Wednesday, September 19, 2007

Policy side effects:thinking beyond Stage One

DB 's MEDICAL RANTS recent comments about the need to consider the potential "side effects" of health policy decisions stimulated me to revisit Thomas Sowell's Applied Economics-Thinking beyond Stage One. Economics seems to be much about effects and side effects.

In this book Dr.Sowell examines economic policies in terms of their "later repercussions" not just their immediate effects of their apparent aim or their "hoped-for" result.For Sowell, a program's "unintended consequences" are often foreseeable if the processes involved were considered in terms of the incentives and constraints and not in terms of the desirability of the goals. Rent control brings abut housing shortages,black markets and poor quality housing not the
readily available, affordable housing promised for the poor.The caps on earning found in some Canadian provinces predictably brings about shortages and long waiting lines as described by the former Canadian, The Physician Executive. Tendency to cherry pick patients and treat the chart and emphasize quality measures while ignoring other important features of patient care were clearly foreseeable consequences to P4P.

The seasoned physician knows he may have to wait a while to learn about the problems that may occur with use of a new drug (i.e. those side effects not evident in the randomized trials that are done for drug approval). However,the shortages and other problems that are well recognized with socialized systems such as Canada and Great Britain are things that should not surprise us when they appear if similar systems were put into place in this country.

With relatively uncommon,non-acute side effects we often just have to wait and see if in the long term a new drug will cause harm while with certain policy moves using knowledge of human nature, history of how things have worked in the past and analyzing the relevant incentives and constraints we may well know what to expect.

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