Excellent article by the Stephen Levitt on the government getting involved with stuff it should not.
http://www.nytimes.com/2008/01/20/ma...n-freak-t.html
The Case of the Red-Cockaded Woodpecker
One year from today, a new president moves into the White House. This president will be eager to carry out any number of plans — including, surely, plans to help the segments of society that most need help. Extending a helping hand, after all, is one of the great privileges and responsibilities of the presidency.
But before charging ahead with such plans, the new president might do well to first ask him- or herself the following question: What do a deaf woman in Los Angeles, a first-century Jewish sandal maker and a red-cockaded woodpecker have in common?
A few months ago, a prospective patient called the office of Andrew Brooks, a top-ranked orthopedic surgeon in Los Angeles. She was having serious knee trouble, and she was also deaf. She wanted to know if her deafness posed a problem for Brooks. He had his assistant relay a message: no, of course not; he could easily discuss her situation using knee models, anatomical charts and written notes.
The woman later called again to say she would rather have a sign-language interpreter. Fine, Brooks said, and asked his assistant to make the arrangements. As it turned out, an interpreter would cost $120 an hour, with a two-hour minimum, and the expense wasn’t covered by insurance. Brooks didn’t think it made sense for him to pay. That would mean laying out $240 to conduct an exam for which the woman’s insurance company would pay him $58 — a loss of more than $180 even before accounting for taxes and overhead.
So Brooks suggested to the patient that they make do without the interpreter. That’s when she told him that the Americans With Disabilities Act (A.D.A.) allowed a patient to choose the mode of interpretation, at the physician’s expense. Brooks, flabbergasted, researched the law and found that he was indeed obliged to do as the patient asked — unless, that is, he wanted to invite a lawsuit that he would probably lose.
If he ultimately operated on the woman’s knee, Brooks would be paid roughly $1,200. But he would also then need to see her for eight follow-up visits, presumably with the $240 interpreter each time. By the end of the patient’s treatment, Brooks would be solidly in the red.
He went ahead and examined the woman, paying the interpreter out of his pocket. As it turned out, she didn’t need surgery; her knee could be treated through physical therapy. This was a fortunate outcome for everyone involved — except, perhaps, for the physical therapist who would have to pay the interpreter’s bills.
Brooks told several colleagues and doctor friends about his deaf patient. “They all said, ‘If I ever get a call from someone like that, I’ll never see her,’ ” he says. This led him to wonder if the A.D.A. had a dark side. “It’s got to be widely pervasive and probably not talked about, because doctors are just getting squeezed further and further. This kind of patient will end up getting passed on and passed on, getting the runaround, not understanding why she’s not getting good care.”
So does the A.D.A. in some cases hurt the very patients it is intended to help? That’s a hard question to answer with the available medical data. But the economists Daron Acemoglu and Joshua Angrist once asked a similar question: How did the A.D.A. affect employment among the disabled?
Their conclusion was rather startling and makes Andrew Brooks’s hunch ring true. Acemoglu and Angrist found that when the A.D.A. was enacted in 1992, it led to a sharp drop in the employment of disabled workers. How could this be? Employers, concerned that they wouldn’t be able to discipline or fire disabled workers who happened to be incompetent, apparently avoided hiring them in the first place.
How long have such do-good laws been backfiring? Consider the ancient Jewish laws concerning the sabbatical, or seventh year. As commanded in the Bible, all Jewish-owned lands in Israel were to lie fallow every seventh year, with the needy allowed to gather whatever food continued to grow. Even more significant, all loans were to be forgiven in the sabbatical. The appeal of such unilateral debt relief cannot be overestimated, since the penalties for defaulting on a loan at the time were severe: a creditor could go so far as to take a debtor or his children into bondage.
So for a poor Jewish sandal maker having trouble with his loan payments, the sabbatical law was truly a godsend. If you were a creditor, however, you saw things differently. Why should you lend the sandal maker money if he could just tear up the loan in Year Seven? Creditors duly gamed the system, making loans in the years right after a sabbatical, when they were confident they would be repaid, but then pulling tight the purse strings in Years Five and Six. The resulting credit drought was so damaging to poor people that it fell to the great sage Hillel to fix things.
