"Frontline" ran an episode some years back where they investigated some dental clinics that did astonishing numbers of unnecessary major dental operations.
It turns out that the government had a program that paid for these operations when performed on poor people. So the clinics would convince their customers that they needed major dental work, then would do the work and bill the government. The clinics were totally specialized just for this.
"Frontline" pinned the blame on the clinics, sort of "how could the do that". Of course, they're right. But blaming the clinics doesn't work, because the actual problem was the government set things up so that the rise of clinics to exploit the rules was legal and inevitable.
You're now faced with the problem of crafting a bureaucratic rule to define a "necessary" major dental operation. Of course, it's impossible, and the same problem as "management by metrics".
"Blaming the clinics doesn't work" - I trying to wrap my head around to put myself in your frame of mind to shift the blame from who is to blame to the government. If those clinics recommend and perform unnecessary procedures on people that can afford them (and do not benefit from govt. aid), does "blaming the clinics not work", because the actual problem is people being able to afford it? or would you go one step ahead and then say that the government is still to blame for allowing the possibility of wealth accumulation by individuals that results in unnecessary spending? or is the government still to blame because of not further regulating and auditing dental clinics? or is the government to blame because of allowing the mere existence of private dental clinics?
I guess that the government did not "set things up so that the rise of clinics to exploit the rules was legal and inevitable". I am going to guess that individuals, knowing that that was not the intention of the government aid, decided they could get around it to profit.
If you have a plan that relies on everyone in a nation of 300 million behaving ethically and honestly when there is a big incentive not to, you have a bad plan.
The moral failing is on the clinics, sure, but if you want to fix the problem, you have to look at the government.
Dentists take the Hippocratic Oath just like doctors. First and foremost, this wasn't just a moral failing, this was a major professional violation, regardless of any government incentives. They put patients in unnecessary risk of complications and likely caused harm in some cases, in direct violation of the one of the most important oaths in any profession. It is the job of healthcare professionals to cater to the health of their patients, not their billing departments.
You can't write all laws like we're living in a Mad Max dystopia - some laws will need to assume that other laws are functioning correctly in order to be practically implementable as a law - just like software has dependencies that must uphold some invariants for the interface to work. The issue isn't subsidizing healthcare, it's unethical professionals abusing our trust.
"Dentists take the Hippocratic Oath just like doctors. First and foremost, this wasn't just a moral failing, this was a major professional violation, regardless of any government incentives. They put patients in unnecessary risk of complications and likely caused harm in some cases, in direct violation of the one of the most important oaths in any profession."
Generally true, but the judgment call on "is this patient better off by being left alone" vs. "is this patient better off by having a surgery" is not easy, especially in our culture which worships heroic medicine. Patients often demand that something be done because they are primed so from the popular media they consume.
This can be even seen in the end-of-life care. Too many families demand that their dying grandma is given expensive and invasive care to live three weeks longer, even though its not just pointless, but outright cruel.
> Generally true, but the judgment call on "is this patient better off by being left alone" vs. "is this patient better off by having a surgery" is not easy, especially in our culture which worships heroic medicine. Patients often demand that something be done because they are primed so from the popular media they consume.
That's why it's a problem with professional ethics in healthcare first and foremost. Nobody in the bureaucratic chain is qualified to make or judge medical decisions and them trying would only be a monumental disaster because they don't even meet the patient and they're probably not medical professionals themselves. Hell, the patients and their family are rarely qualified to make the decisions - just look at what doctors chose for end of life care versus what their patients end up doing.
The system doesn't work if we don't police the professionals making the decisions at the point of care. The trick is not overdoing it like we did with opiates, scaring doctors from prescribing them even for patients genuinely in need.
Define accountability. Now you have a cost benefit ratio. If there is personal liability who can be blamed so you get the benefit and they get the detriment.
In this specific case, it would be an independent audit of the procedures to determine whether they were actually necessary or not.
it's not rocket science. Poor people don't have the money required to go to the dentist and properly take care of your teeth. Since having a healthy populace is a good thing, we say "okay, we're all going to pitch in so everyone can be as healthy as possible."
If people start to take advantage of that for personal gain (which we know there are always people who are going to do that), we need to have a plan in place for dealing with those assholes.
The presence of assholes in society shouldn't mean we don't even try to take care of each other. It should mean that we have plans for recognizing when someone is an asshole and taking measures to change that behavior.
Now you've created a new problem of bureaucrats that are just as susceptible to incompetence, incentives, and malfeasance as the dentists.
This is going to be the problem with every system of mandatory funding. Doesn't matter if it's housing, dentistry, food stamps, etc. People were abusing the disability program, so we made a bunch of hurdles to get funding. Now there's companies who train you how to get over those hurdles: what to write on the forms, what to say to your doctor, etc. And guess what? The companies that train you what to say to get disability then get to bill the government for this new service they provided you. I'm sure it's easy to imagine their incentives.
And yet there are ways we can address those issues too. I don't get why we gotta stop trying to take care of each other simply because there are assholes who try to take advantage of things.
Removing a massive mechanism for being able to address a need that most people feel shame for and explicitly try to hide due to social pressure?
If I'm acting on my own, my reach is very limited. By using the government, we have the potential to make a much larger impact, and in this case, create the expectation that no one should go hungry in this country. We're not there yet, mainly because there are many people around here who don't believe that expectation is valid. I'll fight them for the rest of my life.
There is a specific term relevant to this, which is applicable to many problems of misaligned risk/incentive, governmental and otherwise: "Moral Hazard"
Seems like existing whistle blower incentives could be beefed up and better publicized.
A new "moral heroes" national holiday celebrating those who uncover fraud. More resources dedicated to investigating claims, more leeway to fine corporations for bad faith activity in order to increase the incentive to blow the whistle.
I think you are implying the following when you say "you have to look at the government": "if you want to fix the problem of people/clinics/etc. abusing (dodging/fraudulently take advantage of) government programs/policies you have to ..." ----- And the "..." is not filled in. I guess I could fill it in with: "stop implementing policies/programs if you are not at the same time investing as much as it is necessary to guarantee nobody gets around the law" - that is, do not trust, add more inefficiency (clinics already need to attest the procedure is necessary) and cost.
Dentists and doctors are not all of one mind about treatment effectiveness or necessity, so the tails of the bell curve matter. There may very well be some small percentage of dentists who believe that procedure X is beneficial in almost all cases. They might be quacks, but most quacks I've met believe what they are selling (even if they are wrong.)
If there also is a government program that reimburses for X in almost all cases, then you could see the emergence of clinics that "exploit" the rule even if everyone involved believes they are behaving ethically.
There are feedback loops that then exacerbate the problem- for example a successful clinic might bring on additional dentists, who despite misgivings will be influenced by existing practice at the clinic and begin self justifying the procedures to conform to the senior partner. After all, they clearly know what they are doing, right?
While I have no idea if that's what happened here, it is well with in the realm of possibility. The government does bear some responsibility to ensure that thier programs and rules provide sufficient oversight and feedback to keep fringey participants within the bounds of what the government considers acceptable.
I understand your arguments, which in my view, "shift the blame", and in your view, "charge with at least some responsibility" to the government. The problem I see is that this sort of arguments, if accepted as OK/inevitable and universalized lead to a dilution of responsibility that would make no one fully accountable for any intentional wrongdoing: for example, if you pay for your car to be repaired at your regular car repair shop, but the mechanic knowingly used parts that were not certified or due to time pressure skipped standard checks, and you let someone drive your car a year later, and there is an accident that was caused as a consequence of that sloppy repair-work, do you share responsibility for your oversight? - You might argue you do; well, I would argue you don't.
The government is not an individual- appropriate morality and responsibility at scale are different then as an individual. Additionally, if insurance / the government agrees to pay for a procedure that serves as a form of confirmation for the end user - after all, the department of health and human services approved the procedure!
A better example would be if a Sr Director of a rental car company shifted sourcing of thier repair contractor. If the new repair contractor consistently did way more repairs then the rental company needed, should the director of fleet maintenance be held responsible? Absolutely.
The moral blame rests fully on the clinic, but the responsibility to fix the system rests fully on the government (in this case). It's really no different than a production line with a quality problem. You can yell and scream about the morality of the workers all you want, but you can't expect them to improve if you don't fix the system and incentives that cause the problems.
the reason the analogy doesn’t hold up is there isn’t a system there — that’s a set of actually individual choices. When you see systematic behavior, you need to look for the system to fix it. The problem with blame is it doesn’t get you far enough, even if it feels good or right. Finding and fixing incentives is the only way to systematically enact change. Whether it feels good or not.
btw, I think it is important to place the blame correctly and take whatever action is possible on the perpetrators to deter such behavior and at the same time patch systemic loopholes that are identified. They are not incompatible actions. If anything, they are complementary.
blame/responsibility is a red herring here. mugging is already illegal and, if caught, the perpetrator faces imprisonment. the salient question to ask here is what changes we can make to reduce the unwanted behavior.
possible actions:
politely ask the general public not to mug one another
increase penalties or rate of apprehension for perpetrators
encourage people to minimize their ATM visits, not walk around with debit cards, etc.
give people money so they don't feel the need to mug other people
You're right, "blame" is too loaded of a word, and also inadequate. However, in order to identify the actions to take, you still need something like a full systems analysis of weak points. Your list is a pretty good start on representing those.
I think we can safely blame both owners and employees of the clinics and the people in government who devised and implemented the program.
We can blame the owners of the clinics because we have a right to expect people to to make morally correct decisions. We will never invent the perfect system of laws to incentivize everyone's good behavior. At the end of the day, society only functions when the majority of people are at least somewhat selflessly contributing to it.
We can blame those who devised and implement the program because we can expect them to do more auditing as well and ensuring the program isn't gamed. People in government are responsible for spending taxpayer money wisely.
The trouble is that blame doesn’t address the problem either. We want the government to make wiser, less gameable policy. We want businesses to act ethically. How do we acheive those? It’s not blame.
I think the answer is incentives. The government had the incentive to “help the poor” - so they did. The clinics had the incentive to “fix teeth for people in need” - so they did.
Just like in software development, so much rests on properly defining the desired outcome.
The problem is also that in the game of "helping people afford all their needs", governments will rarely construct solutions that involve less government. Which might well be the right answer.
Examples are impossible: governments are too complex. Any government that does this (however it is done), that government is also doing other things that are confounding factors.
The idea is simple: a government that does less costs less, so it needs to collect less taxes. That means people just over the edge could pay for their dental work instead of the government and all the overhead of having a third party involved.
It doesn't help those completely unable to care for themselves, but those who are close are no longer pushed over the edge.
That may have helped, but you can't ignore other factors such as relatively stable inflation adjusted fuel costs, combined with better fuel efficiency, lowering operating costs, or the trend towards eliminating amenities and increasing passenger density. Or the continued increase in airline safety while overseen by the not deregulated role of the FAA. Deregulation was only part of the picture.
"less gameable policy" -> clinics do not get a blank check, for good or bad, they have to comply with government's bureaucracy requirements, i.e., explicitly take action that attests that the clinic considers the procedure to be necessary and covered under that particular government aid. That is, if the clinic does the bureaucratic 'work' when the procedure would not have been recommended otherwise, their actions border: fraud and healthcare crime.
"The clinics had the incentive to “fix teeth for people in need” - so they did", in the case at hand, being the procedures unnecessary, the incentive was not "fix teeth for people in need", but "increase profits".
I agree completely that “increase profits” was a goal for the clinics, but I mean something a little different by incentive. I mean “a behavior that is being encouraged or rewarded by others.”
You are asserting that the government’s policy was sufficiently specific regarding “medical necessity” that would clearly show these claims would not qualify. If that were the case, then the government itself should not have paid out those claims in the first place. The fact that they did pay the claims (at least until someone blew a whistle) suggests either that their policy was vague enough to not be so enforceable, or that their review and enforcement was lax (or both).
That’s my point - if the policy and enforcement had been clear from the get go this wouldn’t have been so big a deal. One or two bad apples try something and get sanctioned and the whole thing stops being an incentive to bad actors.
We agree that something changed in the situation such that this is no longer occurring, right? What was that change, and why was it not so in the first place?
The government is asking those questions, that is the "work" the clinics do when they say they "would do the work" to be able to bill the government for such procedures.
Yes, but this skepticism is problematic when it comes to healthcare. Particularly when it comes to high-deductible plans -- people are too skeptical, and will avoid seeking the care they need. Even when the cost of that early care is less than what they would otherwise be playing in premiums.
edit: retracted: (sometimes leading to more expensive measures needed down the road) — see replies
I wouldn't be so quick to retract: According to that wikipedia link, while costs may not have changed much, mental & physical health were improved. Essentially, the cost per-unit of overall patient wellbeing was decreased because costs remained the same while patient care increased.
The Oregon Medicaid expansion didn’t reach this conclusion. On balance people were happier because of lower stress, and people with diabetes were better served, but there wasn’t a huge macro effect of cost reduction via early intervention.
We already know the thing about diabetes, to the point that even private insurance companies will throw money at compliance because it’s cheaper than care. Outside that, vaccinations, and maybe a few more specific cases, the conventional wisdom of early intervention saves money is false.
The price of dental work is not very high. A few thousand dollars would cause you or me to ask questions, but the government deals with billions, so that little bit gets lost in the noise. It can make a lot of many for those in the scam without being easy to notice.
I think this is a good example of why in-kind benefits programs are a problem, and if you want to relieve the effects of poverty you should just give people money.
There was a recent UK scandal over the food boxes being handed out as a substitute for free school meals while schools are closed; it was immediately obvious to anybody who has ever shopped for their own groceries that the intermediary company was taking the £30, skimming off most of it, and providing a deeply inadequate result: https://www.dw.com/en/food-parcels-for-kids-spark-outrage-in...
I think you just made a case for why news outlets shouldn't write articles based on random tweets without verifying anything- that lie is now fact in some peoples minds:
> Chartwells, the school catering company that supplied the package, claimed the photograph showed five days of free lunches, not 10, and the charge for food, packing and distribution was £10.50 not £30,
The problem is the poor I want to help most are the poor who cannot take care of themselves. Those who can take care of the money (as opposed to giving it to scammers) can also figure out how to get more and just need the government out of the way. (this is the conservative lower taxes point). What is left is a lot of people with mental issues who can never take care of themselves and wouldn't use the money to do it. The money needs to go to some ??? that will take care of those people.
It's hard to understand how you can take this point of view if you've ever met an average poor person. (The "poor who cannot take care of themselves" are a minority who require different support)
One definition of poor is that people do not have access to enough money to meet their needs.
And, poor people cannot meet the needs of getting more money: tasks such as education, job search, etc, are limited by an immediate need to get rent, food, and warmth.
If the government "gets out of the way", the safety net of being near-guaranteed to cover rent, food and warmth, will also quickly get out of the way, exacerbating poor peoples' problems.
As Adam Smith observed, excess money tends to go into rent. The poor in India sleep on a sidewalk. The poor in the US have a 2 bedroom apartment with running water and a TV. Both sets struggle to make ends meet (I struggle to make ends meet sometimes, and I'm clearly well above average in the upper middle class with 6 months of emergency savings that I dare not touch), so struggle to make ends meet is NOT what it means to be poor.
Everybody will try to make their lives better. Anyone who isn't careful will end up spending so much on little things that they can't afford the basics at the end of the month. I've been poor (for the US - a much higher standard than poor elsewhere!), and I have no desire to go back.
I will agree the poor who cannot take care of themselves are a minority. However I maintain that given money to the rest won't help because they will spend it on things like a nicer apartment. Worse I fear that their attempt to get a nicer apartment will make rent go up and in the end they spend more money on the same apartment - thus making that extra money an indirect handout to the rich.
Rent-seekers will attempt to extract the maximum they can get away with. The solution is controls to prevent that. Anything that is essential (rent, utilities, food) should not be subject to the whims and greed of private interests.
> Those who can take care of the money can also figure out how to get more and just need the government out of the way. (this is the conservative lower taxes point)
Yes, and it's evidence-free nonsense, because many of those people are either not earning at all, often for very good reasons, or earning below the lower tax threshold. You might be able to make a case for abolishing sales tax/VAT, but at least in the UK food is already exempt from VAT.
That’s a dismissive attitude. There’s plenty of people who are poor through flaws in the system and no fault of their own, and there’s also plenty who are stuck in patterns of addiction where free money will exacerbate that.
I can’t see my way to blaming government for this. Either these operations were indicated but unlikely to happen otherwise (the government program was effective) or not medically-indicated (at which point private clinics are torturing poor people for profit which is abhorrent on so many levels).
You can't write a bureaucratic regulation that accurately replaces a judgement call.
For example, I have various dental problems. With each one, the dentist would lay out the options - effectiveness, how long they'll last, the price, how painful the procedure is, what the recovery time is, etc. There is no right answer. Different people make different choices.
(I've often picked an option that wasn't the dentist's recommended one.)
Medicine is almost never (Condition A => Treatment B).
It doesn't seem like the regulation was ever intended to replace that judgement call; just support the doctors' decision. We are not machines ruled by logic, and in the end everything that ends up in the justice system is judged by intention and/or merit and not 'the letter of the law'.
Is that true though? If something is technically legal like this, they get found innocent. When its technically illegal, mandatory minimums insure they go to jail for far too long. Someone once said there are legal traditions where intent of the law could be used to find guilt, and it had a name, but the US and UK are much more like machines.
I believe both the US and UK (as do most western countries?) have 'common law' systems, where jurisprudence / case precedents are heavily relied upon. Whenever there is doubt on the legality of something, that court decision will set the tone for others to follow, and go higher up the justice system as needed.
The main point was that you can't simply blame the law for failing to 'replace judgement'. Most laws rely on some amount of common sense to be interpreted.
> I can’t see my way to blaming government for this.
They get to take money from people backed by the threat of locking them in a box if they don't. They are responsible for making sure that money is spent extremely effectively.
The point isn't that the clinics are not morally culpable, but only that they are a natural response to government incentives over which the government has exclusive control.
Doing something morally wrong is not a natural response. It is a natural response option. To paraphrase Jurassic Park: [Clinics] were so preoccupied with whether or not they could, they didn’t stop to think if they should.
Not everyone chooses to do something morally wrong, just because "I'm allowed to! And it makes life easier!"
> Not everyone chooses to do something morally wrong, just because "I'm allowed to! And it makes life easier!"
But plenty choose to do something morally wrong because "I have to put bread on my table, and I'm about to go out of business because I can't compete with everyone else doing the immoral thing". This is the mechanism by which the market eliminates ethics from our lives, step by step. If doing something slightly wrong gives you a competitive advantage, you'll take it or you'll get outcompeted by everyone else who do.
Honest business by eastern Massachusetts standards would have you labeled a swindler in southern Indiana.
There are large swaths of the US where "if the option is there then there's no shame in taking it" and "if you don't cash in you're only hurting yourself because someone else will" are just how normal business is done.
The government incentives were clearly going to result in private-island driven dinosaur experiments. If the incentives had been to welcome such genetic experimentation in a controlled manner then regulators would have noticed the predatory behaviour of the velociraptors before it became a problem.
Again, it's about risk/incentive management, not about judging those who dare to go too far. The T-Rex will eat you even as you shake your fist at its unethical re-creator. Better to not merely hope that everyone chooses the friendliest route by virtue of human nature.
If we keep setting up situations where people have an unethical option, I’m not sure we should act surprised by them taking it. We can, it’s an option, but it seems naive.
The government had the option to think through their policymaking more fully. What accountability should they have for that?
If we award points for “trying, with good intentions”, and not for “actual outcome” we are in for a lot more bad outcomes from earnest triers.
The modern business maxim "don't leave money on the table" leads to local maxima, the locus being your own self in the short term. If the clinics self-regulate, don't artificially inflate the number of procedures needed and ostracize clinics who do, then everyone wins in the long run. The alternative is, everyone attempts to maximize gain and the government has to eventually step in with more draconian regulations that hurt everyone. Rational, local altruism can be a path to global self-interest.
Not only has it always been a business maxim, it's a maxim for pretty much every organization and 80% of the population. (I'm being generous, I suspect it is more like 95%.)
Trying to construct a society that relies on people being selfless most of the time is just never going to work.
> But blaming the clinics doesn't work, because the actual problem was the government set things up so that the rise of clinics to exploit the rules was legal and inevitable.
The obvious solution would be for the government to punish the clinics for acting against the spirit of the law. But that approach brings in a huge potential for abuse. We're in a bind.
If we can solve this, this will be the biggest breakthrough for civilization ever since the invention of hierarchical structures many millennia ago. Hierarchies and codified laws were what allowed us to stop living as isolated groups of ~150 people[0] and go on to build a global civilization. But these came at the cost of not being able to exploit our innate social skills to cooperate with each other. Bureaucracies, rules and metrics are thus an inefficient and barely adquate mechanical substitute for trust.
If we could somehow scale trust, scale social skills, so that people would naturally respond to incentives that are uncomputable and not expressible through bureaucratic apparatus - like "don't do stupid shit", or "really, don't cheat" - we'd enter a golden age.
Alas, I have no clue how to do that.
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[0] - Yes, the Dunbar's number. Past which you no longer have the case that everyone knows everyone else, and interpersonal dynamics stop being strong enough to ensure mutual cooperation.
I agree with what you write, but I'm also spitballing stopgap measures: Are there downsides to having governments instead contract healthcare capacity? Has this been tried?
By this I mean that instead of the government paying each hospital (or in this case dentist) for each procedure, the government pays each hospital (or dentist) to keep a certain capacity for each kind of procedure available. The hospitals are obliged to provide up to that capacity at no extra cost to the government. Any demand beyond it, goes into the backlog (and turns into a political issue).
We do this where I work (municipal social work and housing with care) and it really does remove some of the incentives to up-code and over-produce on the part of the provider in the short term.
In the long term there's still some incentive to take on extra clients for the care providers so they have a better negotiating position for their next contact.
I think you might run into the issue of whether or not that capacity is actually being provided or just reported. You can definitely track that a procedure was done: you have the patient that you can contact to verify, bills for the materials that were needed, and bookings that guarantee no one was operating on multiple patients at once. If you just pay for capacity regardless of whether or not it's used, how do you know that they aren't just turning half of all patients away at the door and claiming that they provide the full capacity? There's political unrest about not enough capacity but your healthcare providers are saying no one's coming in and still taking the full amount of money.
The free market is a really simple feedback system that, in any real-world implementation, can just as quickly lose the "mutual self-interest" part, or replace "cooperation" with "coercion". The very problem with the clinics you described - that's the free market in action.
The problem here is that there is no way for society at large to send corrective feedback, "holy shit you're totally abusing the rules and what you do is immoral", and have it actually impact said clinics' behavior. This mechanism exists naturally in small groups, but money and scale destroys it.
Government is not spending its own money but that of taxpayers present and future - an agency-style conflict of interest. This is then made worse by the fact that the party who receives the services purchased (the patient) is someone different again who has no skin in the game at all.
This is a recipe for market failure and not something I'd describe as a "free" market, even if it is a market.
> Government is not spending its own money but that of taxpayers present and future - an agency-style conflict of interest.
The government is spending its own money it collected in taxes[0]. Whether it is more like a thug or more like an embodiment of the collective will of society is immaterial. It's just another customer on the market.
> This is then made worse by the fact that the party who receives the services purchased (the patient) is someone different again who has no skin in the game at all.
This is the exact same scenario as an advertiser paying a company to expose me to advertising; I have no skin in that game either, and I'm subjected to something I do not necessarily want. But nobody would say it's not "free market". Hell, in the case of the clinics, the situation would be identical if the party paying for the procedures was not the government, but a billionaire philanthropist.
In fact, nothing about a free market precludes such scenarios, where the choices available to a buyer are dependent on the deals made between the seller and some third parties.
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[0] - The concept that "government has no money" is silly outside the quite obvious reminder that government is mostly funded by its subjects.
I'm not trying to make a moral point about whether taxes are right or wrong, simply that people behave differently when spending other people's money rather than their own. Government spending taxpayers' money is exactly the same conflict in this sense as company management spending shareholders' money. These agency conflicts can an do often lead to bad outcomes and when this happens it's generally viewed as a form of market failure.
Considering you are talking about the health care system where insurance companies spend money on behalf of their customers. At no point did the customer of the doctor or dentist spend his or her hard earned money. It was always a large, authoriative corporation.
Why would it matter if the corporation is the government or an insurance company? Also, are you implying that you can't have a free market if you have insurance companies?
It is indeed a problem with insurance as well where it's more commonly called moral hazard. With insurance traditionally there are a number of mechanisms which can help mitigate this eg copays, deductibles, etc. - and there is (sometimes) a market for pricing of policy premiums and terms.
But it's far from perfect, especially in the US (at least as I understand the American system).
I'm also not trying to make a moral point. I'm trying to show that these kinds of problems are one of the possible failure modes on the free market, and whether one of the actors happens to be a government is immaterial - you could (like you personally just did) draw an equivalent scenario involving only private businesses.
When people talk about "free" markets it usually means markets where these types of problems are effectively managed or mitigated, not "markets with no rules".
There's of course lots of debate about what the right policies to manage and mitigate these are but it doesn't mean that markets aren't a good mechanism just because there might be trade-offs or imperfect solutions.
I always understood "free" markets to be ones run by supply and demand, without authoritarian interference. That does not exclude principal-agent problems, though.
I'm also not saying markets aren't a good idea. Just I don't believe they're the core of the solution to the problem I outlined upthread.
The government’s money are unearned money, confiscated from taxpayers. There is a saying about this kind of income: "easy come, easy go". You can be sure that "the subjects" this money was taken from would be much more careful about spending it.
Not convinced? Just look at the way government borrows: no sane person would sell her future like that. Also, just ask a politician how worried he is about spending money "for his constituents". I know stadiums made for tiny towns, boulevards for undriven neighborhoods, and so on and so forth...
Sure. But that's neither here nor there, as the market is an equal opportunity institution. It doesn't ask whether you got your money by providing goods in exchange, or confiscated it from your subjects, or won it in a casino, or robbed a bank, or stole it from your employees' pension fund, ...
Sure, but that does not apply to the case we're discussing - which is a government paying clinics for procedures. You could substitute "a billionaire philanthropist" for "a government" and the outcome would be exactly the same.
Now if you want to talk free markets in general, then I want to point out that in the real world, a free market cannot thrive without some sort of government that ensures social stability and enforces contracts. Without such government, the market would quickly degenerate into trading violence alongside currency, and either disintegrate or... end up producing a government. Ultimately, "private enterprise" and "public governance" don't have a clear boundary between them - they're two modes of the same phenomenon, people negotiating with each other.
There is no billionaire who can even remotely approach the purchasing power of a government. If billionaires could truly influence markets, we'd have seen it on the stock market. Instead, we saw the Fed.
I am not proposing to get rid of the government, that leads to anarchy. A government is required to uphold the rule of law and, for markets, to sustain contracts. I would also argue that they should tax externalities. The trouble starts when governments go beyond that and start regulating and influencing the markets, ending up corrupting them.
Free markets can only exist in this way until they are much smaller than the whole economy. The moment they are the economy they are heavily prone to monopolisation.
Wealth begets wealth. It compounds. The larger the market, the more space there is for a company to take the lead, put up barriers to entry, and focus on snuffing out any would-be competitors.
Not true. See [0] for a list of examples, which contains several cases of barriers to entry that do not involve governments in any way (except as the entity that allows contracts to be enforced and the market to exist in the first place).
Half of those examples need to be sustained by the government to actually act as barriers. And all of them ignore the creativity of the entrepreneurial mind when incentivized by the fabulous profits to be had in a monopolized market. A nice example:
I sometimes feel the same about my dental coverage; my insurance will compensate something like €500 a year and the dentist knows this (I think it shows up on the insurance records they have access to). Mind you, my teeth and dental hygiene isn't the best so I'd rather they do the work than lose my teeth.
The clinic was morally wrong. Lying to their customers for surgeries they did not need is malpractice. This does not need to be solved by the federal/state government. The professional body should handle it.
Seems like one of the side effects here is that a lot of people got dental work that wouldn't have otherwise done so. Isn't that a positive outcome worth something? If it's worth about as much (to the patients, and to society) as what was paid, maybe it wasn't as wasteful as at first blush?
> the actual problem was the government set things up
edit: so apparently this anecdote was in the article... I guess I just gave away that I commented before I read the article...
Reminds me of the cobra problem in India. After England colonized India, they noticed that India had a cobra problem, so they created a bounty for cobras: bring a dead cobra, get paid. So people, of course, started farming cobras to get paid by the English government. Once the English government figured out what was going on, they scrapped the bounty program and the cobra farmers released all of their now-worthless cobras into the wild... increasing the cobra problem.
If you're measuring an activity, that's where you end up. People will do more of that activity regardless of outcome. The clinics should be rewarded for the actual outcome you want: better dental health in a certain population.
> But blaming the clinics doesn't work, because the actual problem was the government set things up so that the rise of clinics to exploit the rules was legal and inevitable.
Actually, blaming the clinics does does work, or at least is appropriate. They're the ones that are doing unnecessary work. Just because you can do something does not mean you should do it.
I person can cheat on their spouse, but should they? Was it the spouse's fault that they let the person go on a business trip/conference unaccompanied? The cheated-on spouse should have know better and set up a system to prevent it from happening.
I had a dentist pull that on me, I told him off, and went to another one. (He wanted to pull my wisdom teeth, I told him there was nothing wrong with them, and there still isn't 40 years later. Not even a cavity.)
In some countries, such as the UK, doctors are generally salaried employees.
This is not true. A GP practice is a private partnership like a legal chambers which bills the NHS for its services. This fact is strangely overlooked by people angry about “privatising the NHS”, it’s always been this way.
"the government did this". This is a perfect example of how brainwashed Americans are about 'government is the problem' they will gloss over unethical medical malpractice by professionals and blame 'the government' instead of being a little introspective about why a shitty unethical culture like this is not only allowed to continue but in fact expected. Its as if citizenship is some archaic ideal from a long-gone era to be replaced with rational utilitarianism where every actor is cynically out to screw over everyone else. and in the next sentence, as if aiming to create the perfect non sequitur, bemoan why 'management by metrics' does not work
There are lots of perverse incentives in dentistry.
I've had some dentists do the "mouth mining" kind of thing.
I have my four wisdom teeth, and one dentists was immediately "We should schedule you to have those wisdom teeth out." He's not the only one that asked, but "why should they come out?" always has these vague answers, like "might cause crowding".
So, I've had my wisdom teeth all my adult and they are sort of a litmus test for dentists.
I've heard navy seals require them out, I thought for some deep water diving reason.
It turns out that the government had a program that paid for these operations when performed on poor people. So the clinics would convince their customers that they needed major dental work, then would do the work and bill the government. The clinics were totally specialized just for this.
"Frontline" pinned the blame on the clinics, sort of "how could the do that". Of course, they're right. But blaming the clinics doesn't work, because the actual problem was the government set things up so that the rise of clinics to exploit the rules was legal and inevitable.
You're now faced with the problem of crafting a bureaucratic rule to define a "necessary" major dental operation. Of course, it's impossible, and the same problem as "management by metrics".