month. That’s not dirt cheap, but it’s affordable for many people. It’s about like a car payment.  If insurance is more expensive where you live, I suggest that you give serious thought as to why (psst…It’s because of your state insurance mandates — maybe you should elect a legislature that will enact affordable mandates).

If someone has new cars, premium channels and a smart phone data package, don’t expect me to feel sorry for them if they say they couldn’t afford insurance.

Second, if we got government out of medical care and insurance, we’d have even cheaper solutions that would make it even more affordable. Government involvement distorts the incentives (e.g. emergency room care mandate) that makes it more expensive.  Without government involvement and restrictions, we’d see more solutions along the lines of $4 Walmart prescriptions.

Third, after that, if you still have some people who can’t afford insurance I’d offer two solutions:

1. Donate money to a charity that provides affordable insurance those folks.

2. If we still must do a government solution, target low-income folks with a medical care credit that they will use to buy health insurance and pay deductibles. Why break the system for everyone else? Just fix it for them.

Update: As I was writing this, it came to my attention that the administration is trying to rebrand its mandate as an “individual responsibility” clause.  I think my mandate better fits that description.

Update 2: I like MikeM’s response in the comments to those who ask, “What about the people who can’t afford insurance?”

If they were expected to pay for their medical care, then they “could not afford not to have insurance.”  They would figure something out.

Commerce Clause for Dum-Dums

The Supreme Court hearing this week is about this one sentence from our Constitution:

From Article I, Section 8: The Powers of Congress:

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes

Most people know this as “the Commerce clause.”  We usually hear the Commerce Clause as “Congress has the power to regulate Commerce”.  I wonder how many people know there’s more to it?

In my view, the debate breaks down as follows.

On one side we have people who incorrectly believe this statement empowers our Congress to force citizens of foreign nations and Indian tribes to buy something.

On the other side are people who correctly understand that this statement empowers our Congress to settle trade disputes between states and with foreign nations and Indian Tribes, on behalf of the U.S.

Some folks may claim to believe that this statement empowers Congress to force only U.S. citizens to buy things.

Such people would need to believe two things that I find far-fetched coming from a group of authors who were concerned about limiting the power of government to protect liberty from government:

  1. There is a significant difference between the meanings of the words “with” and “among” as used here.
  2. “States” or “among the several States” actually means “citizens of the United States”.

I find it far more likely that a group trying to preserve individual liberty from government after the learning the lessons of central and arbitrary power firsthand (granted, I admit, not all founding fathers was pure in this regard), actually meant this to be a rather dry power of Congress to settle trade disputes that arose due to laws passed by state legislatures.

For example, this power would be used to settle a dispute if two state legislatures disagreed on how they were to share a common waterway.

No matter the Supreme Court outcome, I’m not convinced that the authors of the Constitution meant this to be an absolute grant of power for Congress to do anything that sounds good that can remotely be tied to a trade between parties.

If that were the case, there wouldn’t be much need for the rest of the Constitution — including Article III, which vests the judicial power of the U.S. in the Supreme Court.