Sebastian Jones has a piece in Nation Magazine – David Sirota interviewed him this morning on his Denver talk show. Essentially, Jones is talking about a little-understood concept, the conflict of interest.
Suppose, for example, this this was a website sponsored by General Motors, and I did not disclose that fact, and then did safety and performance reviews of automobiles. If I were exposed and asked about it, I would likely say that my judgment is not compromised, and that I am perfectly capable of making informed judgments regardless of my source of income. It might even be true.
But that has nothing to do with “conflict of interest”. That expression refers to something else, the idea of serving two masters. It is inevitable that there will be a situation where the interests of one master, GM, will be at odds with the other, the general public. I cannot help but do a disservice to one or the other.
Jones’s first example is Tom Ridge, in service of the nuclear power industry but not saying so, and recommending that the Obama Administration go nuclear. If we were to ask Ridge about it, he would say that he is putting forth honest beliefs, and is therefore not conflicted. That is the standard response when people are exposed.
Over at Electric City Weblog, Dave Budge put up a link to an Atlantic article that cited a study done of 600,000 cases where people had or did not have insurance. The conclusion of the study was that having insurance does not affect health outcomes. He did not cite the funding source for the study, but with 600,000 follow-ups, it was surely very expensive. Without even glancing at the study, I told him that I knew the results were misleading, for one simple reason: People who have access to health care have better outcomes than people who do not.
But he insisted the study was objective, that it was a null hypothesis, and that I should restrict any comments to the study itself. Kind of pointless. Surely, somewhere in all of that nonesense exists a conflict of interest, and further, I should not be the one to search for it. It is the objective guy, the guy putting forth the study. Who funded it? No word.
But there’s a bigger conflict of interest at work in Washington right now- the Democrats and health care. Too many of them took too much money from AHIP and PhRMA to be objective. But the conflict runs deeper than just the money behind them. It is the private health insurance model itself. The Democrat bill that is being pushed does not deal with the conflict. Rather, it subsidizes the negative outcomes of that conflict. Republicans could not have passed such a horrible bill – such insults are usually dealt upon us by Democrats.
The conflict of interest that the Democrats want to subsidize works like this: We turn our money over to private insurers, they keep a portion of it, and use the rest to ration out health care. Each dollar they pay out in benefits reduces their profit margin. They have the stockholders on one side, and the policy holders on the other. They cannot serve one without harming the other. It’s classic. There is no way around it.
The free-marketeers are resolute and ideologically frozen in cement. They cannot fathom a market solution not working, and hence are blind to this obvious conflict. They have a conflict of thier own – married as they are to an obtuse ideology, they are at odds with reality. Hence they go into their shells, discuss these issues among themselves, and when people like me bring the conflict to their attention, they do what Budge did in this particular debate:
Back on subject. That’s nonsense, Mark. What we can or cannot see you cannot know. And when someone makes a point about an argument being made, an open minded person will take that argument on its merits – not on his ideals.
We know your position on a whole host of matters. We we don’t see is any new thought defending those.
The point of the study, funding aside, was supposedly simply bring to our attention an odd phenomenon, the apparent ineffectiveness of health insurance. It needs examination, I suppose, but let’s be frank: Budge’s purpose in highlighting it was to discredit a Harvard Medical/Cambridge Health study (no outside funding) the that found that 45,000 people die each year for lack of health insurance. He wants to disarm opponents of private health insurance. He has an agenda.
First, first they must deal with an old thought – the conflict of interest. How is it possible for insurance companies to serve two masters? I await an answer, from any of them. I pointed this out. There is no answer other than to eliminate private health insurance. The model does not work.
Piece of Mindful 
Kick that straw man! Kick it! I never asserted anything about the veracity of any study.
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To say that I am dealing with a straw man is to assert that you are more than I perceive you to be: Highly biased in your observations and selective of data that support you, to the exclusion of that which does not.
You may say the same of me, and I will not argue. I simply do not place you on the pedestal on which you place yourself. You see only what you want to see.
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Mark,
Free market system supports exactly one interest – your own. Any conflict with that is illusionary.
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Once one person or group has amassed enough power to control a portion of that market, that group seeks a “free” marketplace as a means of maintaining that control – that is, they seek to exclude competition. They use “market” forces, as squeezing and underpricing competition, buying up competitors, they seek to control government via the regulatory agencies, which they themselves control.
There are free markets. But they are not at all what you imagine. Those who must deal with free markets loathe them – these are the small producers who cannot compete with the monopolies, the lowly non-unionized laborers who have no power against bosses. That is your free market at work.
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Mark,
One day you will have explain how a man, non-violently, can FORCE other men into slavery, or prevent competition.
At ever turn, you’ll find that you will have to appeal to the argument “money buys government” – and, as usual, you find me in agreement with you.
However, you believe money is the problem.
Yet, money in the hands of free men is prosperity – but your complaint is money in the hands of evil men destroys and your solution, attempting to prevent the perversion of this evil ends up also destroying the strength of free men and their prosperity!
Whereas I see government as the whole problem.
Unlike money, government is always evil in the hands of any man.
There is no man, with the power of government that can do any good with it. Every strike deals damage somewhere.
Thus, my mantra – remove government out of the equation – and the ability of money to buy legal violence also disappears.
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So, once you grasp the concept of free market, you can re-question yourself.
Who does the insurance company serve?
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Once you grasp the concept of free markets, the question is: What is a conflict of interest? Can one both serve a policy holder and a stock holder at once? (The answer there, to carry forth, is “No.”). If not, then the business model of private health insurance cannot work, and therefore ought to be outlawed.
And indeed, in most places, it has been.
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Mark,
The interest of any business is themselves.
There is no other interest – period.
ans to satisfy this interest is supplying a service valued by others seeking their own interest.
This is the fundamental concept that Adam Smith outlined.
From this point, there is no conflict of interest – each party is undertaking action for their own benefit.
Where many people trip is misunderstanding these underlying truth. They confuse the means with the goal.
They believe that by some altruistic notion that companies exist to benefit OTHERS, and when this does not happen, they build alternative – but wholly incorrect – understanding of ‘conflicts of interest’ or ‘greed’ or ‘self-centered interests’ or ‘money hungry’ or other such representations.
Their solutions, of course, will be as horrifically flawed as their misunderstanding – solves nothing, and worse – makes matters worse!
For your example: If an insurance company does no business, it it not serving its shareholders.
To serve its core interest, it must do something valuable.
Your example makes believe that a business can do nothing good yet serve its interest – economic gain for the owner.
But this will not happen.
No business will live producing nothing good. Owners will lose the business – and the interest served by the business is destroyed.
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A national, universal health care system may be too-big-to-happen. Distrust of our huge central, federal authority isn’t going away anytime soon. There are too many examples of broad federal programs that don’t work and cost too much. Perhaps another smaller, less centralized, structure (regional, or even local) might need to lead the way before something can be adopted nationally.
If we can’t make political “devolution” work for us and for better health care, maybe no improvement is possible in the short term.
How long can local governments point fingers at state and federal jurisdictions as prices for insurance premiums, services and treatments outpace our ability to pay? Local government’s duty is to protect the “health, safety and welfare” too.
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I think it is even simpler -many countries have simply made illegal the for-profit model of health insurance. From there, good things flow.
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Good things only flow for your eyes because you ignore the bad behind you.
The “Broken Window Fallacy” – by only measuring what is done, you believe all is good.
But the loss – unseen – is ignored and uncounted – and is higher and worse.
As will all such Socialist programs, a steady erosion of wealth and prosperity grips the nation – as the unseen losses accumulate wholly ignored and weigh down the producers more and more each day.
The whole thing comes to a crashing stop with the Socialist gnawing their gums proclaiming this or that as the blame – because they are blind and ignorant the total destruction of their policies as it was never counted.
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There is nothing inherently good or evil about money. It is merely a measure of exchange. Your assumption, with which we are in primary dispute, is that wealth ends up in the hands of the producers of wealth, and that any attempt to undo that accumulation is “violence”, or disruption of the natural order.
In fact, wealth ends up in the hands of people whose sole goal in life is to accumulate wealth. These are people who are set on amassing wealth – there is probably an evolutionary reason for their existence in primitive society, but in a society where we produce far more than we need, the accumulators serve no useful function. The idea that we commit violence on them by taxing their excess accumulation is simply their game – their bought priesthood selling their self-serving philosophy.
Those who produce wealth are generally not acquisitive by nature – they are simply productive. Most people produce more wealth than they capture for themselves, and consequently that wealth drifts upward to bosses, corporate owners, etc. There is, again, some good to be had of this, but don’t make a religion of it, as we are usually awash in capital, so that taking this wealth and redistributing it downward creates a better, healthier, happier people, witness the democratic socialist countries of Europe.
Banks don’t produce wealth. Bankers don’t produce wealth. Capitalists are people who need to be reined in, as they eventually want to take control of us. You have it all backwards.
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Wasn’t it the Bolsheviks who ran around the countryside shooting anyone who had accumulated too much wealth? How did that work out?
I didn’t know shareholders had that much power. I seem to recall the shareholders of GM and Chrysler weren’t too good at accumulating wealth. Not to mention all the other investors who lost money in the tech bubble and other recent pops.
Fostering competition seems like a more productive avenue rather than scrapping the enterprise and putting it all under government control like North Korea. The restaurant industry is big, highly competitive, and thinly capitalized. Maybe they should sell health insurance for us.
For that matter, your jihad against the health insurance industry seems like a case of shooting the messenger. Even if we purge all the health insurance CEOs and give their duties to the Department of Energy (since they’re not too busy), we’re still faced with the separate problem of a high cost structure.
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That is as disjointed a packet of logic as you have ever put up.
Bolsheviks running around shooting rich people is a meme, and the basis for most Randian paranoia. The events of the early 20th century in Russia have more in common with our teabagging phenomenon than anything we on the left have done – that is, stupid people being manipulated by smart ones. The “revolution” in Russia merely produced a new set of tyrants. Lessons regarding too much or too little government are not contained in that narrative.
Shareholders make and lose money all the time. So what?
The restaurant industry produces a product that we like and use, and they compete with each other for our business. The health insurance industry does not produce a useful product. They merely bottleneck access to health care while rationing off 20-30% of premium dollars for themselves.
High cost structure in our health care system is often the product of back-scratching – insurance companies agree to pay outrageous prices for products and services because they operate in a tight and uncompetitive environment where they are able, willy nilly, to pass all costs on, as they are exempt from anti-trust laws. Procedures that costs hundreds of dollars here routinely cost a fraction of that in other countries, and it is not the government that feeds this system. The Medicas and we taxpayers are victims, just as are the holders of private health insurance. It is crony capitalism.
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…disjointed…
I was all agitated after reading some more about the leftist Obama drone in Alabama shooting up the faculty meeting, and hearing about Jared Taylor’s American Renaissance group having to cancel their conference after a left wing nut kept dialing in death threats to every hotel they tried to book. Free speech indeed.
It made me think of how the Left seems to leave a lot of corpses in its wake, considering the history of Stalin, Mao, Pol Pot et al and the upheavals of Leftist revolutions that don’t improve anything, to the increased crime rate that seems to be a camp follower of Leftism, from Eastern Europe through Africa over and up through South America to Hugo Chavez and on to San Francisco.
So I’m skeptical of claims that a larger centralized control center will make things better. Seems more a power grab than a concern with human life.
My Atlantic magazine came this morning, and there is an article by Megan McArdle that surveys some studies linking health outcomes with insurance availability, and it finds there is not much linkage. Part of it is that going into the medical establishment has a mortality of its own.
One would think that the age cohort going onto medicare would show a decrease in mortality, since the uninsured become insured through the magic of government, but no discontinuity is found.
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