TCS Daily

Against Wonkism

By Arnold Kling - July 6, 2004 12:00 AM

"Keep in mind that the poor are already entitled to health care under Medicaid and that the near poor often receive free health care through county or city hospitals and emergency rooms. Most proposals for extending health insurance involve taxing their wages for services they already receive. Such insurance may relieve the pressure on the public purse, but it will not guarantee better health care. I believe that screening in schools and community clinics has a better chance at success than unexercised theoretical entitlements."
-- Robert W. Fogel, The Escape from Hunger and Premature Death, 1700-2100, p. 106

Robert W. Fogel (Nobel, 1993) has written a book that I hope will be read by every journalist, legislative aide, think tank member, and policy junkie. Chapter four, "Prospects for the Twenty-First Century," to which I hope to return in a future essay, is by itself worth the price of the book. In that chapter, Fogel makes a well-researched case for optimism about the outlook for our children.

Escape from Hunger's ratio of information to words is so high that it is easier to comment on it by starting from a single idea and expanding outward than by attempting to summarize what is already a highly-condensed work. The idea quoted above comes from chapter five, "Problems of Equity in Health Care," and it is a fair distance away from the central themes of the book. However, it offers a counterpoint to what I call Wonkism, which is the design of policy solutions that are too complex and subtle for the victims -- er, I mean the public, to understand.

Wonkism is a disease that is widespread among elite academics, public policy school and business school graduates, and lawyers. Health care policy seems to be particularly infested by Wonkism. Examples include:

  • Hillary Clinton's health care reform, designed by Ira Magaziner, the poster child of Wonkism. A critic later wrote, "If you're looking for a social engineer, he's the best there is. But the era of the social engineer ended with the demise of the Machine Age. Ira's a mainframe in an age of networked PCs."

  • The recently-enacted Medicare prescription drug benefit, with its "reform" provisions. I am sure that all of the senior citizens who are graduates of the Wharton Business School are behaving in the optimal, cost-reducing ways envisioned by the Wonks who designed the plan, but the other 99.9 percent of seniors are probably more like my mother-in-law, who hasn't got a clue.

  • Lawrence Kotlikoff's proposal here at TCS for an annually risk-adjusted health care voucher.

Wonks take the road that is paved with good intentions. Ira Magaziner wanted to squeeze inefficiency out of the health care system. The Bush Administration wonks wanted to steer seniors toward catastrophic health care coverage. Kotlikoff wants to preserve private health insurance while providing public subsidies to those who might otherwise be denied coverage.

The problem with Wonkism is that it ignores mental transaction costs, if I may borrow a term coined by Clay Shirky in a different context. Wonkist solutions founder on their complexity. They suffer from a difficulty that I associate with open source software, which is that they are remarkably clever from the standpoint of experts but baffling from the perspective of ordinary civilians. If Wonks were to design a consumer electronics device, it would have fantastic features that would be totally inaccessible because the user interface is too hard to decipher. Sort of like my VCR. Or Virginia Postrel's thermostat.

Fogel's Health Care Solution

Robert Fogel says that we should stop thinking of the problem of poverty and health care as one of insurance and instead think of it as one of convenience. Rather than initiating the poor into the wonderful world of insurance company rules and claims-filing procedures, Fogel suggests that we would do more good by directly providing them with prenatal and postnatal care, health care education and mentoring, child health screening in public schools, and neighborhood public health clinics.

Before reading Fogel's book, my preferred policy option on health care was mandatory catastrophic health insurance coverage for everyone; however, instead of Kotlikoff's annual risk adjustment for ensuring that high-risk patients retain coverage, I might favor something closer to the catastrophic reinsurance concept that Brad DeLong reports is part of Senator John Kerry's health care plan. I would have used vouchers to provide health insurance for the poor.

For the most part, I still favor mandatory catastrophic health care coverage and an end to the tax subsidy for employer-provided health insurance. Corporate health care coverage is not the free-lunch handout that it is perceived to be. Instead, mandatory corporate coverage is a large tax on labor, driving down wages and driving up unemployment. (In practice, the tax distortion is more complex, because corporate tax deductibility shifts the burden around.) Returning the responsibility for health care to the individual would lead to much greater efficiency in health care decisions and, more importantly, in the rest of the economy.

However, for people in poverty, I am now inclined to see merit in Fogel's thinking, in spite of my distaste for paternalism. Some degree of paternalism in health care is inevitable, and Fogel's approach seems simpler and more beneficial than the Wonkish insurance-focused policies.

Fogel's hypothesis is that the poor are more likely to under-utilize free health care than to over-utilize it. At first, this seems counter-intuitive, and indeed it could turn out to be wrong. However, if his hypothesis were tested (by enacting pilot programs in some cities) and found to be correct, then the benefits of his approach would be high and the costs would be bearable.

In the case of health care for the poor, straightforward paternalism may be better than Wonkism at achieving humanitarian goals while maintaining a low government profile. That, at any rate, is what Robert Fogel led me to consider.


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