Organization: Penn State University
Date: Thu, 17 Dec 1992 18:31:50 EST
From: <DGS4@psuvm.psu.edu>
Newsgroups: talk.politics.medicine
Subject: Re: HIAA and Reform

In article <1992Dec16.161122.1@ssrl01.slac.stanford.edu>,
tcox@ssrl01.slac.stanford.edu (Tony Cox - (415)926-3105) says:
>
>   In article <92351.101620DGS4@psuvm.psu.edu>, <DGS4@psuvm.psu.edu> writes:
>>
>> The arguments of libertarians about the removal of legal restrictions
>> IMHO fails to address either the underlying distortions or the
>> possibility that the legal restrictions may, in fact, reflect consumer
>> desires.  Tony asked a questions a while back on whether a fully informed
>> consumer should be allowed to contract with any medical provider (I think
>> I have that right).  Tony chided me for my answer, when, in fact, I think
>> he misunderstood it.  How can a consumer be fully informed, when the actual
>> transaction that takes place between the consumer and the provider is
>> information (about the condition, about the productivity of various
>> alternatives, etc.)?
>
>   Dennis. You are off dancing with another straw man again.
>   Actually, I said, "Assume that I, as an informed, rational
>   being..." - nothing about being `fully informed'.

Fine, Tony.  Thanks for jarring my memory.  Will you allow me to
re-state you hypothetical, adding in what I think are additional
elements of the real problem?

Assume that I, as an informed, rational being wish to make a contract
with any health care provider.  Assume that there is a high probability
that fraud or negligence can occur, because the provider has an informational
advantage over me.  Assume that there is a low probability that I or anyone
else will detect this fraud or negligence because of the informational
asymmetry and the large amount of uncertainty involved in tracing the
effects of any medical intervention on health.  Assume that these difficulties
also make so difficult to prove fraud or negligence, that the probability
that I will win a tort even if I was truly harmed is very low.

I would assert that my statement is a much more accurate reflection
of the true nature of the problem.  Your statement is the straw man
which assumes away the most important parts of the problem.

>   As a physicist, I can tell you that `complete information' just
>   cannot be obtained, so any pretense of being `fully informed' is a
>   fiction.

It is the asymmetry of information that is important.



>   On a practical level, if `fully informed' is to be made a criteria
>   for economic transaction, how can _anyone_ be allowed to buy
>   _anything_ unguided? I certainly wouldn't claim to be `fully
>   informed' when I bought my car - I'd have had to strip the damn thing
>   down first!

There are readily available public and private sources of information
on both the costs and quality of cars.  The salesman has no
informational advantage, unlike the medical provider.  Beat that
straw man to death.  Full information is not the issue.  Asymmetrcic
information is.

>
>   In the real world, people can and do make decisions based upon
>   incomplete information. They have no choice in the matter.

But this is not the issue.


>   The key words in my question were "informed" (meaning that I at
>   least have _something_ upon which to make a judgement) and
>   "rational" (meaning that I am capable of using that information in
>   a reasonable way).

The key missing words in your question were the meat of the issue.

>   In any case, the information I need to make the decision on whom to
>   select as my HC provider is _not_ the information that I hope to
>   obtain - I think that perhaps you are trying to generate a logical
>   paradox!

Dennis G. Shea, Penn State
<<DISCLAIMER>>
Ain't nobody's bizness but my own. I'll be happy to accept all
the credit for anything I've written.  It's funny, however, how
employers only acknowledge the profitable ideas.