Health Care at Risk

Health Care at Risk by Timothy Jost

Health Wars:  The Empire Strikes Back Review by John Goodman, PhD

Not everyone is enamored of Health Savings Accounts (HSAs) or patient power. There are even people who dislike HSAs almost as much as they dislike the syllogism. Alas, they are legion. We are surrounded by them. Were righteousness and virtue not on our side, we would have been vanquished long ago.

Many of the complaints of HSA critics are forcefully argued in a new book entitled Health Care at Risk - which I take to be the Freudian counterpart to our own book titled, Lives at Risk.

The author, Timothy Jost, is a law professor at Washington and Lee University.

In a letter to me, he said his book is “fair and balanced.” Compared to the usual screeds, he has a point. Jost actually reads what we write, instead of relying on the Newsweek summary. Still, all the book jacket blurbs are from people on the other side. Readers will have no difficulty understanding why.

Jost offers a lot of interesting institutional background on the consumer directed health care movement and the people involved before getting down to two main points. He says CDHC advocates, including yours truly, rely on the neoclassical economic model to understand the health care system (which is true), and he implies that there is some alternative model that could be used instead (which is not true).

Jost devotes quite a few pages to explaining why the market for medical care is not like the market for breakfast cereal. If you were otherwise inclined to think of those two markets as pretty much the same, his book is a good read. That’s as a prelude to his finding fault with virtually all of economic theory.

Simple economic models, he says, ignore transactions costs, imperfect information, externalities, and anticompetitive behavior.

Economists have learned to deal with these factors in more sophisticated versions of the model, he admits, but he doesn’t say how. The case for the prosecution is so lengthy and varied, there is literally no time for the defense.

Jost doesn’t even remind the reader that the model he is attacking is the very same model that is used to calculate the value of stock options and regulate the money supply; or that it is used by government agencies to forecast the effects of every bill before Congress, including all health legislation; or that it is used ubiquitously by the private sector to predict the effects of external shocks on markets, including all health markets.

I don’t know any economist who thinks all markets are the same or that neoclassical theory is beyond reproach. The more important point here is one that even a lot of very bright people do not understand: There is only one social science model that allows us to think in a consistent, non-contradictory way about complex social phenomena. That model is economics. There are not two or three or four models from which one can pick and choose. There is only one.

Jost quotes from an email message I sent him, but without attribution. So I want to publicly own up to having said the following: “In all of social science - whether economics, politics, sociology, history, etc. - there is only one model that (a) is internally consistent and (b) can explain and predict. That is the model developed by economists. All the rest is gobbledygook. And more often than not, it is highly opinionated, value-laden gobbledygook.”

Economic theory predicts that in any system in which all the actors find it in their self-interest to overuse resources, fail to improve quality and impede access to care, there will be system-wide problems of cost, quality and access. And this prediction holds not just for the United States, it holds for the health care systems of Britain, Canada and other countries as well.

Of course, people may some day come up with a better model to explain these problems. More power to them. But (I won’t keep you in further suspense) Jost does not deliver. He doesn’t even try.

May the force be with you.

To obtain a copy of Timothy Jost, Health Care at Risk, go to

(www.amazon.com/Health-Care-Risk-Critique-Consumer-Driven/dp/0822341247/ref=sr_1_/105-2068329-4320418?ie=UTF&s=books&qid=1189194818&sr=1-1

Subscribe to this digest: www.ncpa.org/sub/#cdhc

------------------------------------------------------------------------

The NCPA is a 501c3 nonprofit that relies completely on private donations. Help us continue our work with a tax-deductible gift. Visit https://secure.ncpa.org/support/ or call 972-386-6272.

------------------------------------------------------------------------

NCPA is a service mark of the National Center for Policy Analysis. We are an independent public policy institute and are not affiliated with any other organization, trade association or corporation.

Dallas Headquarters

12770 Coit Road, Suite 800

Dallas, TX 75251

(972) 386-6272