Thursday, May 28, 2009

Prescriptions for Disaster

"I think getting doctors on a salary is the very first solution..."
The original rationale for HMOs was that the insurance company would be paid a fixed amount per patient per month (although this might be modified by the patient's pre-existing medical conditions) and would be required to provide whatever medical care was necessary; therefore, they would have an incentive to do things the most economical way, i.e. through preventive medicine whenever possible.

That sounded great to me, and it still sounds like a good goal.

Unfortunately, as Adam Smith predicted (when talking about education), instead this gave an incentive for insurers to provide as little care as possible, by making the quality as low as possible, and making it as difficult as possible to obtain it.

In Bryan Caplan's class on microeconomics, he explained the concept of "moral hazard" to us, with plenty of amusing examples. I suggest this as another one.

So, how do we actually accomplish the original goal?

Thursday, May 14, 2009

Second-Best News All Day

My friend and mentor Bryan Caplan -- the guy responsible for my switching from political theory and English literature to economics, and for going to George Mason University -- thus forcing me into courses in which I actually have to learn something during the semester! -- has asked to blog one of my answers to one of his exams.

I'm pretty thrilled. It kind of makes up for the crapsack April I had (with severe downward trends in school, finances, health, and a friendship).

Tuesday, May 12, 2009

Placeholder Post

David Friedman (and others) talk about the Stupid Party and the Evil Party.

I believe it was H. L. Mencken who said "Each party claims the other is unfit to rule, and they're both right."

Here's a YouTube video from one party about the other.

"How I Became A Libertarian" by Michael Shermer

I'm a big fan of skepticism and skeptics, and my heart breaks and bleeds when I see how many of them are gullible followers of left-wing pseudoeconomics. One of the brightest lights of skepticism is Michael Shermer, who has written a blog post called "How I Became a Libertarian."