Thursday, December 20, 2007

How to Escape the Third Party Problem of Government in Health Care…and Public Education



Health Care Proposals

I found an nicely abbreviated summary of the public policy options written by Arnold Kling. He looks at three key outcomes that health care designs must produce and ranks the various proposals.

The first outcome we all want is access to health care by low income and under insured citizens, not just the rich and employed. He ranks the various designs from "Good" to "Bad" to "Ugly".

He does the same ranking for a second outcome, the quality of health care services or more accurately how quality is supposedly maintained by the design.

The third outcome is cost, the biggest problem in our current health care mess since it involves entitlements that will produce rapidly escalating costs and huge unfunded mandates in the future.

I don't think this table will find much acceptance among people who don't understand the third party problem. None-the-less, it might trigger some further investigation by us as we try to undertand why the various proposals would produce widely different outcomes in access, quality, and cost.
clipped from www.tcsdaily.com

AccessQualityCost
Good--clinics
--vouchers
--high-risk pools
data analysis data analysis
Bad--mandates
--Medicaid
--Medicare
P4Pcost containment
Uglynational health servicesmalpractice suitslicensing regulations
The table above summarizes our experience in terms of three goals of health care policy: improving access to care; improving the quality of care; and lowering the cost of our health care system.


If we understand how 3rd party funding works, or rather fails, to maintain access, quality, and cost efficiency, we can generalize this evaluation of health care proposals to other institutions. Public schooling needs this kind of evaluation.

Public Schooling

Public schooling relies on a single government provider, the school district, that is equivalent in design to a single national health service provider in health care,i.e., socialized medicine since the government owns the mean of delivery. The government agency controls and delivers all public education services just as a national health service agency would for socialized medicine.

In public education, the only exception to a forced choice from a single provider is the small number of charter schools some states have allowed, and the rich. Public education is means tested. If you are of poor means, you get what your local public school has to offer, and if you are poor you probably live in a poor neighborhood with the strong likleyhood of a poor school. If you are rich, you can afford a private school. In both systems, citizens suffer from shortage of services.


Public schooling relies on performance standards that are not even pay for performance standards. No lawsuits are allowed since their is no consumer and no consumer protection laws in public education. Public education essentially lacks any means by which to maintain quality since there is no consequence for the failure of student learning. By legislative policy, public schools are designed to produce schools and teaching, not learning. There is simply no consequence to the adults running the system if kids don't learn.

As to cost, public schools depend on a guaranteed revenue stream from the state and local property taxes. If the adults don't get the pay and benefit increases they want, they can strike. Public opinion usually supports the teachers and seldom supports school boards since it is the kids who suffer the consequences of a strike. Boards simply can't take a strike and they have no choices to the union who holds a monopoly control (legally mandated by the legislature) over the labor force.

Public schooling is at the bottom of the table, in the ugly category. If by public policy we institute a single payer or single provider system, we will by design build in the basic problems of third party systems. Public schools produce a 25% drop out rate. Of 3/4 who survive through to graduation, about 1/3 make it to a satisfactory level of academic achievement.

How's your fractions? What is the success rate of public schooling?
It is 1/3 of 3/4 which is 1/4 or 25%. Using a design similar to public schooling for health care would produce the same problems of access, quality, and efficiency that we have in public schooling.