"The health care debate reveals an underlying difference between most liberals and most conservatives about the significance and consequences of the fact that modern life is very complicated. Democratic leaders and many health experts on the left look to centralized decision-making as a means of improving efficiency and so reducing costs. Implicitly, and in many cases also explicitly, they believe that the reason our health care system is inefficient is that it is disorganized, and that the reason it is disorganized is that no one has taken up the task of organizing it. If we study the patterns of efficiency and inefficiency that emerge from current practice, discern those that work best, and then apply those patterns as rules onto practice, we will vastly improve the efficiency of American health care, they suggest. They point to the now-famous Dartmouth studies of regional disparities in health care provision and outcomes—which are certainly wonderful examples of social science at its best—and take the complicated picture that emerges from those studies to show that we need to centralize coverage decisions and run the system from one place so that best practices are universalized. A panel of health care professionals and statistics experts need to set rules for everyone to follow.
To me, this all looks like a demonstration of how much of what you conclude about public policy from social science really depends on the implicit assumptions you bring to the table about human behavior and human fallibility. When I look at the immensely complicated picture of American health care decision-making that emerges from those Dartmouth studies, I don’t think “we need to centralize this,” I think “this can’t possibly be centralized.” I take it not as an indictment of local variability but as proof of the limits of imposed efficiency. Those limits, if we take them seriously, argue for rules that set general incentives and then give individual players the freedom to find their own ways of responding to them, because we cannot know in advance the peculiar pressures that will drive behaviors in different parts of the system, and we cannot hope to eliminate those pressures. There has to be room for local and individual decision makers to find what works for them. That certainly means that the system won’t be optimized for efficiency, but optimal efficiency is not in fact the alternative to this kind of messy market approach. The alternative is artificial shortages"
RTWT
