Saturday, May 24, 2014

The High Cost of Protection


NOTE: These 12 essays are being reproduced from my now defunct blog Random Notes, as I intend to cite them in my upcoming essay on the use of words will emotion-heavy connotations and little in the way of actual denotation (such as "need" versus "want", or "exploit" and "fair").

Whenever we ask for the government to protect us from something, whether we realize it or not, the cost of such protection is the surrender of some of our freedom. Now, to some this may not matter, they may think that surrendering the absolute right of contract is a small price to pay for protection from excessive credit card late fees, for example, but that right may matter to others. And, more important, they may be harmed by the lost rights, even if they don't realize it.

One example that comes to mind is today's lenient tort law. It is sold as a protection of the "little guys" against the "big guys", and is said to be of little or not cost to those who it protects, being entirely financed through suits against wrongdoers. Now, I could write volumes on this topic, on how it drives up all prices, how the scattershot awards mean that while some get rich, many who are actually harmed walk away with nothing, and so on, but let us just look at one case, medical malpractice.

The realm of medical malpractice used to be very simple, if apparently unfair. The area was governed entirely by contract, and you got what you contracted to get. If the doctor made no promises, then you could not collect. If he made outrageous promises, even if he did a fine job, if he failed to live up to his promises, then he paid. In other words, the parties involved set the terms for compensation in the event of a mishap. In one way, it was absolutely fair, as the people involved set the terms before the exchange, so they really had no room to complain. On the other hand, many argued that the doctor had an unfair advantage in negotiating, as he did it all the time and could fine tune a contract, while most patients had little knowledge. Also, they added, the patient is rarely in a situation where he can refuse to agree to terms, so the doctor can draw up the contract to favor himself.

So we entered the second phase of malpractice law. This phase was still relatively fair, but it began the movement of malpractice from the concept of contract and private law tot eh area of torts and public law. Instead of being governed entirely by consensual arrangements, medical care was now to be judged by external "standards of care". In general this was harmless, as by definition the standard of care was that provided by the average doctor, so most would meet the standard. However, something was lost in this process, the freedom of both parties to agree to care which fell below the standard. No longer could a patient agree to "bargain basement" care in hopes of getting cheaper rates. He was forced to receive at least the minimum demanded by the "standard of care", and as we became richer as a society, that standard continued to increase.

That sounds trivial, but it is not. Assume that the standard of care for a head injury requires performing a CAT scan or MRI to rule out brain injury. Let us farther suppose I am a poor man with no insurance. In the past, under the contractual system, I could sign a contract to receive nothing but suture for a lacerated scalp. Under the new tort-driven system, no doctor would see me unless I agreed to a CAT scan or MRI, as failing to do so opened him to liability, even if I agreed to forgo such a procedure. In gaining supposedly greater protection, I also lost some rights, and in this case, the protection actually means I can no longer receive only the care I want, or can afford. I must receive what the courts insist doctors must provide, regardless of patient wishes.

The system remained in the tort form for some time, but inevitably, the logic of protection forced it to change. If it was a good idea to ignore the contract to provide extra protection,t he argument ran, then why should we be bound by the practices of doctors? If all doctors in a given market are negligent, should we then hold negligence as the "standard of care"? And thus was born today's expansive medical malpractice law. Instead of holding to the standard of care, the courts also began to bring in concepts from other areas of tort law, such as "reasonably foreseeable", as well as allowing juries to reinterpret "standard of care" to include far more than simply the normal care provided by doctor's in that locality under normal circumstances. The law became more arbitrary and far more driven by jury whim than by any sort of predictable law.

As with all modern expansions in tort law, the theorists sold this change as a form of "social insurance". Using the same logic they had for targeting "deep pockets" in product liability cases, they argued that those most able to pay were also likely those most able to prevent an injury, and so they should be made to bear the burden*. As a result of this mindset, modern tort law has become somewhat divorced form questions of liability and traditional concepts of fault and centered instead more on who can pay when something goes wrong.

And what has been the result? Well, mostly that you can no longer find a doctor. Honestly. In several areas the high cost of malpractice insurance has made it impossible to find an obstetrician. In others it has become difficult to find other specialties. Or if one can find them, they tend to perform endless rounds of testing and other defensive medicine in hopes of staving off any liability claims.

And that is the point of this long-winded digression. Those who supported hitting doctors with strong malpractice suits imagined that it would be paid by the doctors. They thought that patients would get better care, or else get easy reimbursement, and the only cost would be to the doctors. Instead, the patients who were supposed to be helped can no longer find a doctor, or have to undergo needless testing and increased costs. Those who were supposed to benefit ended up losing.

And that is what my original point was, that to get supposed government protection, we have to surrender rights, and, in the long run, it costs us, whether we realize it or not.

In a previous essay, for example, I discussed the calls for caps on interest rates or limits on the fees lenders can charge. And while this sounds like it would benefit borrowers, it really does not. To get this protection, we have to give up some right to contract freely. We decide that certain contracts simply can no loner be enforced. And that sounds fine until you are in a situation where you cannot get a loan because the interest rate required would be illegal, or the lender would give it, but the fees he wants are prohibited. So, in the name of protecting people with bad credit, we prohibit them from making choices and deny them the right to decide for themselves what contract to make.

And that, really, is the very nature of the nanny state, the state which promises to take care of us. Taken to its logical extreme, the nanny state becomes the asylum state, where we are denied the ability to make any choice and become prisoner-patients in the state asylum. Having decided that we are not competent to decide anything for ourselves, the state regiments and controls our every act. We are far from reaching that condition, but it is only a matter of degrees. At the moment we confine our nanny state to select areas of life, but there is no way one can logically limit it. Inevitably it will expand to more and more areas of our lives, until, in the end, we have precisely the asylum state I described.

Of course many will deny that. They will argue that the asylum state is taking things too far, that they want only to protect people from a few specific harms. But look at their logic. To protect people, we must deny them certain choices. We must say they are not allowed to make these decisions, are not competent to make the right choice. Then take that to its logical conclusion. If we can do that for one decision, why not all? If we know better than some citizens in one case, why not apply it in every case where we know better? And is there even one area in which there is not someone who will certainly make a mistake? What area can we name where people won't harm themselves through poor judgment? Why not enforce rules to make everyone make every decision in the best possible way?

And at that point, the asylum state is inevitable. Once you substitute your judgment, masquerading as the judgment of the state, for the judgment of another, you have said that compulsion is right, that adults should not be allowed to choose for themselves, and that was should guide those who might choose wrongly. You have set the stage for the eventual asylum, it is just a question of time.

As long as you deny adults the right to make mistakes, so long as you want to substitute your judgment for that of another, you are supporting dictatorship, whether you admit it or not.

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* Though many lawyers argue that Huber's case is incorrect, I don't think anyone can dispute the many citations in his book Liability tracing the evolution of the modern tort law. As he cites the brains behind the social insurance theories of tort liability, it seems hard to argue against him. Then again, after Rev. Wright, it is rather fashionable to say people mean something other than what they said, so I suppose even direct quotes don't really prove much any longer.

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POSTSCRIPT

I would point out that these laws are based on a strange, contradictory view. The asusmption is that people in general are incompetent to lead their lives on their own, that the decisions they make will likely be wrong. However, when those same people are elected to office, they become wise enough to tell their fellows exactly what to do.

I wrote on this contradiction before. However, it is easily reolved one way. The solution is to assume that, while most people are stupid, those making these decisions are some sort of elite. That helps explain two phenomena. First, the tendency toward elitism among the members of supposedly populist movements, such as the Democratic party. And second, the tendency for welfare states to establish dictatorial features (eg. the supposedly stateless communism of Marx becoming the clearly authoritarian communism of the USSR and China), as if there is only a small elite intelligent enough to decide, democracy is a foolish approach, a dictatorship of the elite makes much more sense.

UPDATE


While Wikipedia is generally pretty unreliable, as I have said before, it is handy for topics where there is little debate and you know enough about the topic to spot outrageous modifications. That being the case, the page on standard of care is not a bad description of the various meanings ascribed to the phrase in both the law and medicine.

Originally posted in Random Notes on 2008/06/14.


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