Bush, Fallibilism and Health Care

I am writing this in response to recent comments about Bush’s arrogance and the insinuation that he sees himself as infallible, that he does not listen to his advisors, that he believes that his personal intuition is the will of God, and that he has a messiah complex. I was especially dismayed by John Piper’s recent Fresh Words in which he contrasts Lincoln’s humility with the absence of confession of personal fallibility by both Bush and Kerry.

It is absolutely true that Bush is not the orator Lincoln was. He often seems uncomfortable except in extremely partisan settings where he is guaranteed a sympathetic audience. He speaks in sound bites, pausing awkwardly in the midst of sentences, indicating that the teleprompter controls his delivery more than the meaning of his statements does. It is also true that he is often his own worst advocate and is too defensive to freely admit to errors and miscalculations. (I happen to believe his defensiveness is justifiable given his treatment by the mainstream media.) However, it is clear that Bush’s policies and decision-making assume human fallibility where Kerry’s do not.

Decision-making

Bush is a satisficer; Kerry an optimizer. Satisficing is a model of rational decision-making first described by Herb Simon, I believe, in his Administrative Behavior. It assumes that human reason is both limited and bound. Perfect information is impossible; even if perfect information were available, the human mind is limited in its capacity to process it. Therefore, decision-makers and problem solvers ought to search for solutions that are good enough -- that is, satisfactory -- not necessarily optimal. Once we know that we have identified a good course of action – that is, doing something is substantially better than doing nothing -- the additional cost we incur to find the optimal course, even if it were possible to find it, would eat up all the benefit of that better solution. The additional costs may take many forms: delays, costs of information gathering, human costs, etc.

What does a satisficer look like in the real world? Often it will look like he makes decisions prematurely. Optimizers, especially, will accuse him of making decisions without enough information. He is free to take bold action. Knowing that he can never know exhaustively the consequences of his decisions, he will act with principle as his guide. He can make a best guess as to the outcomes of his decisions, but, ultimately, he will base his decisions on what is right on philosophical or moral grounds. Because he knows every decision he makes is wrong to some extent -- it is after all non-optimal – he sees no point in dwelling on errors and mistakes. Second-guessing decisions after the fact is as useless and costly as seeking the optimal solution before-hand. It is more useful to consolidate the gains achieved by actually doing something.

An optimizer, on the other hand, rarely acts. He assumes that perfect solutions are possible and that the cost to attain the optimal solution is irrelevant. Can there be any question that Kerry is constantly in the process of gathering information and refining his positions? His constant criticism of Bush only makes sense if he assumes perfect decisions are possible a priori. Is it at all surprising that Kerry made his name in the Senate only as an investigator, not as a legislator? At least in the arena of decision-making, it is Bush who humbly embraces human fallibility and Kerry who arrogates to himself the possibility of exhaustive knowledge. Bush is a leader; Kerry a legal engineer.

Health Care

Bush’s domestic policies assume human fallibility as well, exemplified by his health care plan.

Both candidates seem to recognize that financing American health care is messy. Normal market models do not apply; not because health care decisions are somehow not economic decisions -- they are. Economics simply deals with the allocation of scarce resources that have alternative uses. As much as people wish the opposite were true, health care is a scarce resource. Rationing does, and must, occur. There are also alternative uses for health care. Any elective surgery provides a good example for this, especially cosmetic surgery. We must admire the knowledge and skill demonstrated by plastic surgeons in these extreme makeover shows on TV; but we also recognize that there is an unlimited demand for their services and a variety of alternative uses of their skill.

The mechanism for allocating resources in a market economy is price set by supply and demand. Prices serve the very useful function of impersonally enabling millions of transactions between consumers and suppliers. Prices are, in essence, ambassadors conveying messages about the desires of consumers and suppliers and negotiating a compromise agreement between them. However, the fundamental laws of supply and demand, assuming a transaction between consumer and supplier, don’t really apply in health care; the consumer, purchaser and payer are all different parties. Generally, the employer is the purchaser. Benefits managers within our large corporations evaluate the prices and quality of services of different health plans. The employee is the one who actually then uses the service. The insurance company, or the government, pays for the service. So, market forces are muted and confused in our health care system.

Once we recognize that our health care system is an economic hybrid, we can devise a couple different strategies to fix it, to purify it, if you will. The first, Bush’s, is to introduce more elements of a standard market economy into health care financing, to reunite consumer and purchaser. The intent of health savings accounts, and cost sharing mechanisms, is to involve the consumer of the health care service in the purchasing decision so that standard laws of supply and demand can work, and so that price can play its normal very useful role in allocating health care resources.

Kerry’s strategy, on the other hand, remains a hybrid but moves away from a market model for health care toward centralized control. It reunites payer and purchaser, but not consumer. The consumer is even more insulated from the purchase decision than before. Kerry would deny that. He argues that his is an entirely voluntary plan. However, everyone who has worked in health care knows that the 80/20 rule applies: 20% of the cases generate 80% of the cost. (Actually in the studies I’ve been involved in a much smaller percentage of cases generated a greater percentage of the cost.) Kerry’s plan is to reduce employer-based health insurance premiums by making the 20% of cases and 80% of cost the responsibility of the government. There is absolutely no question health insurance premiums will go down, and no employer would continue to offer private insurance plans for catastrophic health care. However, the actual aggregate cost will not go away but will probably increase because of administrative inefficiencies.

Under Bush’s proposal, the market guides millions of individual health care decisions. Otherwise the health care system is too complicated, and unintended consequences of policies too varied and unpredictable, for the limited human mind to fully comprehend. Under Kerry’s plan technocrats will deliberately steer health care decisions through the creation of “self-executing rules” similar to those already in play in the Medicare system. Bush’s plan assumes limitations of human understanding; Kerry assumes an intelligentsia can overcome these limitations.

Isn’t the summary of Kerry’s befuddled campaign simply this, “I’m smarter, more competent and can second-guess anything!” Bush, in spite of a swagger and cocky smirks, assumes human fallibility and reveals humility where it counts.