Berwick’s view of rationing is, in fact, the opposite of [Paul]  Ryan’s. The latter believes it should be driven by the informed decisions of consumers in a free market, while our new CMS head has summed up his contempt for the intelligence of patients as follows: “I cannot believe that the individual health care consumer can enforce through choice the proper configurations of a system as massive and complex as health care. That is for leaders to do.”

The hidden premise here is that if doctors, patients, and insurers are free to contract with each other as they please, they won’t do what Donald Berwick wants.  To authoritarians like Berwick, we’re all pawns to be used by the “leaders.”  As economist Frederic Bastiat wrote in The Law (1850):

Socialists look upon people as raw material to be formed into social combinations. This is so true that, if by chance, the socialists have any doubts about the success of these combinations, they will demand that a small portion of mankind be set aside to experiment upon.

Berwick’s comment also reveals ignorance about how free markets work.  No single person, or group of “leaders” knows how to configure a health care system. They do not even know how to manufacture a simple wooden pencil. See Leonard Read’s classic I Pencil. Or watch Milton Friedman explain:

Progressives are forever longing to replace the governance of people by the administration of things. Because they are entirely public-spirited, progressives volunteer to be the administrators, and to be as disinterested as the dickens. …

Professor Obama, who will seek reelection on the 100th anniversary of Wilson’s 1912 election, understands, which makes him melancholy. Speaking to Katie Couric on Feb. 7, Obama said:

“I would have loved nothing better than to simply come up with some very elegant, academically approved approach to health care, and didn’t have any kinds of legislative fingerprints on it, and just go ahead and have that passed. But that’s not how it works in our democracy. Unfortunately, what we end up having to do is to do a lot of negotiations with a lot of different people.”

Note his aesthetic criterion of elegance, by which he probably means sublime complexity. During the yearlong health-care debate, Republicans such as Sen. Lamar Alexander of Tennessee have consistently cautioned against the conceit that government is good at “comprehensive” solutions to the complex problems of a continental nation.

F.A. Hayek put it well:

The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.

Frederic Bastiat is more biting. He wrote in The Law (1850):

Socialists look upon people as raw material to be formed into social combinations. This is so true that, if by chance, the socialists have any doubts about the success of these combinations, they will demand that a small portion of mankind be set aside to experiment upon.

The popular idea of trying all systems is well known. And one socialist leader has been known seriously to demand that the Constituent Assembly give him a small district with all its inhabitants, to try his experiments upon.

In the same manner, an inventor makes a model before he constructs the full-sized machine; the chemist wastes some chemicals—the farmer wastes some seeds and land—to try out an idea.

But what a difference there is between the gardener and his trees, between the inventor and his machine, between the chemist and his elements, between the farmer and his seeds! And in all sincerity, the socialist thinks that there is the same difference between him and mankind!

It is no wonder that the writers of the nineteenth century look upon society as an artificial creation of the legislator’s genius. This idea—the fruit of classical education—has taken possession of all the intellectuals and famous writers of our country. To these intellectuals and writers, the relationship between persons and the legislator appears to be the same as the relationship between the clay and the potter.

(Will’s article via Lyndsi Thomas)

The bill summary states:

For purposes of workers’ compensation, property and casualty, and health insurance, requires any internal review of claims, independent medical examination, or utilization review to be conducted by a Colorado-licensed health care professional who is in good standing and has appropriate expertise in the same or similar specialties as would typically manage the case being reviewed. Requires written denials of benefits to identify the health care professional on whose opinion the denial is based.

No one wants their own insurance claimed denied. After all, if you have insurance, you want it to cover as much as possible.  Hence the political appeal of this bill.  Yet, this bill will surely increase premiums:

1. It adds time and resources to processing.
2. Insurers will have to pay health care professionals for their time
3. Health care professionals probably won’t feel great about their name being associated with a denial of benefits, so they will charge a high fee.
4. Insurance companies might deny fewer claims.  This sounds good on the surface, but in the end it increases premiums.

Again, a case of what is seen and what is not unseen. Also, a case of diffuse costs and concentrated benefits. Everyone will pay the cost of higher premiums, but few will benefit from (if it occurs) not having a claim denied.  (Maybe I’m missing an unintended consequence that somehow insurers will deny more claims…)

The question is: who decides?  In a free market for medical insurance, you’d be able to choose what plan is best for you.  Insurers would be able to decide what products to sell, though of course they’d have to satisfy customers (rather than politicians) to stay in business.

Maybe you want a low-deductible plan that is effectively pre-paid health care.  But then you might have claims denied.  Or maybe you have a high-deductible plan and (conservatively) invest the premium savings  self-insurem, which can pay for care that is not covered.  (Today you can do that with a tax free Health Savings Account, but in a free-market the tax system would be neutral to how you spend your money…)  Or maybe you’d want to pay a physician a flat fee for services, and self-insure the rest. Or any combination of these.

But as it is, the U.S. already has socialized medicine, and politicians make the choice. Not you.

*       *       *

Linguist George Lakoff wrote a book subtitled “The Essential Guide for Progressives” where he discusses the importance of metaphors¹ in framing political debates. As he explains in another book:

I have argued that perhaps the most important part of any real moral system is the system of metaphors for morality and the priorities given to particular metaphors. If I am correct, then vital political reasoning is done using those metaphors—and usually done unconsciously. This means that the empirical study of metaphorical thought must be given its appropriate place in ethics and moral theory…

With this in mind, consider the metaphor Barack Obama has used in support of single-payer health care, a type of socialized medicine.  At a town hall meeting in New Mexico, Senator Obama said:

If I were designing a system from scratch, I would probably go ahead with a single-payer system. 

He has used the phrase “from scratch” before, so there’s a good chance that he means it literally.  People may speak of writing legislation or policy ”from scratch,” such as a tax policy or patent law.”   But this is different.  He’s talking about a significant sector of our economy, which refers to trade between people: patients, physicians, pharmacists, insurers, scientists, engineers, entrepreneurs, etc.  The “system” that Obama wants to “design from scratch” ingredients are people’s lives.

Like many advocates of government-run industries and charities, Barack Obama sees his relationship as a politician to citizens to be analogous to that of a cook (the “designer”) with ingredients.  We’re not individuals with rights.  We’re ingredients in his recipe.

As economist Frederic Bastiat wrote in The Law  (1850):

Socialists look upon people as raw material to be formed into social combinations. This is so true that, if by chance, the socialists have any doubts about the success of these combinations, they will demand that a small portion of mankind be set aside to experiment upon. The popular idea of trying all systems is well known. And one socialist leader has been known seriously to demand that the Constituent Assembly give him a small district with all its inhabitants, to try his experiments upon.

In the same manner, an inventor makes a model before he constructs the full-sized machine; the chemist wastes some chemicals—the farmer wastes some seeds and land—to try out an idea.

But what a difference there is between the gardener and his trees, between the inventor and his machine, between the chemist and his elements, between the farmer and his seeds! And in all sincerity, the socialist thinks that there is the same difference between him and mankind!

It is no wonder that the writers of the nineteenth century look upon society as an artificial creation of the legislator’s genius. This idea—the fruit of classical education—has taken possession of all the intellectuals and famous writers of our country. To these intellectuals and writers, the relationship between persons and the legislator appears to be the same as the relationship between the clay and the potter.

Obama’s use of metaphor reveals how he, perhaps unconsciously, sees the relationship between American citizens and politicians: as ingredients to be used by politicians acting as chefs.  With such an attitude, it’s no surprise he has little respect for patients’ rights to exercise their own judgement in procuring health care and health insurance for themselves and family, or for physicians’ rights to do business as they see fit.

*       *       *

 ¹For a fine critique of Lakoff’s view on metaphors and politics by a fellow linguist, see Steven Pinker’s article here.

“[Americans] act more and more like a people sharing a geography. You don’t have the ethos that goes with being a nation. In Canada, in Taiwan, they view health care as the cement that makes a nation out of a group of people, rich or poor, when they are sick.

The other thing we need to recover in this country is a sense of shame.

I can think of several explanations: 

One is that Reinhardt thinks it is moral to force other people to do what is right by making taxpayers fund a government-run charity.  I address that here.   Whether these programs are effective is another story, as many people die waiting for medical care under single-payer. 

Or, he could be like the socialists the economist Frederic Bastiat mentions in The Law (1850):

Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all.

We disapprove of state education. Then the socialists say that we are opposed to any education. We object to a state religion. Then the socialists say that we want no religion at all. We object to a state-enforced equality. Then they say that we are against equality. And so on, and so on. It is as if the socialists were to accuse us of not wanting persons to eat because we do not want the state to raise grain.

But given the first part of Reinhardt’s quote, I think another explanation is best.  OK, it’s not completely independent from the above, but it’s a useful concept. In short, Reinhardt is in love.

Reinhardt has eloquently expressed what George Mason University economics professor Dan Klein has called The People’s Romance:

If government intervention creates an official and common frame of reference, a set of cultural focal points, a sense of togetherness and common experience, then almost any form of government intervention can help to “make us Americans.” If people see government activism as a singular way of binding society together, then they may favor any particular government intervention virtually for its own sake—whether it be government intervention in schooling, urban transit, postal services, Social Security, or anything else—because they love the way in which it makes them American. …

When we think of the action of the primitive band, the family, or the organization, we think of the whole acting as an integrated entity. We may fail to consider that the posited entity consists of constitutive elements or members. We may neglect to think about how each member experiences his membership in the entity and achieves with the other members the consonance in action that permits us to say that the entity acts in this or that way. …

“Don’t Worry About the Government”
(Yes, I know the video and audio are out of sync.)

When people think of society at large as the group to which they belong—when they think of having “citizenship,” whether it be in a town, a county, or a country—the logic of coordination leads directly to government as the focal point. Unparalleled in power, permanence, and pervasiveness, the government is prominent, conspicuous, unique, focal. Moreover, as people look to government as the focal point, it increasingly draws them into thinking of its dominion as setting the boundaries that define the group. The government provides and validates the focal points in the sentiment game, and, in the first instance, it arranges and validates the games that citizens can play.

Government creates common, effectively permanent institutions, such as the streets and roads, utility grids, the postal service, and the school system. In doing so, it determines and enforces the setting for an encompassing shared experience—or at least the myth of such experience. The business of politics creates an unfolding series of battles and dramas whose outcomes few can dismiss as unimportant. National and international news media invite citizens to envision themselves as part of an encompassing coordination of sentiments—whether the focal point is election-day results, the latest effort in the war on drugs, or emergency relief to hurricane victims—and encourage a corresponding regard for the state as a romantic force. I call the yearning for encompassing coordination of sentiment The People’s Romance (henceforth TPR). …

TPR helps us to understand how authoritarians and totalitarians think. If TPR is a principal value, with each person’s well-being thought to depend on everyone else’s proper participation, then it authorizes a kind of joint, though not necessarily absolute, ownership of everyone by everyone, which means, of course, by the government. One person’s conspicuous opting out of the romance really does damage the others’ interests. …

TPR lives off coercion—which not only serves as a means of clamping down on discoordination, but also gives context for the sentiment coordination to be achieved. The government inculcates the notion of “The People” chiefly by coercion.

I first read this article in April (mentioned in an EconTalk podcast), and it resonated with me while riding the bus back from Denver after a legislative shadowing day sponsored by the Leadership Program of the Rockies.  I saw “the sausage being made,” so to speak.  Because I was shadowing Senator Schultheiss, I sat in on the Senate Health and Human Services committee’s discussion of Senate Bill 217, where I also made an impromptu testimony.

So after a day of ceremonial gavel-banging and Robert’s rules of order, I took the bus back to Boulder.  When it passed Coor’s Field, I saw people arriving in the stands for a Rockies Game.  I found myself thinking: “I could be at that game. … but I’m not, I’m on the bus.”  The game.  If you want to see the Rockies play live, you go to the game, and share the experience with everyone else.  If you want to get from Denver to Boulder for $4, you take the bus, just like everyone else.Common frame of reference, togetherness, a common experience.  I really felt it.  And it scared me.  For a brief moment, The People’s Romance posessed by body.  This is what people feel, without articulating it, and is in part why they support government-run schools, health care, you name it.  For me, the flood of emotion culminated with the Talking Heads song “Don’t Worry About the Government” (lyrics) playing in my head.

An intriguing part of Sunday’s New York Times article about medical care in the Czech Republic was a quote by Harvard’s Marc J. Roberts, included in the excerpt below:

But many Czechs see it as a matter of principle that health care should be free … “The only analogy I can think of in our political culture is primary schools,” said Marc J. Roberts, a professor of political economy at the Harvard School of Public Health who has worked in Central Europe. “Most people in the United States believe that primary education should be free and open to all and that it shouldn’t be subject to market principles.”

I’m sorry to say that many people probably do think this way. But isn’t this like asking government to run energy policy because something as important as generating energy should not be “subject to the laws of physics”?

“Market principles” is shorthand for economic incentives, and people always respond to economic incentives, regardless of to what degree politicians impose their will in a specific market. Such interference merely changes the incentive structure, and the way people respond to these new politically-imposed (and forcibly) imposed incentives explains why government programs achieve unintended consequences antithetical to their purported goals.

The Concise Encyclopedia of Economics has a good entry on unintended consequences . And then of course there is the classic essay by Frédéric Bastiat, “That Which is Seen, and That Which is Not Seen.” The Wikipedia entry on the broken window fallacy provides a brief introduction. The second chapter of Henry Hazlitt’s classic Economics in One Lesson also does the job. The book is on-line here, and browsing the table of contents is well worth it if you’re not familiar with the book.

See also Public Choice Theory.