The problem with the American healthcare system is entropy, Devin Finbarr says — but he’s talking about much more than health care:
Three forces shape the actions of American government: populism, factional interests, and institutional expertise. Populism is generally Republican: Sarah Palin, talk radio, Ron Paul, mega churches and tea parties. Institutional expertise is generally Democratic: civil servants, universities, NPR, the NY Times, MSM, the Hill staff, and the original Brain Trust. Factional interests are cross-partisian: the AMA, the AARP, nurse unions, big insurance companies, Wall St. banks, etc.
Let’s examine how each force will react to Plan Finbarr.
We’ll start with the institutional experts. The selection process for any official agency ( universities, civil service, NY Times) rewards thinkers who stay close to progressive thinking. People who believe in changing the world via markets do a startup or go into business. People who believe that policy should be managed by a caste of experts go into the official institutions. These people tend to select people who think like themselves as successors. Thus progressive/institutional thinkers rarely generate creative, market oriented solutions as Plan Finbarr. Instead too many official experts busy themselves with proving that the free market cannot work and singing the glories of a European style plan (while somehow leaving out market oriented Singapore).
Plan Finbarr is a simple plan. It has few roles for commissions, agencies, departments, etc. It aims to set a few basic rules that align incentives properly, and then takes a hands off approach. Plan Finbarr wipes out Medicare and Medicaid as they exist. These are deeply rooted Washington programs. Bureaucracies do not commit hari kari. Any simplification or consolidation eliminates both jobs and power for official experts. All the permanent Washington staff operate in a world where these agencies are taken for granted. To abolish them would be unthinkable.
The “populist” forces are either dumb, fickle, impatient, or both. Or at least the people who make noises around election time are both. The populists are the ones uttering phrases like the now famous “I don’t want government involved with my Medicare”. In general, Plan Finbarr will be a huge benefit to the people. The silent majority — not the experts or the interests — are the main constituents and beneficiaries of the program. But the problem is that the wrenching change happens first, and the benefits only come later. Some, especially seniors, will lose out at the beginning (after the payments are cut, but before the costs have fallen). Mishaps will happen in transition. Those mishaps will be exploited by any partisan opponent. The benefits will only be obvious five or ten years later. But by that time, the people who created the plan will have been voted out of office.
Every so often the popular web site Facebook.com dramatically changes its interface. The moment it comes out, people hate it. For weeks they gripe and moan. The facebook.com management assumes the air of Frederick the Great and says, “They are to say what they please, and I am to do what I please.” With time the users grow used to it, and enjoy it more than ever. Political decision making cannot operate the same way. The Congressman who votes for Plan Finbarr will likely not make it past the next midterm.
Finally, we get to the factional interests. Any successful plan to reform healthcare by definition will reduce costs. But every cost is another person’s income. Plan Finbarr aims to cut healthcare costs by half. The healthcare industry will lose out over $700 billion a year. Obviously, they will not be happy. The insurance companies, doctor’s association, nurses unions, pharmaceuticals, big city hospitals will all join forces to fight the plan to the death. They will spread FUD (“Plan Finbarr allows tax payer money to be spent on witch doctors!”), spam Congressmen with issue papers, and threaten to throw their vote as a block to eject any politician who supports the plan. Some Congressmen will break out of fear. Others will break because the lobbyists convince him. In American politics, the concentrated interest always defeats the general interest. The concentrated always knows what’s at stake. The general interest is disorganized and deceived.
Neither the institutions nor the factions are malevolent or stupid. The experts do not wear hooded black robes and jealously guard their power. Rather there is a selection effect within each agency that rewards people who believe in the mission of that agency. The experts would all sincerely believe that Plan Finbarr would cut essential agencies and lead to ruin. Likewise, the factions do not cackle and laugh as they count the coins they rob from the American people. Rather they simply view it as their job to represent their own constituents in Congress. They believe that if all sides represent themselves, what comes out is a reasonably acceptable balance.
Entropy is the Enemy
There is one commonality among all three forces. All oppose entropy reducing changes. The institutional experts oppose entropy-reduction because it would require cutting jobs and consolidating power. The populists oppose it because the downsides of change hurt more than the upside in the short run. The factions oppose it because it will cost them money.
The Obama plan is all entropy increasing — it adds another commission, more money, and more regulations. Virtually every proposal, from either the right or left, that has ever gotten anywhere in Congress has increased entropy. The key difference between the American system and the European systems is not that the European system is government run and the American system is a “free market”. The difference is that the American system is far older and has more entropy. With every incremental reform, entropy increases, the system becomes more complex, the layer of legislative gray goo grows thicker. The ratchet never turns in reverse.
In 21st century American policy, only one final question matters. How can entropy be reversed?
This is depressing beyond words.
It’s depressing, ’cause it’s true.
Strongly agree. The age of the organisational structure is probably more important than its overall form.
Compare my comments on the British health system and entropy.
I had a co-worker a decade ago who came from China — before everyone agreed that China was the next big thing — and he would say things like this: “China is a very old country. When America is as old as China, it will be just like China.”
In fact, I cited that piece on public service efficiency when I found it last year. Insightful.