Re: A Happy Hanukkah to all the Jewish readers and a listening note

I'm late to this topic, since for some reason I thought it was about
seasonal cheer. Politically I may be, on some topics, to the right of
Attila the Hun, but as an economist I am trained to look at
measurements of the public good.
I agree with legalising currently illegal drugs. I'd go further than
the Libertarians though. I believe that addictive substances should be
provided free by a State (in the US a Federal) health service to
anyone whose doctor finds that he is addicted.

The reason for this is simple: there is then no profit in getting
people addicted because they won't have to keep paying the people who
get them that way. This worked for many years in the British National
Health Service until US pressure and moralising forced the US model on
the country. People could and did function at reasonable levels while
on drugs, maintaining employment and families, just as insulin
dependent diabetics or people with HIV do.
However, in the US addicts steal to get money to buy impure drugs, and
the impurities can do more harm than the drugs. The crime is an
externality to society: other people suffer from criminal behaviour
and the public good suffers. However, unionised prison and law-
enforcement personnel have benefitted enormously from the current
arrangements both above the table and under it. Call it a Drug Policy
Industrial Complex if you like.

I feel the same way about health care in general. It should be
essentially free to the user. There is a public good aspect to this
too, and the most obvious aspect is though the externalities of
infectious disease, and the disruptions (e.g. in school, work, and
public places) that can be caused by the untreated sick. This is not
the place to discuss the ways insurance companies actually function in
US heathcare (the jargon is that the principal-agent problem applies
in spades, and the incentives in the system do not line up with
maximising patient benefit for a given budget). The only US health
systems that come close to ideal is the Kaiser Permanente model, where
in principal a non-profit staff model health provider with insurance
attached should be more or less aligned with keeping the long-term
cost of its patients down.

For profit insurance companies do not negotiate with providers except
on a take it or leave it basis. Their dispute resolution clauses are,
as you might expect, highly asymmetric in their favor, and the
information asymmetry is too. I have personal experience, in the
event of a billing dispute, of an insurance company saying that the
procedure is covered, but won't be paid because of their undisclosed,
proprietary, claims-editing software. When asked how to get paid the
answer was, verbatim, "that's for us to know and you to find out."

The appeal of this required a $5000 upfront deposit to the insurance
company to pay for their choice of arbitrator. The insurance co CEO
was paid >$1.7B that year. Incentives are not aligned with patient
interests.

There is no flaw-free system, as there are few perfect markets or
ideal polities, but we ought to be able to do better than we are. The
problem, of course, is the principal-agent difference. Our elected
representatives do not get paid if they maximise the public good. They
get paid if they get reelected, and they get reelected by serving the
interests of their backers whose interests are seldom the same as the
public at large.

Anyway, enough discussion on the OT subject.

Merry Christmas to all, and to all a good night.
Richard
.

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