Public Choice Theory informs us that Obamacare is a bad idea

You will not find defenders of Obamacare (aka ObamaCONcare) evoking Public Choice Theory (PCT).In some instances this is out of ignorance of the ideas contained therein and in other instances a wise, tactical decision was made not to have to face those ideas as they relate to Obamacare.

In a nutshell here is what PCT is all about;it is based on certain views concerning human nature namely:

1)Humans tend to respond to incentives.2)Humans  frequently tend to act in what they believe to be in their own best interests.3)Humans have definite cognitive limitations.

PCT does not claim that people always act on the basis of some cost benefit analysis nor that sometimes folks do not act in ways that seem to be altruistic.

These aspects of human nature apply to businessmen,butchers,bakers and con men but they also apply to elected public officials,politicians,and bureaucrats.Accordingly this second group will from time to  time act- most of time probably- in their own interests and not in some effort to bring about some abstract public good and that politicians just might respond to the incentives of campaign contribution in return for sponsoring some legislative act that benefits some special interest group at the expense of the public at large.

There are two others aspects of PCT worth briefly mentioning.

PCT explains that although private and public actors both respond to incentives (and constraints) the set of incentives and constraints are not the same for the two groups.Secondly, for the PCT analyst the unit of analysis is the individual- not society or the group or the community. Society does not make decisions,individuals do -realizing necessarily that the individual does not make decisions in a vacuum.

James Buchanan and Gordon Tullock are credited with the explication and promulgation of PCT but were not the first nor alone  alone in their efforts .From one point of view, their work restored and re-invigorated views that were part of the common wisdom and discourse of the English speaking inhabitants of the British colonies in the later part of the 18 Th century. For much of the twentieth century journalists,historians and high school civic texts as well as college courses treated governmental action and public officials actions as not being self interested and assumed those acts were done in the public interest and typically carrying out the voters' will. Buchanan and Tullock said lets rethink those assumptions. As Buchanan said it is about politics without romance. Political actors acting in their individual self interest replace the wishful thinking which envisioned benevolent,wise selfless officials carrying out whatever society wanted which they were able to discern with near omnipotent wisdom.

The Founding Fathers realized the dark side of human nature  and were very aware of the risks involved with investing power with the government.The government needed enough power to protect individual rights but the power could be used to restrict liberty as well. The Madisonian project was to devise a system of government that could constrain the power of the government that it needed to have to protect individual liberty.

Obamacare from the PCT perspective is a bad idea in part because it invests  governmental entities with too much power.Further the power is concentrated in a few governmental entities and in regard to their edicts there are few if any avenues of appeal.Think HHS Secretary,IPAB,the IRS and the US Preventive Services Task Force.

The power given to the Secretary of HHS is a prime example.The absurd number of times the statute says "The Secretary [of HHS] shall determine" illustrates the concentration of power in a single politically appointed governmental official and is a dangerous transfer of power from the legislative to the administrative. The corrupt political ends to which a number of those decisions, i.e exempting friends of the administration from certain aspects of the law, serve to illustrate illustrate Acton's axiom of " power corrupts".

And then here is the matter of the IRS.Politicians feign shock and horror regarding the revelation of IRS acting in an illegal and politically motivated way and will hold hearings to investigate. The same thing has happened with previous administrations, both democrat and republican. Does anyone really believe that giving the IRS a major role in the administration of Obamacare is a good idea?

The still revolving door of Health care "reform"- yet another chapter

Dr. Roy Poses writes about the odyssey of Nancy DeParle from the health care industry to the health care legislative reform con job known as ACA and back to the health care business-this time with  a venture capital firm which invests in health care related enterprises. See here for his recent blog commentary.

quoting Poses:

"...Ms DeParle came from roles as a steward of multiple large health care corporations to lead the health care reform efforts of the executive branch.  In that capacity, she helped to create and enact legislation that she would later say created many "new investment opportunities."  Now, as the legislation is going into operation, she has spun over to private equity to take advantage of these opportunities. "

A similar tale can be told in regard to the person Sen. Max Baucus credited as playing a key role in the cooking of the legislative meat of Obamacare. I have commented on  that before. See here.

Once again a well deserved kudo to Dr. Roy Poses for  his tireless efforts to shine as much light as he can on corruption,rent seeking and crony capitalism in the world of health care.

What could possilby go wrong with meta-analysis and guidelines (think pre-op beta blockers)

Epidemiology 101 describes reasons for a correlation, namely :" causation,bias,confounding and chance".But fraud should also be on the list. Reports indicate that fraud played a major role in a Dutch study which in turn determined the outcome of at least one meta-analysis and from that a major recommendation for pre-op beta blockers in non cardiac patients.And now it seems that rather than prevent peri-operative deaths the beta-blockers might have lead to more deaths.

 The European Society of Cardiology issued a strong recommendation for the use of peri-operative use of beta-blockers in 2009. Their analysis that lead to that recommendation was apparently heavily influenced by the DECREASE trial that showed a significant decrease in perioperative heart attacks in the treatment group. On the other hand ,the POISE trails showed that the control group had fewer deaths. When the two were combined and included in the meta-analysis and sprinkled with magic statistical fairy dust benefits were shown to be greater than the risks. When the fraud issue was raised and another Meta-analysis was done excluding the DECREASE data the risks were greater than benefits and more deaths occurred in the treatment arm.

See here for details and for more links.

As tragic as however- many- deaths occurred as a result of these guidelines there is reason for great optimism moving forward. Surely we will not need to worry about this sort of thing happening with the advent and proliferation of Accountable Care Organizations (ACOs) which will be catalyzed by the great crony capitalism victory social justice generating Accountable Care Act.We look forward to have wise "leaders with ideas " leading the way  in good Don Berwicken fashion who will be immune to the multitude of Kahneman-Tversky type cognitive biases to which the hapless individual medical practitioners and their selfish patients are so susceptible.

What is  the big deal here anyway-surely fraud is rare in medical studies.I hope so too but  there are other reasons to be wary of meta-analysis and should sweeping guidelines be based on meta-analysis that are driven by one study. The x-files Aent Mulner believed the "truth is out there somewhere"-maybe  but it is elusive and premature conclusions that are magnified by being enshrined in guidelines-particularly those that fortified in a P4P setting-can do more than a little harm.When the wisdom of the day is 180 degrees from the wisdom yesterday you can hear the plaintiff attorney asking :"Doctor, were you wrong then or are you wrong now ?"

The perfect system of medical compensation is not an option

Quoting the increasingly insightful Arnold Kling;

"Keep in mind that there is no perfect system for compensating doctors. For example, if you pay them a fixed amount of money per patient, then their incentive is to see a lot of healthy patients and avoid the sick ones. If you pay them a fixed salary, their incentive is to work short hours. If you pay them for “quality care,” that means that a central bureaucracy, comparable to IPAB, has to define the meaning of quality."    

 and I add "folks will treat to the test" and the quality measure will lose whatever value it had as a measure.

So as usual it is "people respond to incentives" all the way down.


Currently the medical progressive elite and various rent seeking special interests seem to control the narrative and hence the anti fee-for- service propaganda blitz.