Sunday, September 17, 2017

Validation bias and the danger of technocracy

My recent post on healthcare included a section sharply critical of the AMA.  I explained why doctor salaries (and thus, healthcare costs) are inflated by licensure requirements, and highlighted some of the ways the AMA is historically and presently to blame for that.  I’ve since done some reflection on why the AMA behaves as it does, and would like to clarify my impression of its motives.

Whenever we allow professionals to serve as gatekeepers to their profession, cynical minds like mine are quick to point out the potential for outright financial corruption.  Their initial fear – that licensing boards will suppress competition for-profit – is understandable and perhaps even healthy.  But it is also an incomplete model of regulator behavior, and one which (if focused on exclusively) risks weakening the overall argument against centralized regulation of market entry. Regulator conflict of interest is not limited to pure graft.

Really, the incentive for financial gain is tied up with a deep human desire to validate our own importance and the importance of our work, which in the case of technical experts leads them to exaggerate the importance of their own expertise.  This leads to a mutually intensifying interplay between profit and snobbery: if the expert can convince himself that the would-be market entrant is truly so inferior that the public must be protected from them, the financial gain of shutting them out seems more like a reward for their public service.

In each of the policies I described in my earlier articles and many others, the AMA means well.  It is comprised of people who have devoted their lives to healing others, and conceive of themselves as guarantors of quality in the healthcare industry.  But this is the danger of technocracy: the experts become so enraptured with their subtle intricacies of their field that they come to exaggerate the need for that knowledge, at the expense of competing considerations.  In the case of healthcare, the competing consideration is access – through both cost and patient convenience/proximity – which is part of why American healthcare today is very high quality, but endlessly expensive.

The incentives faced by AMA members are not unique to doctors or healthcare; really, they’re a problem with licensure laws in general.  Wine experts will advise you to buy a $50 bottle over a $5 box of Franzia, because they truly believe the difference is worth it.  Gun lovers will tell you to spend hundreds of dollars on all sorts of accessories – scopes, grips, special ammo, etc. – to achieve the most marginal improvements in accuracy, because THEY can tell the difference.  Music lovers will stick up their nose at generic iPod headphones, and coffee lovers at McDonalds coffee, and fashion lovers at a cheap suit, and all of this is fine when these people are making purchasing decisions for themselves.  But when you empower a narrow band of wealthy experts in a narrow, lucrative field to make cost/benefit and risk tolerance decisions for everyone in society, they will always prioritize higher quality over cost reduction at a rate that’s simply unacceptable to those outside their geeky circle of enthusiasts.

Healthcare is no different, and a century of regulation written by those most passionate about healthcare is a huge part of why it costs so damn much. It’s not that there’s no way to provide it cheaply, it’s that those ways are illegal.  The AMA stubbornly opposes any encroachment on the licensed general practitioner monopoly based on the most far-fetched risks of decreased quality or safety, even when those measures would yield comparatively massive increases in affordability or convenience.  The FDA does the same with drug approval decisions.  Nobody wins from that tradeoff except the regulators.

The dangers of technocracy are multiplied (and yet easier to overlook) when the field in question is seen as a public good, or when the providers are seen as selfless public servants driven by non-profit motives.

For some reason, people seem more willing to accept a tiered system of cost-quality tradeoffs in the markets for cars, phones or banking services than they do in the markets for education or healthcare.  Providing a minimum level of education and healthcare to everyone in society is seen by many as a moral imperative.  Maybe it is; but, that doesn’t make the cost-quality tradeoff disappear!  When policymakers impose quality-assurance regulation out of pious refusal to accept anything less than top-notch education and healthcare for their constituents, it inevitably proves counterproductive to the parallel goal of universal provision.

When wealthy business owners or Wall Street executives get in bed with federal regulators to protect their own incomes at the expense of consumer choice, progressives are the first to cry foul.  The left sees plainly how the state is a tool for corruption when the industry in question is commonly associated with greed.  But when the industry in question pertains to the provision of things liberals value, they too often cannot bring themselves to suspect the intentions of those rigging the game, accepting instead the most cursory hand-waving about consumer protection.  They should not be so naïve.  Whether driven by profit or by validation-bias, strict licensure requirements keep doctor wages artificially high at the expense of the most vulnerable in society.  Deregulating the profession would amount to precisely the sort of rich-to-poor wealth transfer the left should be able to get behind.

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