The Government as an Intervention

Social workers are taught with a pretty useful framework of "interventions" to solve problems. On the micro-scale, these can include clinical interventions, such as CBT therapy, or social service interventions, such as completion of a housing voucher. On the exo- level, interventions are normally thought of as programs that use private or public funds to address a larger social problem. For instance, housing voucher programs for the homeless or underhoused.

This brings me to a relatively cool article from the Washington Post Fact-Checker column today about Ron Paul's claim of the poor and elderly not being denied care before Medicaid and Medicare were enacted. While I am tempted to nitpick the article's conclusions and its exclusion of Medicaid data entirely (fuckers!), I'm more interested by the author actually critically analyzing the effectiveness of private versus public assistance to those in need. Most conversations in this realm fall victim to what Gillespie and Welch call "existence bias." Existence bias is a cognitive bias in which people who have always known something to exist find it difficult to imagine a world without it. In reforming social support programs, this is a fundamental bias.

Paul actually gets at another bias, though not a cognitive one so much as a political one. Because of conservative demagoguing of poverty issues for decades, most people assume that people who want to reform the system are only trying to pinch money from those who need it the most. Part and parcel with that is the assumption that if programs were altered or cut, there would be mass suffering followed by a social-Darwinian extinction. In actuality, there is a strong argument to be made that the policies of those who want to cut those programs would benefit the beneficiaries (and healthcare workers!!) greatly.

Getting back to existence bias, it's wonderful to see a major paper actually engage in researching the merits of public assistance versus private funds. This is a direct benefit of Paul's campaign, and it's a conversation that's long overdue. The article eschews a discussion of Medicaid data, but does an okay job of explicating some of the arguments against Medicare for seniors. First, it admits that few seniors were turned away from doctors and that charitable giving was healthy and alive. Unfortunately, it makes an oddly blatant error in assuming that if Medicare were unavailable, seniors would not have health insurance. For most seniors--those in the middle and upper classes--if Medicare were not available, it is likely they would be able to afford health insurance and that a free market would pool risk better than a universal, government-run system. This would only leave the poor seniors, which I believe, are the only moral beneficiaries of government assistance (though I would rather private aid).

The article paints a picture of a system prior to Medicare where there was great need for assistance to seniors, but one where a system of charitable aid and gratis care did a good job of addressing that need. What the article fails to mention (and rightly, it's a small article) is that not only were those needs taken care of, but the decisions for care were made by those very close to the patient. A senior citizen, pre-Medicare, comes into a doctor's office and needs surgery but cannot pay, the doctor or the hospital itself will shoulder the cost. A mutual-aid or charity may help defray those costs. Regardless, the decisions affecting whether our senior citizen gets the operation they need is made by the doctor treating her and his direct administrators.

Let's take that same senior and fast-forward her to today. Her care is shouldered by each and every person in this country through taxation. The decisions for whether or not she gets that particular surgery (let's say it is an experimental surgery or may use a new instrument or technique) is made in Washington and not by the doctor or his administrators. Instead of being a person in care, she becomes an input into a much larger system. She must choose from a limited list of doctors and hospitals who will accept the paltry payments of Medicare, in addition to her possibly rationed care. If she requires aftercare and follow-up, those are much more likely to be rationed, as well. The cost of the surgery, her stay at the hospital, and doctor's fees are determined by Medicare--not by her doctor or the hospital. The hospital's incentive is not to control costs for her care, as in the previous example. Instead, their motivation is to extract as much government money as possible. Which is not to impugn hospital administrators as avaricious sociopaths, but merely people who respond to incentives in a tightly regulated financial market. In the end, she receives substandard and possibly rationed care in an impersonal system while the treatment and aftercare are provided at inflated prices which are passed on to the taxpayer.

All of this brings me to the title of this post: The Government as an Intervention. Central planners in the government saw a problem in the system--seniors faced high medical bills and had to rely on charity for care. It designed a system where they would receive free or close-to-free care at the expense of taxpayers. The system would control payments to doctors, implement price controls on medical procedures, and centralize planning with a bureaucracy to make decisions regarding care. As doctors, hospitals, and patients found ways around the cost-control measures implemented by the government, the bureaucracy must grow larger and exert yet greater control over these parties. As doctors specialize or bill for multiple services to get closer to free-market reimbursement rates, the government must implement countermeasures. When patients, such as my grandfather need assisted living care, they hide their assets 5 years prior to entering assisted living so Medicare will pay for the whole bill. If they don't, they will be on the hook for tens of thousands of dollars per year. (He actually didn't do this, but should have.)

What the article doesn't answer and what no one seems to ask is are seniors better off with Medicare? Is the US better off? At first blush, that question seems laughable. Of course we are! Of course seniors are better off getting care! Well, the choice isn't between whether to treat seniors or let them die. It's between covering them by socializing their risk and creating a massive bureaucracy (consuming 30% of total present-day federal spending) or covering them locally and privately through charities and free care.

You can take two approaches to looking at the results of this intervention. From a top-down perspective, you would have to look at aggregate statistics like number of people denied care, the quality of care they receive, and life expectancy (to name a few off the top of my head). This would merely prove, however, that Medicare has positive outputs. That's not really in dispute. If it only had negative outputs, I'm pretty sure we'd have changed that by now. We need to show it is better than a private system. Well, would a private system have similar or better results in access to care, quality of care, and length of life? The article does not provide statistics, and I don't have any, but it does mention that access to care was largely on par with Medicare, and we can't really acquire alternate-reality data on life expectancy without Medicare. That only leaves the quality of care. It's hard for me to gauge logically whether quality of care would suffer more under a rationed, controlled government market or under one where a person had to rely on charity. I just don't know. It seems at least plausible that a private system would lead to better outcomes in the aggregate than Medicare.

Where the private model really shines, however, is not in the aggregate, top-down view but in the lived experience of a person in the system. How is our nameless senior treated in both systems? In Medicare, she has fewer choices, less control of her care, and is charged an exorbitant rate for services (which is then absorbed by taxpayers). In private charity, she may have more options for care, but will be able to control her care and influence those who make decisions about it, and will be charged as much as she can afford. From her point of view, there is no question which system is more moral and just.

This analysis will hold true with any area of social support--Medicaid, housing, etc. When the government is the intervention, it's aggregate results are debatable, but the experience in the system is almost universally negative, impersonal, and (I argue) morally wrong. The providers of your social support network do not get to make important choices regarding your care. Our organizations are built on payment structures dictated by the government. We cannot be human because the system we are in is not designed for humans--it's designed for whatever passes for a widget in Economics courses.

Look down at the next post and that Bastiat quote. No one is saying we should let sick seniors die. We are just arguing whether government is the best method of achieving those important results.