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Preventive vs Reactive: Cheaper today means higher costs tomorrow

July 7th, 2010 · No Comments

Perhaps it is simply human nature or perhaps driven by the skewed nature of early 21st century capitalism or perhaps simply an oddity of American society, but there is a fundamental societal challenge that undermines our ability to pursue sensible policy objectives: the often huge hurdles to investing just a little bit today to avoid higher (often catastrophically higher) costs tomorrow.

We have, in the United States, a system that thrives on reactive responses to repair the situation as opposed to the less exciting but far more effective proactive (preventive) response to invest to avoid the problem and prevent (or, at least, reduce) having to rush to ‘repair’ the situation.

A good part of the problem is our accounting — how to value an avoided cost, especialy an uncertain avoided cost. The closest thing to a rational accounting for this is insurance where we are willing (even, as with auto, where forced to do so) to pay something upfront to reduce the impact of an event that is certain to occur — even if uncertainty as to whether (and, well, with life insurance — when) that bad event will occur to us. The accounting system, however, is very good at accounting for what can be easily counted and monetized. This tends to undermine the valuing of that avoided cost, of understating the real value of sensible preventive investment.

We see this in health care, with strident opposition to a unversal health care system based on preventive health care such that the United States has what can be described as the best reactive health care system in the world. E.g., we do relatively poorly at preventive and routine care but have some fantastic high-end capabilities. Preventing heart problems: poor. Doing bypass operations with good survival: great. Preventing cholesterol problems: poor. Lots of drugs to manage cholesterol: great. Writ large, the US health care system is high cost and poor at helping people avoid problems but does a good job at doing that quadruple bypass and dolling out cholesterol drugs. Now, it is not that universal single payer is the “least expensive form of health care” (cave men health care – eg none – would probably be ‘cheapest’) nor is single-payer without its challenges or problems. But, in terms of delivering a quality care across the entire society with good outcomes at lower cost, single payer does seem to be the best approach. It provides a sensible balance between investing in upfront, preventive, care while providing top-notch ‘back-end’, reactive, care when illnesses occur.

We see this is our international aid, with too little going toward fostering sustainable development (ugly words there that can be associated with “nation building”) with massive shifts in resources required to respond to earthquake devastation in Haiti or famine and strife in the Horn of Africa or … We invest too little in preventive which fosters higher cost reactive policies.

We see this in our justice system, with far too little spent on programs for ‘troubled youth’, far too little on job assistance in impoverished communities, far too little attention to rehabilitation efforts (whether in prisons, half-way houses, or otherwise), but with seemingly unlimited willingness to construct prisons to have the largest percentage of our population in prison of any modern nation on the planet.

And, we see this with energy and our energy infrastructure. We, as a society, weren’t willing to pay the price for adequate standards and supervision of our offshore drilling. The results are starkly visible in the Gulf of Mexio and across the beaches and marshes of the states bordering the Gulf. We, as a society, haven’t been willing to invest in a clean-energy infrastructure and we’re paying for it with our lungs (higher asthma rates) and our minds (mercury in the system reducing IQ levels) and our future (the risks of catastrophic climate change). We, as a society, aren’t willing to recognize the corollary costs of our energy usage … and those costs are high, today and tomorrow.

Just as in all these other domains, we are seeking paths to be ‘cheap’ today that ignore corrollary costs and that are actually increasing our costs for today and tomorrow …

We are not willing, it seems, to pay extra in transactions for ‘preventive’ and then treating the (extraordinary) costs of the impacts as seemingly unrelated to our carbon addiction:

  • Mercury in the food system due to coal-fired electricity
  • Asthma / etc due to coal burning
  • Cancers due to all forms of fossil fuel burning – with, for example, statistically significant increases in cancer rates as residences get closer to highways (gasoline/diesel exhaust)
  • Environmental impacts from mountain top removal to ash / slurry ponds to water supply degrading from hydraulic fracturing to havoc in the Gulf from BP’s still-unchecked ‘volcano of oil’
  • Climate Change and sea-level rise, agricultural disruptions, etc …

We are, societally, going ‘cheap’ on the preventive and then having to spend far more on the reactive with lower results.

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Tags: Energy