Tag: james c. robinson

Holman Jenkins: ObamaCare Is Part of the Insanity, Not Its Cure

I’m a week late on this, but Holman Jenkins has an excellent discussion of why health care costs and pricing (not the same thing!) are insane, and why ObamaCare will only make it worse:

Duke University’s Clark Havighurst [wrote] a brilliant 2002 article that describes the regulatory, legal and tax subsidies that deprive consumers of both the incentive and opportunity to demand value from medical providers. Americans end up with a “Hobson’s choice: either coverage for ‘Cadillac’ care or no health coverage at all.”

“The market failure most responsible for economic inefficiency in the health-care sector is not consumers’ ignorance about the quality of care,” Mr. Havighurst writes, “but rather their ignorance of the cost of care, which ensures that neither the choices they make in the marketplace nor the opinions they express in the political process reveal their true preferences.”

You might turn next to an equally fabulous 2001 article by Berkeley economist James C. Robinson, who shows how the “pernicious” doctrine that health care is different—that consumers must shut up, do as they’re told and be prepared to write a blank check—is used to “justify every inefficiency, idiosyncrasy, and interest-serving institution in the health care industry.”

Hospitals, insurers and other institutions involved in health care may battle over available dollars, but they also share an interest in increasing the nation’s resources being diverted into health care—which is exactly what happens when costs are hidden from those who pay them.

Put aside whether President Obama could have pushed real reform if he wanted to. ObamaCare as it emerged from Congress fulfills the insight that any highly regulated system ends up benefiting those with influence, i.e., health-care providers and high-end customers, not those of modest means.

What are ObamaCare’s mandates on individuals and employers except an attempt to force back into the insurance market those who have been priced out by previous “reforms” so their money can be used to prop up a system of gold-plated coverage that mostly benefits those in the highest tax brackets? What are ObamaCare’s minimum coverage standards except a requirement that these customers buy more costly coverage than they would choose for themselves so their money can be used for somebody else?

I include a lengthy excerpt from Robinson’s excellent article in my chapter for the Encyclopedia of Libertarianism.

Robinson on Arrow and Szasz

With the passing of Cato adjunct scholar Thomas Szasz, it might be worthwhile to share this excerpt from Berkeley economist James C. Robinson’s contribution to a retrospective on Nobel laureate economist Kenneth Arrow’s highly influential 1963 article, “Uncertainty and the Welfare Economics of Medical Care.”

The irony of “Uncertainty and the Welfare Economics of Medical Care” is that it brought to articulation a view of professionalism and the physician-patient relationship on the very eve of a massive and largely successful assault on that view and the social relationships it embodied. The decade of Arrow’s article produced a generation of now-classic critiques of the principle that patients must rely on trust in the benevolence of physicians for understanding, treatment, and personal coping with their diseases. Medical sociology turned its back on Talcott Parsons (1962) and savaged professional dominance through the writings of Elliot Freidson and his followers. The Boston Women’s Health Book Collective denounced the paternalism and status inequalities inherent in the conventional clinical relationship, founding what became known as the women’s health movement. Thomas Szasz’s denunciation of psychiatry as pseudoscience and a threat to personal freedom launched the mental patients’ rights movement, building on exposés of coercive institutions that embodied the ultimate in asymmetric information between physician and patient. Ivan Illich carried the Szasz framework to the whole of medicine, characterizing medical professionalism as the expropriation of health from the people, the deliberate creation of unequal access to information.

“Uncertainty and the Welfare Economics of Medical Care” was and remains an important article, a spur to thinking and an identifiable starting point for the modern moment in health economics. Its influence pales, however, in comparison to the rich and radical debates spurred by Professional Dominance (Freidson 1970), Our Bodies Ourselves (BWHBC 1969), The Myth of Mental Illness (Szasz 1961), Medical Nemesis (Illich 1976), and the other calls for a new social and clinical contract, a relationship of equals between patients and physicians, the people and the profession. Arrow’s article experienced the fate of many seminal writings, to describe as the present a world that already was past.