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"All government regulations face a persistent problem. By their very nature they are trying to keep people from acting in their own self-interest."

No. Some regulation is to avoid shared commons problems and externalities like pollution. Maybe these fit his description but in health care another reason is especially common. People want to improve their health but don't have sufficient knowledge to get there. Regulation helps identify drugs, treatments, facilities, and experts most likely to help and not harm. It is to avoid what happened to Steve Jobs when he got cancer. It is to avoid thalidomide.

Obviously, not all regulation is perfectly successful, some not at all, but much of our government regulation is NOT trying to do as John Goodman says.

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Sorry, I don't get your argument here. Regulation did not avoid birth defects from thalidomide in Europe and Canada, and as far as I can tell, the only reason it wasn't approved for morning sickness in the US was because of the heroic obstinance of a single woman physician at the FDA. Also, what exactly are you referring to when you reference what happened to Steve Jobs when he got cancer, and how could regulation have avoided whatever that was? I would have thought he had access to the best medical care money could buy (as I recall, the story was that he chose to delay having the surgery recommended by medical specialists, but that had nothing to do with government regulations).

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Do you really not see the point or are you just trying to be a jerk?

I said one intent of regulation is to avoid situations like thalidomide. I didn't say whether it did. But you understand the intent, right?

Likewise, another intent is to dissuade people from doing what Jobs did. Does it always work? Clearly not.

Are the approved options always the best? IDK but that's not the point.Go back and read my first quote again. Goodman says government is trying to keep people from acting in their own self interest. Successful or not, that was not the intent in these and many other cases.

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To paraphrase the likes of dissident thinkers like Auron Macintyre, the purpose of a system is what it actually does, not what it supposedly intends to do. In any event, I question whether the FDA would have made the correct decision on thalidomide today. The Biden administration is seeking to have ozempic, the product of a Danish drug company, approved for treating obesity in children as young as 12, while it is not approved for such use in Europe. As for Jobs, if his own medical team (who I believe were affiliated with Stanford) couldn't persuade him to undergo surgery as soon as possible, I doubt that any government regulations could have done so. Perhaps you want government regulations to compel people to undergo treatments that are supposedly in their self-interest, which I object to. Jobs was an idiosyncratic thinker, a self-invented nonconformist, and the same personality characteristics that led him to delay surgery were probably also a key factor in making him a great entrepreneur. The slogan 'think different' was how Jobs viewed himself. Besides, it is not at all clear that having surgery earlier would have resulted in a different outcome. The cancer may have already spread to his liver and other organs at the time of diagnosis. The sad fact is that cancer anywhere in the digestive system is usually a death sentence.

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Aug 26Edited

Auron might be right about purpose but Goodman commented on what government was trying to do, not what it actually does.

Your hypothetical about if thalidomide were presented for approval today and the approval of Ozempic for weight loss in 12 year olds might be true failures but that in no way conflicts with anything I said.

What Jobs did is a little off-topic since no regulation is intended to prevent it but most medical treatments are "approved," insurance tends to mostly cover just the approved ones, and people tend to get what is covered by insurance.

Jobs had a rare type of pancreatic cancer that is slow growing and not very deadly, especially if treated early. I don't know how much a nine month delay affected his outcome but it surely hurt his chances.

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Re "over-consumers" - my elderly parents are over-consumers - and my father a gleeful over-consumer - of medical services. I won't get into tedious details, but this over-consumption, at least in their naive hands, has definitely not always been in their self-interest.

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For me personally, the incentive to over-consume medical services created by health insurance is not sufficient to overcome my aversion to dealing with doctors and the health care system, and my suspicion that doctors have an incentive to sell me services that I don't need, or that may be ineffective and/or have adverse side effects. I have declined to consume recommended treatments more than once, including allergy shots, HRT, and bone density testing (in the latter case, because I wouldn't take the available pharmaceutical treatments no matter how the tests came out). Perhaps the over-consumption of medical services by the elderly reflects the hope that such services will prolong their lives, but my motto is there is no cure for old age.

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There is some risk adjustment in the exchanges, but it is highly imperfect. There is none in the employer market so in both systems, the incentive is to attract the healthy and avoid the sick. That is why it is common for primary care to be almost free, but there are huge out-of-pocket costs for hospitalization.

Medicare Advantage plans do have an incentive to over code. But so do doctors in traditional Medicare. Federal investigations show that there are more error in the latter than in the former.

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At the end of the day, any risk score model is going to be something lazily implemented based on imperfect and out of date data by disinterested employees at CMS. I do not accuse them of purposely trying to do their jobs badly, they just lack the same incentives as their adversaries* and are hamstrung by political constraints of various kinds.

*By contrast, spreadsheet jockeys of the providers and insurers have huge incentives to figure out how to game the system.

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I see three categories of medical care. Four if you count hospice.

Maintenance

Catastrophic

Long Term Conditions

Maintenance is routine care. Checkups, immunizations, minor illnesses and injuries. Birth control.

Catastrophic is anything unexpected with a high price tag. Major injuries, major illnesses.

Long Term Conditions are anything that if left untreated will kill you quickly but which have no cure. Diabetes is an example.

These three categories require different funding methods.

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Good post

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Yeah. I always told my students that any law, regulation, policy, system, whatever had at least one loophole (and frequently many) and that efforts to find and close loopholes using laws, regulations, new systems. new policies, etc merely opened up new loopholes, and didn't always close old loopholes.

Add, then, the fact that individuals or small groups finding and uasing loopholes for their own gains will ALWAYS pay off better than finding and closing loopholes will.

Gaming the system may be the single greatest indicator of humanity. Without it we wouldn't be flying or doing most of the other things we've done since we, more or less, ceased being a species of scavengers. (And not especially good ones, either.)

We are defined by our ability to game the system.

Efforts to stop gaming of the health care 'system' merely increase the potential loopholes and add to the gaming. Decide what level of gaming or fraud you are willing to accept as "part of the game" and then institute minimal rules and punishments to try to keep it there.

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While it's true doctors have an incentive to overprescribe for diabetes, they rarely have to; we too often don't follow their advice to reduce medication. (Guilty.)

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It seems to me that a system of multiple insurers competing for clients that purchase coverage with tax credits would at least inject one party in the chain with an incentive to do cost benefit on the results. And it would also remove one disincentive for employing low wage workers.

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That's Medicare Advantage.

The size of the tax credit it based on the risk score*. Companies analyze whose risk scores are profitable and whose aren't relative to likely claims, and try to design their products to attract/repel accordingly. To the extent that risk scores can be increased (by paying doctors to code more) they will do this as well. Some whole clinics are basically risk coding farms.

On net this has led Medicare Advantage to be more expensive then Traditional Medicare.

*Absent Risk Scores you would only want to attract healthy people, which is how it started out and MA was accused of skimming the healthy from the Medicare pool (sales offices on the second floor flight of stairs so fats gave up).

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Great article!!

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