Where does wisdom live?

David Brooks paints a simple picture of what he proposes as the core philosophical difference between Democrats and Republicans. The parties look in different places  for answers to policy questions.  Do you look to government, or do you look for wisdom among consumers making decisions in response to markets?  The debate over Medicare is, of course, the backdrop.  It is up to Democrats to show that Brook’s characterization of the role of government is caricature.

Democrats tend to be skeptical that dispersed consumers can get enough information to make smart decisions. Health care is phenomenally complicated. Providers have much more information than consumers. Insurance companies are rapacious and are not in the business of optimizing care.

Given these limitations, Democrats generally seek to concentrate decision-making and cost-control power in the hands of centralized experts. Under the Obama health care law, a team of 15 officials will be created to discover best practices and come up with cost-cutting measures. There will also be a Center for Medicare and Medicaid Innovation in Washington to organize medical innovation. Centralized officials will decide how to set national reimbursement rates.

This sounds like the Soviet Politburo and “death panels”.  What is missing is the foundation upon which these decisions are based and the character of the decisions surrounding best practices and reimbursement rates.

The experience with identifying best medical practices and the elimination of wasteful services has led to a beneficial skepticism and humility about what counts as a “best practice”.  The foundation for the identification of best practices is the collective wisdom of medical researchers and practitioners grounded in scientific studies and comparative effectiveness studies. And the decisions likely to result from these deliberations are incentives for choosing a more effective practice over unproven or less effective practices.

Republicans at their best are skeptical about top-down decision-making. They are skeptical that centralized experts can accurately predict costs. In 1967, the House Ways and Means Committee projected that Medicare would cost $12 billion by 1990. It actually cost $110 billion. They are skeptical that centralized experts can predict human behavior accurately enough to socially engineer new programs. Medicare’s chief actuary predicted that 400,000 people would sign up for the new health care law’s high-risk pools. In fact, only 18,000 have.

They are skeptical that political authorities can, in the long run, resist pressure to hand out free goodies. They are also skeptical that planners can control the unintended effects of their decisions.  via Where Wisdom Lives – NYTimes.com.

Brooks is arguing for a position that basically says, we have to give up policy making because we just don’t know enough.  Alternatively, we can acknowledge our fallibility and  make decisions on the basis of the best available knowledge.  And adjust policy over time as we learn more about the  intended and unintended consequences.

I agree with Brooks that Democrats are (would be) mad to define themselves as the party of top-down centralized planning. This is the challenge and the poverty of current thinking, that the choice appears to be between a health care Politburo and a voucher funded marketplace that will dramatically increase costs to the elderly at a time in their life when their financial means are fixed or declining.

 

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