Archives: 07/2006

As the Supply Curve Shifts…

Today’s New York Times runs an oped on the supply of physicians by David C. Goodman, an investigator with the Dartmouth Atlas of Health Care. The Dartmouth Atlas does invaluable work documenting the waste that exists in Medicare and other parts of the U.S. health care sector. Goodman critiques a recommendation by the Association of American Medical Colleges that the United States increase its output of doctors by 30 percent to meet the needs of the growing number of elderly Americans. That critique is excellent as far as it goes, but it seems to miss half the picture.

Goodman argues that increasing the number of physicians will do nothing to improve the quality of health care. He cites the sort of data for which the Dartmouth Atlas is famous:

Many studies have demonstrated that quality of care does not rise along with the number of doctors. Compare Miami and Minneapolis, for example. Miami has 40 percent more doctors per capita than Minneapolis has, and 50 percent more specialists…

The elderly in Miami are subjected to more medical interventions — more echocardiograms and mechanical ventilation in their last six months of life, for example — than elderly patients in Minneapolis are. This also means more hospitalizations, more days in intensive care units, more visits to specialists and more diagnostic tests for the elderly in Miami. It certainly leads to many more doctors employed in Florida. But does this expensive additional medical activity benefit patients?

Apparently not. The elderly in places like Miami do not live longer than those in cities like Minneapolis. According to the Medicare Current Beneficiary Survey, which polls some 12,000 elderly Americans about their health care three times a year, residents of regions with relatively large numbers of doctors are no more satisfied with their care than the elderly who live in places with fewer doctors. And various studies have demonstrated that the essential quality of care in places like Miami — whether you are talking about the treatment of colon cancer, heart attacks or any other specific ailment — is no higher than in cities like Minneapolis.

In other words, doctors in some areas of the country order up a lot of health care that seems to benefit no one but the doctors themselves. All that apparently value-less health care costs workers and taxpayers tens of billions of dollars per year.

But Goodman does not address an equally important question: whether an increase in physician supply could make health care more affordable. In the standard supply and demand model, loosening a constraint on supply shifts the supply curve to the right, which reduces prices. With third-party payers, the process gets pretty attenuated – probably more so when the government is paying than when a private insurer is paying. But that’s not the same thing as saying it breaks down. In fact, it’s hard to believe that increasing the supply of anything by 30 percent over time wouldn’t have an effect on prices.

Goodman might have noted that (1) the persistence of expensive, low-quality care and (2) a relatively unresponsive price mechanism are both enabled by the same same feature of the America’s health care sector: our over-reliance on third-party payment. As Mike Tanner and I noted in Healthy Competition, we even nose out Canada in terms of the share of medical care purchased by third parties.

Fixing that problem could address both cost and quality problems. Miami patients would be less likely to let their doctors order up useless tests if those patients are paying, say, 5 percent or 10 percent of the cost. And price is much more likely to respond to supply shifts if you have 200 million price-sensitive purchasers as opposed to a few hundred third-party payers, not all of which are price-sensitive.

Goodman’s Dartmouth colleague John Wennberg has recommended using medical savings accounts to cut out some of the waste in Medicare. Here’s an idea for getting rid of even more useless medical care: just give Medicare beneficiaries a lump-sum payment, adjusted for their individual health risk, and let them purchase medical care and coverage until it stops providing them value.

That might even change the political dynamics enough that we could eventually put to bed these wasteful political discussions about whether we should allow 30 percent more people to become doctors each year.

UK National ID in Collapse - U.S. National ID to Follow?

The Sunday Times (U.K.) reports that “Tony Blair’s flagship identity cards scheme is set to fail and may not be introduced for a generation.” The Times cites leaked e-mails reflecting senior officials’ belief that the plan to subject the U.K. population to the regimentation of a national ID system is falling apart. Even a backup, scaled-down national ID card isn’t “remotely feasible,” according to the e-mails cited by the report. Ministers who are pressing ahead with the plan are “ignoring reality.”

Similar e-mails may well be floating around the U.S. Department of Homeland Security, which will be issuing regulations to flesh out the REAL ID Act this summer this fall after November 7th. (No bureaucrat with an ounce of political acumen would drop a $9-billion-dollar unfunded surveillance-mandate before the mid-term election.)

This is not bad news. A national ID system is useful for controlling a law-abiding population, but not useful for securing against law-breakers, particularly committed threats like terrorists - unless it is part of a total surveillance system.

The failure to implement a national ID system in the U.S. would represent little loss to the nation in terms of security, and a substantial gain in terms of preserved freedom and autonomy. All this is discussed in my new book, Identity Crisis: How Identification is Overused and Misunderstood.

Unlike the U.K., where a national ID is apparently a project identified with Tony Blair, the Bush Administration does not have to look for a face-saving alternative. The U.S. national ID was not a Bush Administration project, but something it accepted in a political bargain. The Administration can now (rightly) declare it impossible to implement and inconsistent with American values, then work with Congress to repeal the REAL ID Act.

New at Cato Unbound: What to Do about Iran?

In this month’s Cato Unbound, “What to Do about Iran,” Reuel Marc Gerecht, resident fellow of the American Enterprise Institute and author of The Islamic Paradox, argues in a provocative new essay that diplomatic attempts keep Iran’s clerical regime from getting nuclear weapons will fail, so the U.S. must choose between preemptively bombing Iran’s nuclear facilities or allowing the mullahs to have the bomb. Arguing that the latter option “would empower its worst enemies in Tehran and spiritually invigorate all Muslim radicals who live on American weakness,” Gerecht advises the former: a policy of preemptively bombing Iran’s nuclear sites.

This week and next, a panel of defense strategy and foreign policy experts will challenge Gerecht’s argument, starting with Ted Galen Carpenter, vice president of defense and foreign policy studies at the Cato Institute, and followed by Edward N. Luttwak, senior fellow of the Center for Strategic and International Studies and author of widely discussed recent article in Commentary, “Three Reasons Not to Bomb Iran — Yet,” and Anthony H. Cordesman, Arleigh A. Burke Chair in Strategy at the Center for Strategic and International Studies and author of Iran’s Developing Military Capabilities.

Is Gerecht right? Are all non-military approaches to the Iranian nuke bound to fail? If so, should the U.S. resign itself to a nuclear Iran and rely on deterrence as it did during the Cold War? Or is deterrence ill-suited to a regime run by religious extremists?

Stay tuned for incisive commentary and criticism by some of America’s leading defense policy thinkers.

Crocko

Filmmaker Michael Moore is not doing much to inspire confidence in Sicko, his upcoming film on the U.S. health care sector. According to Variety.com, Moore wrote the following in an email to supporters:

If people ask, we tell them Sicko is a comedy about the 45 million people with no health care in the richest country on Earth.

One can only assume Moore is talking about “the” 45 million Americans who lack health insurance. Never mind that a lot of them will not be among those who lack health insurance tomorrow. Never mind either that government eggheads believe “that the estimate is inflated due to poor reporting of Medicaid coverage and perhaps other coverage types as well.”

No, what’s really interesting is that Moore says the uninsured receive no health care. He might be surprised to know that people have actually researched this topic. In 2003, the journal Health Affairs published an article titled, “How Much Medical Care Do The Uninsured Use, And Who Pays For It?” Turns out the uninsured received $99 billion of health care in 2001. The uninsured probably receive even more health care today.

Now, you might think $99 billion is not enough. You might even think $99 billion is too much. But if you think $99 billion equals $0, you might be Michael Moore.

I’m actually looking forward to agreeing with Sicko about how the U.S. health care sector is bloated and inefficient, and how health care providers routinely rip off taxpayers. But I can’t help this feeling that Moore is going to recommend that we turn that mess over to a sector of the economy that is even larger, even less efficient, and an even bigger rip off.

I’m hoping for a surprise ending.

Ron Paul in the Post

The Washington Post profiles libertarian congressman Ron Paul (R-Tex.) – in its Sunday Style section, which is sort of a throwaway placement.

It’s one of those 1970s-style laundry list stories:

The amiable Texas congressman would do away with the CIA and the Federal Reserve. He’d reinstate the gold standard. He’d get rid of the Department of Education.

Rather than really try to present the argument for individual rights and limited constitutional government, drawing on public choice economics and the failures of government programs, the reporter just lists one out-of-the-mainstream position after another. Still, she does make it clear that he’s philosophically principled and not your typical Bush-supporting JFK-lookalike 21st-century congressman.

Here’s an interesting point about Ron Paul that I haven’t seen anyone make: As far as I know, Ron Paul is the only member of Congress who has been elected three times as a non-incumbent. Two of those times he beat an incumbent.

He first won a special election in 1976, then lost that fall. Two years later he came back and defeated incumbent Bob Gammage. After three terms he ran for the Senate, losing the Republican nomination to Phil Gramm. The really bad news was that he was replaced by Tom DeLay. In 1988 Paul was the Libertarian Party nominee for president. Then in 1996, 20 years after his first election and 12 years after he had last won election to the House, he ran again in a differently configured district. He had to beat Democrat-turned-Republican incumbent Greg Laughlin in the primary – against the opposition of the National Republican Congressional Committee, the National Federation of Independent Business, the National Rifle Association, former attorney general Ed Meese, Senators Gramm and Kay Bailey Hutchison, and Gov. George W. Bush.

Given that kind of firepower and the incumbent reelection rate of about 99 percent these days, Ron Paul has a remarkable political record. He must be doing something right back in Texas.

Belated Thoughts on “Libertarian Democrats”

In early June, Markos Moulitsas roiled the political blogosphere with a provocative post prophesizing the rise of the libertarian Democrat. My Cato colleagues Gene Healy, Will Wilkinson, and Radley Balko offered replies on Cato@Liberty, and the DailyKos logged some 900 responses to the post. Clearly, Kos had struck a nerve.

After a month of ruminating and at the risk of being too late to the party, here are a few additional thoughts:

All good classical liberals would eagerly agree with Kos about the threat that “government and other individuals” pose to liberty. Good libertarians would be captivated by his paean to the Bill of Rights, including the Second Amendment (and — can we hope? — the Ninth and Tenth). Classical liberals would also join him in rebuking government’s impositions in “our bedrooms and churches” and its ongoing evolution into Big Brother. And good libertarians of all political stripes (not just Blue) would agree with him about the threat that corporations pose to individual liberty, including their pushing externalities onto others. After all, my job at Cato is to manage the institute’s 64-page quarterly criticism of rent-seeking weasels.

Up to this point, all good classical liberals, libertarians, free-market liberals, et al., would be cheering Moulitsas. If there were any hesitation, it would be over his determination to promote libertarian Democrats instead of any office-seeker who is libertarian. If a voter values individual liberty, wouldn’t that person support any candidate who shares that value, and not just candidates who have an “R” or “D” after their names? I assume Kos and all lovers of liberty — and, indeed, all politically thoughtful people — would not be so base as to view candidate party affiliation as either a necessary or sufficient condition for gaining their votes.

But, as Gene and Will both point out, further reading of Kos’s post suggests that his brand of libertarianism may be quite illiberal.

Moulitsas postulates several “rights” that he claims a “Democratic libertarian” would recognize and that government should secure:

  • The right to “roads and public transportation to give people freedom to travel wherever they might want.”
  • The right to “make a living without being unduly exploited by employers.”
  • The right to “poverty prevention programs,” so that people will not be “constantly fear[ing] for their lives.”
  • The right to “social safety net programs” and health care, so people can be free of “fear for their health.”

To be sure, the freedom to travel, the freedom from employer exploitation, and the adequate provision of necessities like food, shelter, and health care (not to mention many non-necessities) are highly valued by libertarians and the rest of humankind.

But is government the right instrument with which to secure those things, and can it do so successfully? On both philosophical and empirical grounds, I believe (those are important words) that government routinely fails either the “right instrument” or “successful” test for Kos’s purported “libertarian” government duties that I list above. Concerning transportation, I can name dubious public transportation projects and successful, welfare-boosting private ones; I would also argue that much of transit is not just wasteful but also regressive and dangerous (look at the transit data). Concerning labor issues, I question whether government can successfully identify “undue exploitation” (apart from violation of contract) and whether all workers would accept that identification — what may be exploitation to one worker may just be a hard day’s work to another.

I could make similar criticisms about other government roles that Kos claims a libertarian government should fill. Moulitsas and others would likely disagree with my claims, on both philosophical and empirical grounds. And their arguments would likely have merit — as do mine. A truly impartial observer would probably conclude that both sides seem to have a point, and that neither side could be declared clearly right or clearly wrong.

And that is why real libertarianism is so valuable, and Kos’s brand (if I understand it correctly) is problematic. True libertarianism — and, I take it, the founding principle of the American experiment — holds that society should maximize individual liberty so that different people can choose for themselves what they believe is right. This freedom is granted out of respect for individuals’ right to self determination, recognition of the variation of individual preferences, and appreciation that many issues cannot be definitively decided by political process, even after considerable philosophic and empirical analysis.

If you believe a certain employer behavior is exploitative, join a union or contract with a labor provider (e.g., Kelly, Manpower) that shares your belief and that negotiates labor conditions with employers. If you believe Social Security is a bad deal and not sustainable, opt out and prepare for retirement on your own — if government would only let you.

Perhaps that latter example provides a compromise between Moulitsas libertarianism and the traditional variety: The Kos libertarians could create whatever government programs they believe are necessary to enhance liberty, but people would be free to opt out of those programs and their costs. Kos could have his strict OSHA regulations so long as I could sign a contract saying I give up those protections. He could even have single-payer health care, so long as doctors, patients, and other health care system participants could freely decide not to participate in or pay for the single-payer system.

So Kos, would that be acceptable? You can have your libertarianism, just so long as I have my liberty.

Remembering Japanese Internment

Over the 4th of July, I headed out West to a family reunion in a very remote part of the U.S.: Minidoka County, Idaho–an apocalyptically stark stretch of mile-high lava rock and sagebrush in the heart of the Snake River basin, unfolding like a moonscape from the base of the Albion mountain range at the Utah-Idaho border.

I’d grown up on my dad’s stories about his Idaho childhood. One story that intrigued was his very early memory of working my grandfather’s fields alongside Italian and German World War II POWs, who were held in a prisoner-of-war camp near Twin Falls, Idaho. POWs were used to remedy a shortage of farmhands in agricultural areas throughout the U.S.

Not long ago, I asked my dad if any World War II Japanese internment camps had operated in the Minidoka area. He wasn’t aware of any. Imagine my surprise then when I learned of this memorial service, held today, for the Minidoka internment camp–one of the larger Japanese internment camps operated during World War II.

Its no surprise my dad–otherwise an encyclopedia of information about southern Idaho–was caught short on this question. Virtually nothing of substance remains to memorialize the camp today, although a more substantial memorial is planned.

Minidoka residents–fond of calling their region the “Magic Valley“–shouldn’t get off so easily. Just as the government loaned Axis POWs to some local farmers, it loaned Japanese-Americans to others. Some 2,300 “Nisei” camp residents worked area sugar beet farms on “agricultural leave” from the Minidoka camp–hard, backbreaking work at a time when local farming was undertaken without modern tractors or modern irrigtation technology. To be sure, the camp residents weren’t technically forced to work, as this bit of outrageously upbeat 1943 government propaganda notes–but the Japanese internees had little other choice of employment.

This shameful episode–part of the darker history of communities throughout the West and a telling example of the worst that can happen when courts abdicate oversight of the political branches during wartime–deserves substantial local recognition in Minidoka and other host communities. For more about the location of internment camps, see here and here.