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Sunday, August 27, 2017

Understanding Donald Trump

After speaking to my oldest child last week (and he is not a kid anymore), I believe I have gained some insight into Donald Trump. What Andrew observed was that it seems that Trump is critical of anyone who is critical of him and furthermore, Trump is incapable of being critical of anyone who is supportive and uncritical of  him. It is a very simple principle of tit for tat and very consistent with the reasoning of a man who does not appear to be especially capable of any deep and reflective thought.

After thinking about this observation, it brought to mind the writings of Jonathan Haidt and his work "The Righteous Mind". This work is nicely summarized in 2011 article in Scientific American (Link)

"To understand what constitutes these moral matrices Haidt teamed with Craig Joseph from the University of Chicago. Building on ideas from the anthropologist Richard Shweder (with whom they both had studied), they developed the idea that humans possess six universal moral modules, or moral "foundations," that get built upon to varying degrees across culture and time. They are: Care/harm, Fairness/cheating, Loyalty/betrayal, Authority/subversion, Sanctity/degradation, and Liberty/oppression. Haidt describes these six modules like a "tongue with six taste receptors." "In this analogy," he explains in the book, "the moral matrix of a culture is something like its cuisine: it’s a cultural construction, influenced by accidents of environment and history, but it’s not so flexible that anything goes. You can’t have a cuisine based on grass and tree bark, or even one based primarily on bitter tastes. Cuisines vary, but they all must please tongues equipped with the same five taste receptors. Moral matrices vary, but they all must please righteous minds equipped with the same six social receptors."
It may appear that he is thoroughly unprincipled but that is not the case. Trump values loyalty beyond all other principles. His earlier dealings with Jim Comey provides support for this. Recall that in his initial dealings with Comey what he asked for ( LA Times link)

President Trump demanded "loyalty" from former FBI Director James B. Comey and asked him to drop at least part of the bureau's investigation of former National Security Adviser Mike Flynn, Comey plans to testify to Congress Thursday. In a prepared statement posted on the Senate Intelligence Committee website, Comey says that in a private dinner with Trump on Jan. 27, the president asked him if he wanted to remain as head of the FBI and told him “I need loyalty, I expect loyalty.”"I didn’t move, speak, or change my facial expression in any way during the awkward silence that followed. We simply looked at each other in silence," Comey says. He told Trump that he could promise "honesty," he says.
Comey did not get it. To Trump, loyalty is much more important than honesty. Trump's mind is likely equipped with all of the same six social receptors, but he applies a different emphasis on particular receptors. Haidt showed that this differential emphasis is a characteristic of people with certain patterns of emphasis associated with particular political leanings.  One can take a test to see where your individual leanings might be and which moral senses you might emphasize at (http://www.yourmorals.org/).  Haidt has noted that liberals and conservatives tend to place emphasis on different priorities, where liberals placing great emphasis on care and fairness and conservatives placing more emphasis on sanctity, authority, and loyalty.  Surprisingly, there seems to be an inherited component to this differential weighting that goes beyond environment. Thus, our moral intuitions may be driven by genetics to some degree.

Although I realize this is rank speculation, I believe if Donald Trump took this test his results would be skewed toward a single minded emphasis on loyalty.  His focus on loyalty is so strong and so single minded, it is hard for the rest of us to comprehend.  Yet, it does seem to explain what otherwise defies explanation. Donald Trump becomes quite understandable once you realize that no other principles are in play.


Monday, August 21, 2017

The Promises and Perils of AI - Artificial Ignorance v. Artificial Ignorance

AI - New Yorker

There is a buzz out there in the health care delivery world about the promises of artificial intelligence (AI). There are fears among physicians that they might be replaced by computers. There is excitement and there is fear and there is hype. In my opinion, at this point there is mostly hype. The reason I believe that what we have most is hype is that for most of the important tasks we can delegate to AI, we are missing one key element. AI is not something programmed. It is something learned and in order to learn a computer needs validated data sets which contain unambiguous right and wrong answers. There lies the rub.

The recent article in the New Yorker by  (AI - New Yorker AI v. MD) describes studies done by Stanford where they trained computers using images taken from patients diagnosed with melanoma.
Thrun, who had maintained an adjunct position at Stanford, enlisted two students he worked with there, Andre Esteva and Brett Kuprel. Their first task was to create a so-called “teaching set”: a vast trove of images that would be used to teach the machine to recognize a malignancy. Searching online, Esteva and Kuprel found eighteen repositories of skin-lesion images that had been classified by dermatologists. This rogues’ gallery contained nearly a hundred and thirty thousand images—of acne, rashes, insect bites, allergic reactions, and cancers—that dermatologists had categorized into nearly two thousand diseases. Notably, there was a set of two thousand lesions that had also been biopsied and examined by pathologists, and thereby diagnosed with near-certainty.......
...Thrun, Esteva, and Kuprel then widened the study to include twenty-five dermatologists, and this time they used a gold-standard “test set” of roughly two thousand biopsy-proven images. In almost every test, the machine was more sensitive than doctors: it was less likely to miss a melanoma. It was also more specific: it was less likely to call something a melanoma when it wasn’t. “In every test, the network outperformed expert dermatologists,” the team concluded, in a report published in Nature. 
So should our dermatology brethren be afraid that Watson and its prodigy will supplant the mole spotting workforce in dermatology? Perhaps, but there is a flaw in this work.  What does it mean to use "biopsy proven" images? What exactly does a biopsy prove?  It may not prove anything and there lies the problem. The teaching sets upon which machine learning is based may be validated (or not) by a not so shiny gold standard.

In a recent paper published in the British Medical Journal by Elmore et al (BMJ) the reproducibility of histology in melanoma diagnosis was examined.  The results are a bit concerning and call into question the gold standard status of anatomic pathology and its ability to "prove" anything. The best concordance found was about 80% for lesions believed by experts to be frankly malignant. That means any training set the computer viewed likely had at least a 20% error rate built in. For the more subtle lesions, the concordance rates hovered around 50% (and some lower).  How about comparing this to coin flips?

Training machines to learn to make diagnoses by using flawed teaching sets will generate AI; perhaps more likely to generate artificial ignorance than it is to generate artificial intelligence.

Sunday, August 20, 2017

Civil War Reconstruction continued

I have been a bit quiet for a while. I, like much of the country, have been appalled by the antics of President Trump for a number of typical and also contrary reasons. I do not disagree with everything that he is attempting to accomplish, just because embraces awful positions on other issues. In some sense, I am even more deeply resentful of his appalling white supremacist and neo-Nazi apologist statements. They are appalling in and of themselves, but also because these statements also can prejudice others against anything else Donald Trump may embrace. They poison his entire agenda, good and bad.
When one looks into the history of Confederate memorials, it presents a not so virtuous justification of erecting them in the first place. The great surge in erecting these monuments coincides with the promulgation of Jim Crow laws and of Lost Cause mythology. The Old South prior to the Civil War was built upon a foundation of racism at its worst. It was an economic system where people owned other people. The Lost Cause mythology attempted to soften that ugly fact and revise history to make the actions of those who led the rebellion,  to preserve the system which allowed certain people (whites) to own other people (blacks), to appear more virtuous than they really were. It also attempted to have the oppressors and former slave owners assume the roles of victims.

The monument building occurred at the same time that Washington DC was resegregated by Woodrow Wilson, the KKK membership spiked, and many gains African Americans garnered in the South after Reconstruction were rolled back through enforcement of Jim Crow laws. The nation put in place immigration laws at that time that were blatantly racially exclusive. The monuments to the Confederacy were erected for a purpose, and a not so benevolent one. We need to recognize that was part of the plan.

Do the statues need to come down? I like the idea that they need to come down only after a period of reflection and education. Here they are in plain sight, where some have been for more than 100 years. Many of us simply ignored them as empty and boring markers of distant history no longer relevant to our lives. However, the history involves events which happened not so long ago and we need to be more aware of what happened then because it is relevant to what is happening now. I believe they were erected with malice intent with an agenda focused on fear and intimidation. Some people in current times share this same agenda. There is nothing benign about this. I believe that once the truth about these statues becomes widely understood, they will come down because they will be a source of embarrassment.

In my opinion, it is not justified to honor people whose behavior and actions were neither heroic nor morally sound. They likely were people with many virtues (or at least some virtues) but their decisions to fight for a way of life predicated on human enslavement put them on the wrong side of the moral divide. It might be said that our founding fathers (Washington and Jefferson) should also be viewed in this light but I would like to make a basic distinction. Washington and Jefferson were hypocrites in that they were slave holders,  but they did not mount a rebellion based upon preservation of a morally unjustifiable tenant of slavery. Their monuments were erected to celebrate their accomplishments in creating a Republic which, although imperfect, has been a remarkable accomplishment.

Confederate leaders led a rebellion primarily motivated by the desire to preserve this abhorrent institution. We do need to recognize that their views were not unique for the times. Slavery was the norm for thousands of years and these men and women who embraced it in the early and middle part of the 19th century represented the tail end of slavery acceptability, at least in the developed world. Their lack of insight may be explainable given history, but it is not morally justifiable and clearly does not warrant any monuments celebrating their lives and actions. In the end, they accomplished essentially nothing. What is there to celebrate about their lives and accomplishments?

This series of events also highlights the perils of focusing on moral equivalencies. At the most basic level, everyone is flawed and everyone makes mistakes. This creates the opportunity to level all moral transgressions, elevating minor infractions to major status and lowering major one to minor status. We need to recognize that some transgressions are simply worse than others. Yes, I understand that this can lead one into another slippery set of slopes but we can for our work on the ends of the spectrum and not in the middle. Advocacy of Nazism and White supremacy has no middle way aspects. The philosophy is poison and has recent history marked by brutal violence and mass murder. We would be absolutely mortified if current day Germany started erecting statues honoring Adolf Hitler and Herman Goering.


Sunday, July 16, 2017

Repeal and Replace Agonies

The Republican attempts to change the ACA into something else are destined to fail. They are destined to fail not necessarily because their ideas are devoid of any merit, but they are destined to fail because they are charged with a series of impossible tasks. The only acceptable outcomes which are politically sellable are ones that must include the following characteristics:


1. All pre-existing conditions must be covered and insurance companies cannot discriminate on the basis of age of illness. To be actuarial sound you need broad participation but you can't force people to buy insurance they do not want to buy.
2. People must be insulated from the costs of care - this means minimal to non-existent copays and deductibles
3. Since health care is a right, all reasonable services need to be covered, including new and innovative treatments, drugs, and procedures
4. Cost of care must be kept in control and increases in costs must not break state or Federal budgets. However, you need to cut costs without cutting expenditures. Cutting expenditures means you will be killing people. This is where the game of political Twister really becomes interesting.


This is an impossible task. They simply cannot succeed. The insurance markets are a complete mess with the prospect of complete breakdown without intervention. However, no intervention is likely to happen without total collapse. The collapse will be used to justify movement to a Federally administered health system.  Everyone will gain coverage by fiat but that is when the next set of challenges will become apparent.


With a single payer which presumably will coopt present insurance markets, the question will be whether it will represent a floor for care or a ceiling. If a Federal "universal" program has ambitions to provide a comprehensive package of services to everyone covered, it is no trivial task to decide what is covered and what is not covered. Who is going to do this? Are we simply going to contract with the current insurance carriers to do what they have been doing? What are the gains that we will see from this approach. We as physicians and patients will end up bargaining with the same people we have been bargaining with all along. How will these parties be incentivized to administer the system. I suspect they will be rewarded for stinting on care. Sound familiar?


I have worked within a Federal single payer system call the VA Health System. The VA system is amazingly comprehensive. In fact, there are days where it appears that there is no service which might be delivered to a veteran which cannot fall broadly into the scope of health care service delivery. Furthermore, there is really no one who is charged with the job of defining what the scope of health care services might be. The end result is a perpetually expanding scope of services all defined as within the scope of their right to health care. If the job of defining scope does not fall upon former insurance companies, it will end up in the hands of Federal employees who will not be empowered to anything other than allow for scope creep.


The point is that a Federally financed universal health insurance program will not be administered by the Federal government. The Feds to no have any experience in dealing with the systems required with the exception of the VA Health System and the only thing less politically sellable than the Republican alternatives to the ACA is to put everyone into the VA health system.


Despite the explosive growth of Medicare costs, the care of patients on Medicare patients has been cross subsidized by patients whose care is covered by private insurance. A movement to Medicare for all will represent a price shock for suppliers of care They will push for acceptance of Medicare for all only if the system allows for patients to purchase supplemental policies that do more than help pay co-pays and deductibles. Care can be delivered for Medicare prices only by paring costs dramatically. With fewer financial resources coming in, health systems will need to figure out how to operate under these conditions. They will figure out how to do less and spend less and justify these actions.


We are already seeing hints of this under the current system. Rural health delivery is disappearing. It is simply too expensive to maintain a comprehensive set of services where the costs to deliver these services are higher. The first services which go away are ones with small or negative margins. There are also massive movement away from using physicians, who are expensive. The move to a single payer would in essence make everything look like rural health. The drive to reduce costs and to do less, especially less of anything low margin, would translate into whole swaths of care services disappearing. If you have a hard time finding something now, it will only get more challenging.


This is actually happening already. A shift to single payer would only accelerate this shift. However, universal state sponsored health plans also exist within the context of private insurance. This happens in France, Germany, and Great Britain. The Universal Plans provide more of a floor than a ceiling. From my understanding (and I may be wrong) the Canadian system historically had few non-state outlets, other than travelling across the southern border and paying cash to the doctors at the Mayo Clinic. A more basic coverage model is clearly possible with non-covered or poorly covered services being available via supplemental insurance. Whether this would look like our current alternatives for Medicare covered patients is uncertain. If more options are made available to non-Medicare patients, these additional choices will ultimately diffuse into the Medicare population. The program may end up to be a Medicare for all program, but I predict that the end result would be a disruption of Medicare as we know it. Giving options to one group will obligate us to provide those options to all.


What do I predict will happen within the next five years?


1. Single payer in the US. It will not likely happen in the current administration unless there is a complete meltdown of the insurance markets.
2. Single payer will result in dramatic changes to the Medicare program
3. The big debate will be how much of a parallel private insurance market will pop up  - the other tier

Sunday, June 4, 2017

Drug Recognition Experts and other snake oil salesman

I saw a story on the local news yesterday where they showed a video clip of three different people all stopped for minor traffic issues and subsequently arrested for being "under the influence" (News Link). The assessment of their compromised state was made by a single policemen using an algorithm of dubious utility.




The news story focuses on a particular Officer Carroll, a decorated Cobb County Officer who is one of the approximately 250 officers in the state of Georgia who has been trained as a Drug Recognition Expert. In the three cases identified in this news story, Officer Carroll's assessment was at odds with the final laboratory evaluation, which did not demonstrate the presence of drugs. The response of the Cobb County police was nothing short of remarkable. They commented -





"Commanders would not let Officer Carroll talk with us, but they stand behind the arrests. The department doubled-down on their assertion that the drug recognition expert is better at detecting marijuana in a driver than scientific tests."
Say what? The gold standard is an poorly validated and subjective test which can be trusted over the actually measurement of a certified lab whose machines and assays use actual positive and negative controls? What drugs are these people on? 

RAPID decision making

I learned about a new tool for decision making. It is called RAPID and it has been credited to Bain and Company Inc.

While I was introduced to this tool's use in committees structure within ate large health organization, it seems potentially even more impactful within clinical environments. In clinical environments teams of care workers participate,  yet roles and responsibilities are generally very ambiguously defined. A patient who presents with a set of complaints such as shortness of breath, decreased visual acuity, and a new onset rash on the background of hypertension, diabetes, anxiety, and history of opioid abuse will undoubtedly require a large care team to address their issues. Within any team charged with addressing these problems there will be a host of overlapping roles which currently are defined on an ad hoc basis at best, and more often than not never defined at all.

One could imagine creating a modified SOAP note or problem list which would include team members charged with making actual decisions and execution of specific plans. Accountability never happens without actual ownership of problems and definition of roles and responsibilities. 

Assessing outcomes in healthcare: Do we need the equivalent of double entry bookkeeping?

We tend not to understand how what is now viewed as mundane was once revolutionary. The simple act of balancing our checkbook is a legacy of a revolutionary and transformational process which was first propagated not much more than 500 years ago. That process is double entry bookkeeping (DEBK). There is some contention as to where DEBK was first used or at least widely used, but there is little contention that is the big picture, it is a relatively newly adopted human practice. Humans have been accumulating and trading for thousands of years. We have been formally accounting using DEBK for only a few hundred years.


What is the big deal about DEBK? It allowed individuals and more importantly larger organizations to organize large amounts of information into relatively compact journals with visual displays which allowed people to accurately assess whether their activities where leaving themselves and their organizations better off after transactions. DEBK is one of the foundations of the modern trading economy and served as a foundation for the growth of wealth and the unprecedented  improvement of the human condition which has happened in the past few hundred years.


Let's move from commerce to healthcare. In the healthcare economy, at the most fundamental level the ultimate goal is to leave patients with more health assets after encounters than they started with. While appearing very simple when boiled down to this principle, setting up the ledgers is not so straight forward. What exactly do the entries look like? What are health assets and what units can they be measured in? What specifically do people value in terms of health?


There is the absence of undesirable symptoms whether pain, anxiety, or fatigue. There is also the presence of particular functionality. Can you walk, run, climb stairs, think clearly, solve problems, or function sufficiently to work and earn a living. This sounds complicated to measure but there are already various patient reported outcomes tools which measure many of these elements.


There are also financial tools which can be used. For any given intervention, financial assets are needed to deploy. There is always a financial and time costs to devoting resources to address health issues. If we are able to measure health assets over time, theoretically we can begin to assess whether a financial commitment to a person results in a good investment.


The barriers to deploying such a project are not insurmountable. One issue we will need to anticipate is how we will execute the conversion of financial resources into health assets. There will be huge variation in terms of the preferences of specific individuals. Some people will want to invest large amounts of money to improve their health asset picture while others will want to invest those resources elsewhere.


Furthermore, improvement of health assets may be best done via investment directed toward activities and services not commonly viewed as health care services. There are currently biases skewed to certain directions of investment driven by health insurance which probably drive inefficient allocation of resources that leave people and populations worse off than if the resources were invested via some alternative approach. However, without the equivalent of DEBK for health assets, the pernicious effects and the asset losses created by these suboptimal investments are hidden and opaque.


For those who repeat the mantra that health care is different, DEBK application into the world of health assets will be a wake up call. Improvement of the human condition requires human activity driven by incentives and systems that allow us to measure whether investments of time, effort, and money actually provide on return on that investment. Do we leave people better than we found them and are the investments we make best applied to where they can best accomplish this goal?

Tuesday, May 9, 2017

Fixing Medical Prices - The history of RBRVS and the RUC

For those who are interested in the mess that is health care financing, this is a must read. It contains the story of how the RBRVS was adopted and how the whole process was co-opted by the AMA and the RUC. While the influence of the House of Medicine may be perceived to be waning in some domains, a small group of people through the RUC has shaped (warped) and continues to shape (warp) the practice of medicine at the most fundamental level.

Monday, May 8, 2017

Case discussions, tumor boards, and phantom consensus

I received referral paperwork (not really paper anymore..) on a patient this week. In the packet of information was a letter which described that the clinical details regarding this particular patient had been presented at a local medical meeting and a particular consensus regarding diagnosis was reached. The "group" thought the Dx was X. Hmmm...How interesting. Just what did this mean?


Was there an actual vote taken regarding the diagnosis and if so, what exactly was the tally? Did this tally reflect an overwhelming majority, a simply majority or perhaps just some form of plurality (45%?, 25%? or other?). I have been to enough of these meetings to know for certain, no vote was taken. The consensus recognized was owned by everyone but really no one.


This phenomena is widespread within medicine. We value clinical discussions and there are a number of traditional venues where difficult cases are presented to various groups of experts and conclusions are drawn. It is a good idea but there are limits to its utility, especially when the desire for input morphs into groupthink where no one ultimately owns the decisions made. Is this process compatible with medicine in the 21st century?

Sunday, May 7, 2017

Health care reform: What problem(s) are we trying to fix?

I feel I am being taken back to when I started blogging, at the beginning of the Obama Administration and at the time of the debates regarding the ACA. Only this time it is role reversal. The Republicans control both houses of Congress and the White House and similarly, they have insufficient numbers to avoid filibuster issues in the Senate.  I started writing this piece before the first House health care bill was withdrawn but I was not able to get back to it until after the second bill made it to the Senate. I have not had a chance to read either one in any great detail. I suspect I am no different from the overwhelming majority of people who feel entirely comfortable to render judgment, either positive or negative.
I understand the urgency which is perceived by Republican leadership, but the urgency is political urgency, not necessarily anything more. Yes, the exchanges are collapsing but from what I can tell, nothing offered in either of the replacement bills will do much to forestall this near term problem.


As far as I can determine, the debate is essentially useless. One side claims it is acting to avoid immediate ACA collapse while the other side claims it is resisting to avoid system collapse which will be induced by reform. The issues are framed as black or white. None of this makes any sense.
We have a dysfunctional system and it has been increasingly dysfunctional for decades. We spend tons of money for low value care. Services which could and should be inexpensive are expensive. We still have substantial numbers of people who are not insured, despite the ACA. Even those with insurance have a hard time accessing services they need. The quality of the services offered is spotty and highly variable. We are going broke trying to keep up with spending.

It is important to address these issues over time. It is also important to prioritize them because not everything can or should be addressed at the same time. Some of the goals are mutually incompatible, at least currently and likely inherently into the indefinite future.


In my mind there are basically two competing immediate priorities. The quality and value issue is tied to both.


1.  No one should be left without adequate resources to meet the needs of their illnesses, no matter what. Included in this is the debate regarding pre-existing conditions and insurance coverage.

2. Health care costs are increasing in an unsustainable fashion and will consume resources which may better invested outside of the health care economy.

The first tends to be talking points from the left and the second is a talking point from the right. They are two very different priority sets. Both sides want value and quality (who can argue wit that?) Making the first priorities are not compatible with making financial sustainability one's priority. It will take infinite resources to entice the last few millions to partake in the insurance market. Furthermore, even in the presence of near universal insurance there will always be circumstances where coverage will not equate to actual care. A good system which provides insurance coverage does not mean a perfect system. One will always be able to find examples of failure, even in a the best system one can deploy at any given point in time.


The current debate is very disheartening because the competing parties frame the discussion in terms of starkly right and wrong alternatives. If they actually believe this starkness is true we are in trouble. I am not sure what to hope for; parties are blind to where they might be wrong, or parties who are simply power hungry and willing to vilify those with contrary views simply to further their own personal ends.
The current system is a mess, for a host of reasons. Culpability goes back generations to decisions made in both political and private sectors. Unwinding this, if it is even possible, will be painful. It is only possible if the biggest contributors to dysfunction can be identified and addressed in a stepwise fashion. However, we cannot even come to an agreement as to what primary dysfunction we need to address. Is it the fact that there are those still out there who cannot garner sufficient benefit from the insurance/healthcare delivery system or is it that the system is financially unsustainable? Focus on the first priority and you worsen the second problem; and vice versa.
Meanwhile, the rhetoric gets more strident and the assumption is that no compromises and trade offs are required. Lobby for what you believe represents prudent fiscal constraint which is required to save future generations from bankruptcy and you get accused of being heartless and an idiot.


However, for any system to work better, there will be financial transfers required. How much is optimal is likely a moving target. They need to be based upon consistent principles, framed is a transparent way, and supported by the best outcomes data we can muster. The only real outcomes data we use is whether politicians can leverage transfers ( or resistance to transfers) into votes. Currently, financial transfers such as those which are required for the ACA, feed the polarization since they come to be either expected by some segments of society or resented by other segments, independently of whether they are good investments.

The bottom line is I don't get how anyone can be especially passionate about our options. Fixing problems which have plagued mankind for millennia does not happen by trying to implement broad political and legal fixes to problems we do not understand and are not able to readily measure success or failure. One set of constituencies measures success by how we spend while the other measures success by how little we spend.

What I am certain of is within the spectrum of solutions offered to fix health care there are ones that may be better or worse, but none that represent right or wrong. Even the better or worse assessments need to be understood within specific time contexts. Some that may be better in the short term could be worse in the longer term, and vice versa. The choices are simply not that starkly right or wrong and to vilify someone who points that out is crazy.

Sunday, April 9, 2017

The tyrannies of experts and the legacy of Woodrow Wilson

I am still in stunned. I, in no way anticipated a Trump victory in the Presidential race. He seemed like a clown to me, and a mean spirited one to boot. However, since I believed there was no way that he was going to be elected, I did not devote much time or attention to what he actually would pursue if he was elected. Press coverage did not especially help, in that it tended to cover polarizing and titillating elements such as Muslim bans and pussy grabbing.



Fast forward a few months and we have a Trump administration and despite wishful thinking of the Democratic Party, we likely have at least four years of this. The mid terms elections may sway the balance of power in Congress, but the executive branch is with us for the next four years. What does this mean? I am pretty sure I don't know but I suspect no one else really knows. I have been relatively quiet about Trump and his administration. I am inherently skeptical about everything political and for that reason I am skeptical of Trump while also skeptical of the anti-Trump movement, which appear to be monolithic in their opposition to him.



Beyond the outrageous and the titillation,  what are these guys all about? What are they trying to accomplish? Should I oppose everything they stand for? Recent coverage of the CPAC conference highlighted some brief video of Steve Bannon (Bannon) and he highlighted three major priorities; National Security, Economic Nationalism, and Deconstruction of the Administrative State. I will delve into national security at some later date, when I can say something intelligent, but must state emphatically that the mean-spirited xenophobia framed as a security concern is indefensible. Furthermore, I think Bannon and Trump are barking up the wrong tree in regards to economic nationalism, but I am out of sync with both political parties on this.



The issues raised on the Administrative State piqued by interest. I had not heard this term before but after I delved into this I realized I had given this much thought and in order to understand these issues, one must go back to the history of the Progressive movement and the works and impact of Woodrow Wilson in order to understand where this came from and how fundamentally this movement changed both how our government runs, and changed the role of experts in the private quasi-regulatory realm. Here lies much of the source of current political polarization. Do you place your faith in the state and administrative agencies (bigger government) or do you place more faith in markets and constitutional limitations which may limit the power of the state to do both good and mischief? Tough question but it is the question that must be addressed.


Please refer to the two videos below - one from Richard Epstein (Epstein) and one from the National Constitution Center (NCC).









Why markets do not work in health care

The reason that markets do not appear to work in healthcare is that there really few if any true markets deployed in healthcare. The question is, what are true markets and why do they tend to allocate resources so efficiently.


The realization I recently had focuses on a concept first put forth by Amos Tversky and Daniel Kahneman called loss aversion. Basically loss aversion means that people prefer avoiding losses as opposed to making gains. Any true market transaction must deal with loss aversion because market exchanges mean giving something up first in order to gain something. There is a complementary element to this called the endowment effect which means people place a higher value on what they already own.


What does this have to do with markets and specifically health care markets? For a transaction to happen in a free market, those undertaking the exchanges must view that they will be better off after the exchange occurs. That is a very high bar given these realities of loss aversion and endowment effect. Both parties need to hold a similar perception that they will both be better off after the exchange. Each will have to give up something they own and in market systems, what they give up is very clear to the parties undergoing the exchange. The initiation energy for the transaction has to overcome the loss aversion barrier, meaning that both parties need to be confident they are much better off after the exchange.


Health care markets are flawed markets at best. The major financial transactions happen on the front end before any services are even contemplated. They are in the form of deductions from salary, taxes, or premiums paid. These transactions do not pay for any specific health care service and they pay for some set of services which are poorly defined. Many if not people never see the money in the first place and really have no idea of what they have purchased.


This was constructed this way intentionally because if people were required to pay for premiums on a monthly basis they would experience loss aversion and push back on payment. Even with nominal charges for copays and deductibles, loss aversion prompts people to stint on their own care for the simple reason that they may perceive little value in what this money goes toward. The copays and deductibles are small fractions of the overall dollars washing around the system.


This is not unique to healthcare. Any long term investment generally has less than perfect buy in from the general public. People do not save for their retirements and Social Security is a form of forced savings. OK, it is not really savings and it is actuarially unsound, but the reason it was put in place is that because of the propensity of humans to not save for the future.


The use of insurance to pay for health care is another form of forced savings to pay for what most people will not or can not plan for. We could try to deploy more market based approaches to pay for health care but they are likely to fail miserably, or at least be viewed as failures, but not for the reasons you might think. They will fail because if people given adequate resources and are placed in charge of how they are spent, they will not view that investment in health care brings them sufficient value to invest the resources they control.  We do not trust markets in health care because we do not trust people to make the decisions that we view are best.


Let's say that instead of providing subsidies for health insurance we simply provided subsidies that people could spend as they please. We are probably right that large numbers would not spend their new found gains on health care if they were given a choice. Are those who fail to make decisions that we feel best for them short sighted of are we simply arrogant to assume that we know best?

Monday, March 20, 2017

A Prescient Address

Eisenhower's Farewell Address to the Nation

January 17, 1961 Video


Good evening, my fellow Americans: First, I should like to express my gratitude to the radio and television networks for the opportunity they have given me over the years to bring reports and messages to our nation. My special thanks go to them for the opportunity of addressing you this evening.

Three days from now, after a half century of service of our country, I shall lay down the responsibilities of office as, in traditional and solemn ceremony, the authority of the Presidency is vested in my successor.

This evening I come to you with a message of leave-taking and farewell, and to share a few final thoughts with you, my countrymen.
Like every other citizen, I wish the new President, and all who will labor with him, Godspeed. I pray that the coming years will be blessed with peace and prosperity for all. Our people expect their President and the Congress to find essential agreement on questions of great moment, the wise resolution of which will better shape the future of the nation. My own relations with Congress, which began on a remote and tenuous basis when, long ago, a member of the Senate appointed me to West Point, have since ranged to the intimate during the war and immediate post-war period, and finally to the mutually interdependent during these past eight years.

In this final relationship, the Congress and the Administration have, on most vital issues, cooperated well, to serve the nation well rather than mere partisanship, and so have assured that the business of the nation should go forward. So my official relationship with Congress ends in a feeling on my part, of gratitude that we have been able to do so much together. We now stand ten years past the midpoint of a century that has witnessed four major wars among great nations. Three of these involved our own country. Despite these holocausts America is today the strongest, the most influential and most productive nation in the world. Understandably proud of this pre-eminence, we yet realize that America's leadership and prestige depend, not merely upon our unmatched material progress, riches and military strength, but on how we use our power in the interests of world peace and human betterment.

Throughout America's adventure in free government, such basic purposes have been to keep the peace; to foster progress in human achievement, and to enhance liberty, dignity and integrity among peoples and among nations. To strive for less would be unworthy of a free and religious people.
Any failure traceable to arrogance or our lack of comprehension or readiness to sacrifice would inflict upon us a grievous hurt, both at home and abroad. Progress toward these noble goals is persistently threatened by the conflict now engulfing the world. It commands our whole attention, absorbs our very beings. We face a hostile ideology global in scope, atheistic in character, ruthless in purpose, and insidious in method. Unhappily the danger it poses promises to be of indefinite duration. To meet it successfully, there is called for, not so much the emotional and transitory sacrifices of crisis, but rather those which enable us to carry forward steadily, surely, and without complaint the burdens of a prolonged and complex struggle – with liberty the stake. Only thus shall we remain, despite every provocation, on our charted course toward permanent peace and human betterment.



Crises there will continue to be. In meeting them, whether foreign or domestic, great or small, there is a recurring temptation to feel that some spectacular and costly action could become the miraculous solution to all current difficulties. A huge increase in the newer elements of our defenses; development of unrealistic programs to cure every ill in agriculture; a dramatic expansion in basic and applied research – these and many other possibilities, each possibly promising in itself, may be suggested as the only way to the road we wish to travel.

But each proposal must be weighed in light of a broader consideration; the need to maintain balance in and among national programs – balance between the private and the public economy, balance between the cost and hoped for advantages – balance between the clearly necessary and the comfortably desirable; balance between our essential requirements as a nation and the duties imposed by the nation upon the individual; balance between the actions of the moment and the national welfare of the future. Good judgment seeks balance and progress; lack of it eventually finds imbalance and frustration.

The record of many decades stands as proof that our people and their Government have, in the main, understood these truths and have responded to them well in the face of threat and stress.
But threats, new in kind or degree, constantly arise.
Of these, I mention two only.

A vital element in keeping the peace is our military establishment. Our arms must be mighty, ready for instant action, so that no potential aggressor may be tempted to risk his own destruction.
Our military organization today bears little relation to that known by any of my predecessors in peacetime, or indeed by the fighting men of World War II or Korea.
Until the latest of our world conflicts, the United States had no armaments industry. American makers of plowshares could, with time and as required, make swords as well. But now we can no longer risk emergency improvisation of national defense; we have been compelled to create a permanent armaments industry of vast proportions. Added to this, three and a half million men and women are directly engaged in the defense establishment. We annually spend on military security more than the net income of all United States corporations.

This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence – economic, political, even spiritual – is felt in every city, every Statehouse, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.
In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.

Akin to, and largely responsible for the sweeping changes in our industrial-military posture, has been the technological revolution during recent decades. In this revolution, research has become central, it also becomes more formalized, complex, and costly. A steadily increasing share is conducted for, by, or at the direction of, the Federal government.

Today, the solitary inventor, tinkering in his shop, has been overshadowed by task forces of scientists in laboratories and testing fields. In the same fashion, the free university, historically the fountainhead of free ideas and scientific discovery, has experienced a revolution in the conduct of research. Partly because of the huge costs involved, a government contract becomes virtually a substitute for intellectual curiosity. For every old blackboard there are now hundreds of new electronic computers.

The prospect of domination of the nation's scholars by Federal employment, project allocations, and the power of money is ever present – and is gravely to be regarded.

Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific-technological elite.

It is the task of statesmanship to mold, to balance, and to integrate these and other forces, new and old, within the principles of our democratic system – ever aiming toward the supreme goals of our free society.

Another factor in maintaining balance involves the element of time. As we peer into society's future, we – you and I, and our government – must avoid the impulse to live only for today, plundering for, for our own ease and convenience, the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without asking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow.

Down the long lane of the history yet to be written America knows that this world of ours, ever growing smaller, must avoid becoming a community of dreadful fear and hate, and be, instead, a proud confederation of mutual trust and respect.

Such a confederation must be one of equals. The weakest must come to the conference table with the same confidence as do we, protected as we are by our moral, economic, and military strength. That table, though scarred by many past frustrations, cannot be abandoned for the certain agony of the battlefield.
Disarmament, with mutual honor and confidence, is a continuing imperative. Together we must learn how to compose differences, not with arms, but with intellect and decent purpose. Because this need is so sharp and apparent I confess that I lay down my official responsibilities in this field with a definite sense of disappointment. As one who has witnessed the horror and the lingering sadness of war – as one who knows that another war could utterly destroy this civilization which has been so slowly and painfully built over thousands of years – I wish I could say tonight that a lasting peace is in sight.
Happily, I can say that war has been avoided. Steady progress toward our ultimate goal has been made. But, so much remains to be done. As a private citizen, I shall never cease to do what little I can to help the world advance along that road.
So – in this my last good night to you as your President – I thank you for the many opportunities you have given me for public service in war and peace. I trust that in that service you find some things worthy; as for the rest of it, I know you will find ways to improve performance in the future. You and I – my fellow citizens – need to be strong in our faith that all nations, under God, will reach the goal of peace with justice. May we be ever unswerving in devotion to principle, confident but humble with power, diligent in pursuit of the Nations' great goals. To all the peoples of the world, I once more give expression to America's prayerful and continuing aspiration: We pray that peoples of all faiths, all races, all nations, may have their great human needs satisfied; that those now denied opportunity shall come to enjoy it to the full; that all who yearn for freedom may experience its spiritual blessings; that those who have freedom will understand, also, its heavy responsibilities; that all who are insensitive to the needs of others will learn charity; that the scourges of poverty, disease and ignorance will be made to disappear from the earth, and that, in the goodness of time, all peoples will come to live together in a peace guaranteed by the binding force of mutual respect and love. Now, on Friday noon, I am to become a private citizen. I am proud to do so. I look forward to it. Thank you, and good night.

Sunday, March 19, 2017

Tweeted to distraction

The Trump administration has submitted its 2017 budget proposal. It is steeped in controversy including steep cuts in support for the EPA, Department of Education, The CDC, and the NIH.  Everyone's ox gets gored in this budget. We can quickly get into the weeds on this, discussing the specific merits of individual line items. While I believe that the wisdom of cutting funds for specific entities such as the CDC or NIH is simply more than dubious, these micromanagement decisions draw attention away from the bigger issues; that being why we are having this discussion in the first place.

The Federal budget is a mess and the dysfunction in Washington is a direct result of the structural issues with Federal spending. The historical perspective of across the isle collaboration existed because there was sufficient discretionary spending within the Federal budget whereby deals could be struck with specific financial resources linked to keep everyone happy. That has gone away because most of the money in the federal budget is spent outside the control of Congress. The net effect of the explosion of mandatory spending is there is no real reason to collaborate and every reason to play legislative chicken when there are fewer and fewer goodies which can be allocated and shared.

The projections of future growth of mandatory spending paint a rather bleak picture if one thinks that future collaboration across the isle are any more likely than the recent past. Mandatory spending is increasingly crowding out discretionary spending. The fastest growing segments of the overall budget are mandatory spending on entitlements and interest on the debt.


We have dodged this over the past 10 years for two reasons. First, we have run huge budget deficits which have allowed for both substantial growth of mandatory spending and support of flat discretionary spending. Second,  interest rates have hovered around zero which has allowed for growth of debt without substantial growth of interest payments.

The only discussions which are happening regarding spending cuts are touching upon the margins of the discretionary spending, which is less than 1/3 of total spending. We are likely to have huge political fights over these marginal items now, which in the not so distant future will be entirely irrelevant since growth in mandatory spending will all but crowd out everything that is truly discretionary.

The party is over. Interest rates are increasing meaning the carrying cost for the debt we have accumulated will, along with growth in Medicare costs, decimate discretionary spending. If the conflicts over cutting at the margins of the Federal budget seem nasty this year, just wait until the out years when the pie gets even smaller. Adjusted for inflation, discretionary spending in 2016 is smaller than any year since perhaps 2003. We could perhaps maintain flat discretionary spending with substantial tax increases for the short term. However, this approach runs a real risk of decimating any prospect of real economic growth and besides, it is only a short term work around. We will need to address the mandatory spending piece. There is no way around this.
Unfortunately, entitlements are not politically addressable. No one wants to talk about them. Smart people become blind when the subject is raised. Smart politicians remain in office by avoiding the conversation. The press corps are populated by smart and innumerate people, at least the ones who are employed.
I for one am not interested in hearing about anyone's specific beef about any specific budget item which will be slashed without a concurrent recognition that the inability to direct financial resources to good investments is part of a larger train running down a track to nowhere. Upset about federal $'s for the EPA - what about the bigger picture? Fill in any issue with any agency; NIH, Education, Agriculture... It does not matter whether you win the fight this year if you are blind to the inevitability of mandatory spending crowding out the remainder of the Federal budget.