John Gibbs argues that the chasm between the experts and the populace is based on two factors: One, that the experts live apart from and don’t understand the rest of us, and, two, that the experts believe they are smarter than the rest of us, so don’t feel a need to account for our views.
While true, these two factors are the least of the reasons the population is fed up with the experts. The biggest reason is that the experts (the educated elite) are always wrong in their prescriptions for the country—always. If they got their remedies right, we would be a happy country with few problems, and we wouldn’t care that the ruling class feels superior to the rest of us. They would deserve to feel superior.
Unfortunately, that has not been the case since at least 1960. Everything the experts have done has failed. Not just been disappointing, not just not lived up to the expectations, but failed spectacularly, making conditions far worse than they were before and destroying lives in the process. The list of examples is endless, but here are a few.
Take a Few Examples of Major Failure
My area of expertise is health-care financing. Whether you agree with the adoption of Medicare and Medicaid in 1965 or not (there are plenty of arguments that these were not the best ways to expand coverage to the poor and the elderly), it is indisputable that both programs poured enormous sums of new money into the health-care system and dramatically raised demand for services.
Not surprisingly, increased demand without a corresponding growth of supply resulted in rising prices. This is axiomatic in any market, but it seems to have taken the experts by surprise. They were shocked that health-care spending was growing at rates ranging from 12 to 14 percent a year from 1967 to 1971, and used terms like “crisis,” and “astronomical increases in costs.” Stuart Altman, who at the time was administrator of the early Medicaid and Medicare agency Health Care Financing Administration, said if health care spending reached 8 percent of gross domestic product “our system would collapse.”
President Nixon agreed, and imposed wage and price controls on the entire economy in August 1971, but removed them in January 1973 for everything but health care, where they stayed until April 30, 1974. These succeeded in holding down the rate of growth (to just over 10 percent) for three years, but as soon as they were lifted, growth surged again to around 14 percent per year.
The next effort to control spending was the National Health Planning Act of 1974, which created elaborate bureaucracies to curtail the growth of hospitals and other health-care facilities. Of course, reducing supply at a time of growing demand was precisely the wrong thing to do, and the program failed and was repealed in 1982, but only after whip-sawing the entire system and building an industry of compliance managers, attorneys, and accountants organized to help facilities cope with all the new regulations. These jobs that had nothing to do with actual patient care did not just disappear once the law was repealed.
Next up was hospital rate-setting, established by 30 states in the 1980s, and repealed by all but one (Maryland) by 1995. Once again, the health-care system was thrown into a frenzy of compliance and restructuring, all without contributing anything to the delivery of services to patients.
I Know: Let’s Double Down on Our Stupid Ideas!
After that, the experts and army of bureaucrats previous efforts had created decided that what we really needed was managed care in the form of Health Maintenance Organization (HMOs) and Preferred Provider Organizations (PPOs). In the decade from the mid-1980s to the mid-1990s, this new panacea resulted in a stampede as the penetration of PPOs and HMOs went from 7 percent of the private benefits market in 1984 to 82 percent in 1997. The entire market was thoroughly transformed in a mere 13 years.
That is, until the “managed care backlash” set in. People hated managed care so much that when the movie “As Good as it Gets” came out in 1997, audiences cheered when one of the characters said “Fucking HMO! Bastard pieces of shit!”
But the experts were undeterred. They loved managed care, so when the opportunity came along, they renamed HMOs “Accountable Care Organizations (ACOs)” and stuck them in Obamacare.
Curiously, the idea of ACOs was completely undefined. They were a very modest part of the law, taking up just four pages of the 2,700-page law (Section 3022), and applying only to Medicare. The requirements could not be more vague. The law simply calls for groups of providers to get together and save money, under the direction of the secretary of the U.S. Department of Health and Human Services—period. What they do and how they do it is left up to the secretary. To the extent anyone had a model in mind, he would suggest Mayo Clinic or the Cleveland Clinic, but nothing in the legislation suggests those as models.
In fact, Medicare had already tried out some of the ACO concepts (such as bundled payments, case management, and pay-for-performance) in the form of demonstration projects, and found they don’t work very well. Amy Goldstein wrote it up in the Washington Post in 2011: “A key government experiment that set out to lower costs and coordinate care for Medicare patients—now the blueprint for an innovation the Obama administration is trying to move to a national scale—has failed to save a substantial amount of money. The five-year test enlisted 10 leading health systems around the country and offered financial bonuses if they could save enough by treating older patients more efficiently while providing high-quality care.”
She adds: “recent studies have shown when a medical group becomes an ACO, the financial investments it must make in record-keeping and other changes have been higher than the government has predicted, causing it to lose money for at least the first few years.”
The ACOs under Obamacare are not faring any better. In 2012, Medicare set up a program called “Pioneer ACOs” intended to blaze the trail for a new way of organizing health services. It initially attracted 32 of the most promising organizations, but by November 2014 half of them had already bailed out.
Today, even Ezekiel Emanuel, one of the architects of Obamacare, is admitting that ACOs are already a bust. An article by Kip Sullivan from Physicians for a National Health Plan quotes Emanuel at length, but also cites other information from the ACO trade association and notes the lack of research from ACO proponents to conclude:
Finding out five years after the ACA endorsed ACOs that ACOs are raising health care spending is absurd. We should never have been placed in this position. CMS, MedPAC, Fisher, Emanuel and other ACO advocates should have done good research on all costs generated by ACOs prior to promoting ACOs. They did not. The least they can do now is warn us that what little data we have indicates ACOs lose money, both for themselves and for society.
So it goes with the upper class of elite managers. They get a notion. It’s a swell notion, but unsupported by research or logic. But groupthink sets in and all their friends and colleagues tell them what a swell notion it is. They have enough political influence to get their swell notion adopted by policy makers, and entire industries hop on board.
Five or ten years later we discover the notion wasn’t so swell after all, and dump it. In the meantime, millions of people have been adversely affected. But the elite managers are unaffected. They just go on to the next swell idea. Then we marvel that voters are fed up with the whole shebang?