Market Solutions to Bad Genes and Organ Needs

Here’s a novel thought: Why not sell gene insurance to protect people financially when a genetic test reveals a nasty surprise that boosts their health insurance rates?

Here’s another: Why not fine judges who parole criminals who then go out and commit more crimes?

And one more: Why not restrict organ transplants only to people who previously agreed to be organ donors? Didn’t get around to signing an organ donor card? Aw, too bad — No kidney for you.

These and other provocative ideas whose times have (perhaps) come are found in “Entrepreneurial Economics: Bright Ideas from the Dismal Science.” The book is edited by economist Alexander Tabarrok, research director at the Independent Institute in Oakland, Calif., and will be published in March by the Oxford University Press.

The book showcases 13 big new policy ideas, all of which feature market-based, libertarian-leaning solutions.

Tabarrok wrote chapters on two of our favorite edgy ideas: gene insurance and a proposal to deal with the shortage of human organs for transplantation. He proposes allowing consumers to buy insurance before taking a test to determine if an individual has a genetic predisposition for diseases such as Alzheimer’s, high blood pressure and breast cancer. If the test comes back positive, the policy would cover the cost of any related increase in health insurance rates.

He predicted that people who bought a policy would not avoid getting gene tests for fear their insurance rates would rise. In theory, these warnings might compel people to seek treatment earlier or take better care of themselves, thereby improving public health.

Tabarrok also predicted that good things would happen if organ transplants were restricted to people who previously had agreed to donate their own body parts. Such a requirement would encourage organ donations, thereby reducing the current shortage of such body parts as hearts, kidneys and lungs. (You wouldn’t necessarily have to deny organs to those who weren’t willing to give theirs up, he added. Free riders would merely go to the bottom of the waiting list.)

More problematic, he acknowledges, is a judicial reform proposal by Steven E. Landsburg, an economics professor at the University of Rochester. “The idea is that when a judge releases someone on parole and that person commits a crime, the judge should be penalized for making a bad choice” with a monetary fine, Tabarrok said.

Then why would a judge ever parole anyone? “His solution is to pay judges for letting people out. So they get a reward if they release people who then don’t commit crimes, and are penalized if they do. What we want is for the judge to have really good incentives to make these decisions carefully.”

ENRON UPDATE: Kenneth L. Lay isn’t saying nuthin’ to nobody in the Senate, but Enron’s quiet man has been a bit more communicative with Christopher DeMuth, president of the American Enterprise Institute, and Paul Portney, who heads Resources for the Future.

Lay’s message: I quit.

In a brief telephone conversation on Feb. 7, Lay resigned from AEI’s board of trustees. He had served on the board since 1994.

Lay also is history at Resources for the Future, where he had been on the board of directors since April 2000.

“He’s off,” said RFF spokesman Jonathan Halperin. “He called and offered to resign and then followed that up with a letter. The gist of it was that he’s obviously very busy with other things and thinks it was an appropriate time to step aside.”

So true.

AUTHOR, AUTHOR: Congratulations to Brookings Institution Vice President Ron Nessen for placing second in the ninth annual fiction writing contest sponsored by the National Press Club. Nessen’s winning entry was “Five Obits,” in which he tells a story through obituaries. Obits contain some of the best reading in newspapers, Nessen noted in a recent issue of the press club newsletter. Nessen was beaten by club member Patrick Mirza, who wrote “The Transporter of Souls,” a satire about used-car salesmen. The winners will receive their awards in upcoming weeks.

PEOPLE: Coming back for a second tour at the Heritage Foundation is James Gattuso, the new research fellow for regulation. Gattuso put in five years at Heritage in the 1980s, before stints at Citizens for a Sound Economy, the Federal Communications Commission and the Competitive Enterprise Institute.

Brookings welfare expert Ron Haskins is going part time with the White House as senior adviser for welfare policy as Washington gears up for this year’s reauthorization of the 1996 welfare reform law. Haskins, who will become an unpaid guest scholar at Brookings, played a major role in producing the 1996 legislation as staff director to the House Ways and Means Human Resources Subcommittee.

Former Federal Reserve governor Laurence H. Meyer has joined the Center for Strategic and International Studies as a visiting scholar.

And AEI recently hired Steven F. Hayward, who comes from the San Francisco-based Pacific Research Institute. For the past six years at PRI, Hayward has produced the annual “Index of Leading Environmental Indicators.” Hayward, a self-described “intellectual Swiss Army Knife,” is also working on a book about urban sprawl, as well as completing the second installment of his two-volume biography of Ronald Reagan. He will split his time between AEI and PRI.