RED GENES BLUE GENES

Economic Irrationality and Health Care Reform -- the Amazing Atlantic Article

HAS SOMEBODY REALLY FIGURED OUT HEALTH CARE?  READ ON!

I was shocked,along with NY Times columnist David Brooks, to discover that the best and most persuasive article on health care reform would be published this late in the game. What's equally peculiar, it seems to come from a non-specialist who has leaned heavily on the theories of a particular Harvard professor.

The article, published in the September Atlantic Monthly magazine, was written by David Goldhill, who is credited as a "media and communications executive."  You can find the article here.

Though I've read dozens of articles on health care by Nobel-prize winning economist Paul Krugman, I never found the magnificent Krugman anywhere close to being as clear and persuasive as Goldhill the generalist.  Now I want Krugman to explain why and will be looking for his analysis.

Basically, here's how I understand Goldhill's argument:

1.  You can never expect to find a virtuous circle of increasing quality at lower prices in any sector unless that sector is subjected to market forces.  When you distort a market by subjecting it to perverse, anti-economic incentives, then you have a chance to create a market which features that unfortunate combination of high prices and low quality which bedevils our health care system.

2.  One source of market distortion is that consumers have been conditioned to confuse "health care" with "health care insurance."  Goldhill points out that this is truly bizarre, because there is no other area of our lives where we expect our insurance to take care of routine expenses.  Our homeowners insurance won't get our houses re-painted just for esthetic reasons, and our car insurance won't pay for new tires or gasoline.

3.  By confusing health care with health care insurance, we develop the perverse notion that health care is "free" for people with insurance.  It sure feels that way when you walk out of a doctor's with a tiny co-pay.  However, Goldhill points out that we get it exactly backward -- the apparently "free" care is actually hugely expensive.  It's kind of like paying a large fee to go to Club Med and then thinking that the all-you-can-eat buffet is "free".  It's not free, it's extremely expensive, but that specific cost has been buried amidst larger costs where you won't notice it.

4.  Every month most workers see a significant portion of their salary disappear in taxes, much of which will be used to fund systems like Medicare, from which we expect to benefit someday.  What workers don't perceive is that their own salary is much lower because the employer is also forced to make huge health care contributions, that might otherwise have been used to boost salaries.  So our "free" health care actually has the direct effect of significantly decreasing our salaries and our corporation's profits.  Thus, "free" health care is actually about the most expensive care you can get.  

5.  Goldhill estimates that over a lifetime today the average American will contribute about 1.8 MILLION dollars toward our society's health care.  Now, how many of us are going to fully tap that 1.8 million health nest egg?  Very, very few.  Where does all the money go?  Our country now has one insurance executive for every two doctors.  Does that sound efficient?

6. Our systems creates perverse incentives because people will often decide to get every diagnostic test in the book, just because they're hypochondriacs or because their doctor is a part-owner of the MRI clinic.  Both doctors and patients routinely request unessential services because of the false perception that such services are "free."  They don't realize they're just pick-pocketing themselves.

7.  Goldhill's proposed solution is to re-insert economic constraints by making us really pay for our own medical care.  The way this would be accomplished would be by forcing everyone to have something like a "Health IRA" -- a tax-subsidized account that encourages you to save for medical emergencies.  When you get sick, you just draw on your health account.  If you have a catastrophic medical problem, that will be taken care of by government-mandated catastrophic care insurance, which will kick only when bills go over $50,000.  Beneath that, you take care of your expenses yourself.  If you don't have enough, you will be allowed to borrow against your own likely future earnings and deposits to your health care account.

8.  We won't need a huge health-insurance complex to oversee this system, so we can fire all those useless insurance executives.

9.  And there is a huge incentive now to stay healthy -- when you get to a certain age, you can tap into your own health savings account, just like you can into your IRA. It provides an additional savings account for all Americans, and a tremendous incentive to follow ideal health practices.  If you stay healthy, by the time you reach retirement age you will have a huge fund that you can use for personal reasons.  If you get hit with catastrophic medical failure later, don't worry, that's covered by the high-deductible government reimbursement principle.  That insurance only kicks in when the expenses go into the 50,000-200,000 range.

End result -- we stop wasting money on low-value medical procedures that aren't going to help us. Doctors and hospitals have to reduce their ridiculous inflated prices, because now it is not the insurance company reimbursing, the citizens themselves will have to pay out of pocket, and presumably will be vigilant to make sure that unnecessary procedures and tests aren't ordered.  All Americans will gradually realize the enormous financial value of staying healthy -- you can save up your health care IRA and use it for whatever you want, visits to Hawaii, a new Porsche, etc, whatever you want, so long as you've avoided cupcakes, cigarettes and tequila for breakfast for the past 20 years.

THIS IS A BRAND NEW ARTICLE BUT I CAN'T FIND THE FLAW IN HIS REASONING. SOMEBODY HELP ME OUT PLEASE, I DON'T WANT TO LOSE MY FAITH IN SAINT KRUGMAN.

Health Care Reform -- My Comment on Obama's Op-Ed

Our greatest presidential writer since Jefferson, Obama has penned an Op-Ed for the NY Times on Health Care Reform.  You can read Obama's piece here.  I can't say he's really at the top of his form here, but it's probably because the article was written by a team of speech-writers.  Here are my comments:

"1. The President is going to pass some kind of Health Reform Bill this fall because he's got the numbers. The final bill will be a classic political sausage, which is better than nothing.

2. Liberals will be disappointed because the reform won't go far enough, conservatives will be furious that it went too far.

3. This Bill will only be the beginning of Health Care Reform, not the end. The health care sector will in the future receive the continual scrutiny of the Congress, the Executive Branch, the Press, and the citizenry who make use of our new medical system. There will be a need for continual updating, refining, revision, etc. There will be many opportunities to fix mistakes, and there will doubtless be many mistakes to fix. There will be Republican Presidents and Congresses in the future, and this new health care system will have to be robust enough to survive the review of such conservative administrations.

4. The \"Town Hall Brouhaha\" is a good example of \"political irrationality,\" the fundamental structural flaw of our republic. Since our government is based on the perpetual conflict between left and right, all innovations, whether coming from the left or the right, will be opposed by about half the voting public. Liberals are correct that conservative protests at the Town Hall meetings are irrational; but they are incorrect to think that liberals are any different when faced with likely government actions which they oppose.

5. The most important principle missing from the President's proposal is citizen oversight and involvement. As with all other massive government initiatives, citizens rightly fear government inefficiency and corruption. Regulators are not the answer because they are bought off by lobbyists. The right approach is to involve \"citizen juries\" -- like grand juries but with an administrative oversight capacity. This concept was developed partially in the U.S. but has already been put into use by Gordon Brown in the U.K. and is supported by Segolene Royal in France."

To comment, click on the Comment button below.  The author will  respond to comments on topic.

5 Easy Clicks to Understanding Health Care Reform

the patient is ready...

Surveys show that Americans virtually never know what they're voting about (e.g., Philip Converse's classic studies, repeatedly confirmed).  However, our lack of knowledge doesn't stop most people from getting heated up.  A lot of people are now developing -- or parroting -- opinions on health care.  Do they know what they're talking about?

Conservative Republicans are absolutely furious that socialized medicine is about to descend on America. Liberals are disgusted that stupid, ignorant conservatives can make such misguided assertions -- but most of them can't tell you what's in the health care proposals, either.

Before you make up your own mind, why don't you find out a few facts?  I've saved you the effort of Googling, by choosing 5 easy clicks to get you up to speed:

1.  What's happening right now in Congress?  Don't worry so much about the Town Hall grand-standing, this Aug. 1 NY Times article gives you a very clear idea of where we are now in the legislative process: steps away from a partisan-line vote which will create a national health care system with mandatory universal coverage.  There is more consensus in Congress than would seem apparent from our news coverage, which focuses on polarization.

2.  Want to understand the context and history of the health care debate?  Better start again with the Old Gray Lady, as the NY Times has built an excellent web-center with a very clear intro article here.

3.  By this point, your next question might be, why do we need to go through this?  Do we really need reform that badly?  Now you should glance through the Obama administration's economic analysis of our health care system -- in a report (PDF file) prepared by the Council of Economic Advisers.  It shows that we can't afford NOT to undertake reform.  Our health care system is the most expensive in the world for reasons that no one can justify.  We're not getting our money's worth, and without reform, the situation would get much, much worse.  In short, bad health care makes us all poorer.

4.  By now you're worried you're not getting a balanced view.  What are the critics of reform saying -- are any of them sensible?  Start with this Fortune magazine column on the potential costs and downsides.  Columnist Kelly argues that we will eventually be forced into a government-managed system that will reduce options and freedoms, and will also be more expensive for some people.

5.  Finish up with the criticism from the right-wing columnist Charles Krauthammer, who argues that we are re-making the whole health care system when it would be easier just to cut out the largest inefficiencies.

You've now been exposed to the facts!  Now you can start thinking about this issue -- and make up your own mind.

Political Irrationality and Health Care: It's Time for a Deliberative Poll

“It is not clear how fully the public understands the complexities of the government …proposal…”
— NY Times, June 20, 2009, “In Poll, Wide Support for Government Run Health”

“The People are that part of the State that does not know what it wants.”
— Hegel

The health care debate has become bitter and explosive because the Obama administration is actually on the verge of accomplishing something significant. We can tell this from the way its opponents are now pulling out all the stops.

The problem with our national debate on this issue, as with so many other issues, is that it inevitably devolves into a nonsensical partisan howling.

As soon as an important public issue becomes politicized, our partisans draw a line in the sand and force the rest of us to choose sides. Liberals and conservatives duly line up on opposed sides of this line, but without any clear understanding of the issues. No one knows what they’re talking about, but they argue anyway, and get rather heated up. This is a powerful example of “political irrationality” – a concept in political psychology which posits that most people are irrevocably biased in their political perceptions (see the essays under the "Political Irrationality" category on this blog).

In a recent book, The Opinion Makers, David Moore shows that most of the large polls routinely exaggerate public knowledge on complex policy issues. The truth is, almost no one has the facts straight.

Our politicians are no help here because they adopt absurdly unrealistic partisan positions – Conservatives pretend we don’t need health care reform, when it’s obvious that we do, and Liberals pretend that they know how much it’s going to cost, when it’s obvious that they don’t.

The problem with Town Hall meetings to discuss public issues, as with many other devices in our democratic arsenal, is that they are not deliberative. No one is forced to learn anything before talking, no one is forced to reflect, no one is ever held accountable for any vote they cast. Under such conditions, people resort to reflexive partisan programming and end up hurling slogans at each other. 

I call this "political debate via screaming."  The process is worse than a waste or time, it’s terribly counter-productive, spawning hatred and mis-information.

Consequently, we should just admit that Town Hall meetings are a publicity stunt; sometimes the stunt favors one side, sometimes the other side, but it’s no place to learn the facts.

Scholars James Fishkin and Ned Crosby have proposed a much better alternative – citizen panels or juries in which ordinary citizens are exposed to information and discussion periods before being polled (see for example: http://cdd.stanford.edu/polls/docs/summary/ ). 

Prof. Fishkin has developed a methodology known as the “Deliberative Poll” which would be perfect for a discussion of health care reform. In a Deliberative Poll, a large sample of ordinary citizens is polled on their opinions about a given public issue. Then, they are exposed to two or three days of meetings, lecture, debates and briefings on the topic. They not only get a chance to interrogate experts, they get a chance to debate their fellow citizens. At the end of the process, the participants vote again. The second vote reveals what I call “the arrow of reason” – it indicates which way reasonable people have been moved by the evidence. That should be enormously convincing.

I would strongly recommend that the Obama administration consult with Fishkin or a similar scholar to develop a national deliberative poll or citizen jury on the final health care proposals. There would be no more reliable barometer of true public opinion than a sample of ordinary Americans asked to invest a few days in really learning the facts.

A Case of "Residing While Black"? A Legal Analysis of the Arrest of Prof. Henry Louis Gates

(July 26, 2009, New York, NY)  The controversial arrest of Prof. Henry Louis Gates outside his own home has been largely interpreted as either a racial or a psychological phenomenon.  Either: 1) it was a case of two grown men over-reacting childishly, and/or 2) one of those men, the police officer, was guilty of racism and racial profiling, and/or 3) one of those men, the professor, was guilty of racial hypersensitivity and over-reaction.

While these perspectives are valid, the press has notably failed to explore the crucial perspective of constitutional law.

In the Gates incident a police officer asked a homeowner to leave his home in order to verify the homeowner’s identity.  Then, when proof of identity was not immediately forthcoming, the police officer pursued the homeowner into his home – without having requested permission to do so.  Therefore, there was a double transgression of the crucial legal barrier represented by the threshold to Prof. Gates’ front door.  This double state intrusion was not warranted by the facts of the situation. 

This is a key constitutional issue which goes to the very heart of the freedoms guaranteed by our Bill of Rights. By ancient tradition, our homes are inviolable “castles” of privacy and this principle has been enshrined in our fourth amendment. The fourth amendment prohibits all unreasonable government intrusions into our home. 

In 1980, for example, the U.S. Supreme Court over-turned a New York statute that allowed police to enter a home in order to effect a routine felony arrest (Payton v. New York, 445 U.S. 573).  Writing for the Court, Justice Stevens held:

The physical entry of the home is the chief evil against which the wording of the Fourth Amendment is directed… [A]n invasion of the sanctity of the home…is too substantial an invasion to allow without a warrant, in the absence of exigent circumstances, even when it is accomplished under statutory authority and when probable cause is present…[T]he Fourth Amendment has drawn a firm line at the entrance to the house. Absent exigent circumstances, that threshold may not reasonably be crossed without a warrant.

Normally, therefore, police officers are neither allowed to enter our homes nor to ask us to leave our homes’ protection. When a police officer crosses our threshold, or asks us to do the same, he or she must be able to articulate a clear and urgent reason for doing so. 

Obviously, a report of a burglary in progress is a perfectly good reason for the police to knock at the front door.  However, they must stop there.  When someone claiming to be a resident then answers the door, police procedure must take into account the strong possibility that a legal resident has been spotted breaking into his own home.  This is a common situation.  Every morning hundreds of Americans head off to work having forgotten their house keys.  After returning from work, such people are sometimes forced to re-enter their own homes in a suspicious fashion, breaking windows or forcing doors.  In a certain percentage of such cases, the “break-in” will be reported to police by neighbors.  This probably happens at least a dozen times a day across America.  How should police react?

The police should understand that while this situation is not unusual for the police force, it is probably a once-in-a-lifetime occurrence for the homeowner.  The home-owner may react with surprise, confusion or annoyance.  The police officer should anticipate those emotional reactions and be prepared to remain calm. When a break-in is reported at a house and a person presents themselves at the front door and claims to be a legal resident, the presumption must be overwhelmingly in that person’s favor.  It may well be that the person is a burglar who is coolly pretending to be a resident, but this possibility is not sufficient to over-ride our vital constitutional guarantee of freedom from government harassment in our own homes. 

Regrettably, police forces in America do not have any clear and legally-defensible policy with respect to the crucial decision to cross a homeowner’s threshold.  In the Gates’ incident, the police officer spotted the professor through a window and requested Prof. Gates to come outside.  Why? Although Prof. Gates had committed no crime, he was asked to leave the legal and psychological protections of his home by going outside.  Given that Prof. Gates was eventually arrested for “criminal behavior” which would not have been criminal had he remained indoors, it is clear that the legal safety of Gates’ home was crucial.

Sgt. Crowley, the arresting officer, said that his intent was to verify whether or not Prof. Gates was an intruder.  In order to achieve this, it was only necessary to ask, “Do you live here?”  The respondent does not have to leave his own premises in order to comply.  Why was it necessary to ask Gates to leave his home?  Perhaps it was because the officer wanted to make sure that Gates stayed in sight, so that he did not seek to escape or to procure a weapon?  That is not a good enough reason.  Unless Gates presented himself at the door with some sort of visible evidence that he was a burglar (i.e., burglar tools, weapons or trembling, bloody hands), the officer had no sufficient reason to ask Gates to leave his home. 

The officer could easily have requested some I.D. through the open front door, without asking Gates to step outside, and without volunteering to come in.  Prof. Gates could have reached into his wallet and showed his I.D. without ever having had to leave his home.  There is no reason that this kind of discussion cannot transpire across the threshold of a man’s front door. Of course, if you feel comfortable talking to police you are perfectly free to step outside your house or invite them in.  But our constitution guarantees that you don’t have to.  If you want the police to stay on their side of the threshold, you have a constitutional right to demand it, and police should scrupulously respect that legal boundary.  A policeman should never enter an American’s home without first requesting permission to do so unless there is a compelling reason that the officer can clearly articulate.

Americans are not required to carry I.D. in their own homes.  Suppose that the “break-in” at Gates’ house had been performed by Gates’ 17-year old nephew, house-sitting while the Professor lectured at Oxford.  The nephew would have had an absolute legal right to be in that house, but he would have lacked a valid I.D. with the right address.  So what?  In such a situation the officer might reasonably request access to the home to seek some common-sense verification of legitimate residence.  Let us say the young nephew volunteers:  “I can tell you what’s baking in the oven.  I can tell you what’s under that couch over there.  I can tell you the password to the computer in my uncle’s study.”  At some point the officer has to use common sense, based on articulable observations.  If the nephew displays a level of familiarity with the household that is only available to long-time residents, the police officer should excuse himself and leave.

In the Gates case, however, the police officer pursued Gates into his own home without a sufficiently good reason for doing so.  Crowley should have patiently remained at the front door while Gates located some proof of residence.  The risk that Gates might have been a burglar who would have used the opportunity to escape over the back fence is not sufficient justification to enter a person’s home (absent any visual evidence that Gates was in fact lying).

None of the above legal analysis has anything to do with the issue of whether or not Gates over-reacted, which seems to be the emerging media consensus.  That is certainly a valid line of inquiry, but it should be kept separate from our constitutional analysis.  A man may be a jerk, but our Constitution guarantees him an absolute right to be a jerk in his own home, and any state intrusion upon that right must be highly offensive to anyone who takes constitutional rights seriously.

The Gates incident exemplifies, sadly, the abysmal failure of the Bill of Rights to protect American freedoms.  Our American approach to freedoms is excessively legalistic and case-based, which makes it useless.  We have lots of beautiful, complicated Supreme Court cases that discourse eloquently – if obscurely and ambiguously – on the limits to police intrusion.  In reality, though, we get almost no protection from these case-created rights.  If the police violate one of your constitutional rights in a minor incident, their impunity is virtually guaranteed.  What are you going to do – take them to the Supreme Court over a misdemeanor when you can just pay a fine and forget about it?  Police all across America have learned, for example, that if you just search people without asking you can later defend that search as a “consensual search.”  Almost no one is ever going to make a federal case out of a constitutional breach resulting in a misdemeanor charge (no one except Skip Gates, perhaps).

The result is that neither American citizens nor the police have any clear idea as to what is a “legal search.”  It’s not our fault.  You would have to be a lifelong constitutional scholar just to begin to understand the Supreme Court cases dealing with legal searches of automobiles.  Since nobody understands the law, the police do whatever they want and in 999 out of 1000 cases they get away with it.  Then, they’re surprised if we get upset about any of this.  If we get become angry about a violation of our constitutional rights, and if we exhibit our civic unhappiness in public, we can be arrested for “disturbing the peace.”  So the law comes down to this: the police can do whatever they want; they can even ignore the Constitution – and you better not get mad about it.

Mr. President, it’s time for a change.  America needs a clear federal statute with respect to police stops, searches and home and car intrusions.  American citizens and their police need to be playing from the same rulebook.  We will never get a handle on the messy issue of racial profiling until both citizens and police can agree on exactly what’s in the rulebook.  Today, the opposite is true.

Unlike Barack Obama, I am no particular friend of Prof. Gates.  He may be a very cool dude most of the time, but in this incident he comes across as a pompous ass (I know what one looks like because I own a mirror).  Whether or not a celebrated scholar of African-American history has displayed racial hypersensitivity is indeed an interesting social question.  However, the fact that our constitutional rights are routinely violated with impunity is far more important, and that’s what we should be focusing upon.

Guillermo C. Jimenez is an author, attorney and educator living and working in New York City.  Comment below.

World Peace is on the Way

Stephen Pinker reminds us that a certain important kind of irrationality is on the decrease -- violence. 

Despite recently publicized warfare and civil strife, statistics reveal a rather astonishing decline in violence throughout recorded history.  How have humans tamed their warlike drives?  Pinker is optimistic... 

Optimism on Peace -- by Stephen Pinker 

Irrationality and the Global Warming Debate

Still kickin': 85-year old contrarian Freeman Dyson

At some point I would like to delve into the potential role of cognitive bias in distorting the global warming debate.  The main thing I want to do here is draw attention to a recent interview by Yale Environment 360 with Freeman Dyson, an 85-year old eminent physicist who has doubts about the global warming consensus.

Essentially, Dyson doesn't believe that current models can possibly forecast future climate change based on CO2, because it is currently impossible to take into account the biological feedback mechanisms involved in CO2 fluctuations.

You can find the article here.

I find the interview amusing first of all because this 85-year old guy is still so sharp -- he strikes me as quite a bit sharper than his interlocutor.  The second funny thing is that the interviewer is so evidently disconcerted and distressed by an inability to find a flaw in Dyson's reasoning.  The only weakness detected is one that Dyson freely avows, that he is not an expert.  But then, by those standards, neither is the interviewer, nor am I, nor are you, dear reader (unless you work for the IPCC or research climate change).

So Dyson stands in the place of all educated and intelligent non-experts and asks the experts humbly: We understand that you are saying that we need to act urgently and massively to avoid global disaster, and we take what you are saying very seriously because you are such big experts, but since you are asking for such drastic revisions to our current mode of living, could you first please explain in a convincing fashion why exactly it is that global warming is going to do us so much harm?