Map of life expectancy at birth from Global Education Project.

Wednesday, June 24, 2009

It's actually difficult . . .

to shoot fish in a barrel, or at least I would think it is. I haven't actually tried it. Anyway, a reader implores me to once again attack the ridiculous John Stossel for engaging in the Argument from Authority:

Washington promises to control health care spending, it makes me look back at what the late Nobel Prize winner Milton Friedman wrote in 2001:

“Two simple observations are key to explaining both the high level of spending on medical care and the dissatisfaction with that spending. The first is that most payments to physicians or hospitals or other caregivers for medical care are made not by the patient but by a third party—an insurance company or employer or governmental body. The second is that nobody spends somebody else’s money as wisely or as frugally as he spends his own.”

Consumers spending their own money holds costs down in every other sector of the economy: Consumers obsess about prices; providers fight to earn their business. Trying to duplicate this process through a government board of experts is pointless.

Stossel is perpetually unencumbered by the thought process, and by those stupid things, facts. In the United States consumers already face the highest out of pocket costs for health care of any of the wealthy countries, with the exception of Switzerland, and what is more, Americans' out of pocket costs have been sharply increasing recently, even as total spending on medical services continues its relentless rise. And yet, as we have seen, we still get the worst results, even though we spend the most.

Let me give you a tip: if the conclusions of an argument are false, then either its premises are false, or there is something wrong with its logic. But Stossel is an ideologue. He believes things, not because they are true, but because they correspond to his faith, the Church of Friedman. Let's look at the Holy One's second premise, "nobody spends somebody else’s money as wisely or as frugally as he spends his own." Is this actually true?

We all know of people who have spent money unwisely and profligately, who might well have benefited from better informed or more prudent advice. And what do corporate managers do? They spend the owners' money. They are paid to do so wisely and frugally. If they succeed, as they often do, the corporation is profitable. Would you expect the shareholders to make these decisions better?

Hmm. Do you trust yourself to spend your health care dollar wisely and frugally? Suppose you have chest pain, and you go to the hospital, and the doctors want to do an angiogram. It turns out there's a $250 co-pay. You might decide that you can't afford it, and say no thanks. Have you been wise and/or frugal? Who the hell knows? Maybe you have a blocked coronary artery and you're going to go home and die, or survive your heart attack and come back and cost 200 times as much - and since John Stossel wants much of that to come out of your own pocket, it's going to bankrupt you and you'll lose your house and your kids will have to drop out of college. On the other hand, maybe you did just have indigestion and it really would have been a waste of money. But who is the best judge of those odds? You or the doctor? The problem here is not your incentive to save money, it's the nature of the doctor's incentives, since it's actually the doctor who at least putatively has the expertise to act wisely and frugally in this situation, which you entirely lack.

This argument is, in short, ridiculous on every possible ground. Its essential premise is false. It makes no sense when you subject it to a simple thought experiment. Its conclusion is demonstrably false, all you need to do is glance quickly at readily available information about the real world.

So why do we keep hearing it? Is John Stossel really that stupid? Or is he a con man? I vote for option number 2.

Update: And while we're on the subject of lies and the lying wingnuts who tell them, let's get reacquainted with our friend Betsy McCaughey. Again, I vote for option 2.


roger said...

i would conflate the choices..he is a stupid con man.

sure thing john..i am as well informed about buying a new refrigerator as i am about diagnosis and treatment for that strange pain in my leg.

do we even have to wonder about his health care?

Cervantes said...

Con men generally come to believe their schtick. It doesn't necessarily mean they're stupid. At least that's how I see it.