The American Psychiatric Association (APA) has gone crazy -- like a fox.

There was a time when we could be more charitable about the vagaries in the APA’s Bible, the DSM. But not anymore. If you’ve never heard of the DSM, it’s the Diagnostic and Statistical Manual series the APA publishes. Psychiatrists all over the world use the DSM as a guidebook for treating people with some form of mental illness. But the APA may test credulity with its upcoming edition.

I refer specifically to proposed changes in the DSM-V due out in 2013. It’s no accident these changes reflect new political realities about how psychiatric medicine gets paid for and by whom. Consider this from Reuters back in July:

Leading mental health experts [in Britain] gave a briefing on Tuesday to warn that a new edition of the Diagnostic and Statistical Manual of Mental Disorders (DSM), which is being revised now for publication in 2013, could devalue the seriousness of mental illness and label almost everyone as having some kind of disorder.

Citing examples of new additions like "mild anxiety depression," "psychosis risk syndrome," and "temper dysregulation disorder," they said many people previously seen as perfectly healthy could in future be told they are ill.

"It's leaking into normality. It is shrinking the pool of what is normal to a puddle," said Til Wykes of the Institute of Psychiatry at Kings College London.

Mild anxiety? Temper dysregulation? Risk syndrome? Reuter’s clearly forgot the lesson of Watergate: Follow the money.

Let’s linger on “mild anxiety”’ for a moment. Everybody gets stressed. What if all I had to do was show up with my insurance card -- paying only a $20 dollar copay -- and ask for treatment? First, I’d have an incentive to seek such treatments. An army of professionals with their diagnostic Bible would be waiting to accept my Blue Cross/Blue Shield card.

It is no accident that the British psychiatrist quoted in the passage doesn’t like the proposed criteria. He’s British. And the NHS has to ration healthcare. So psychiatrists in Britain don’t stand to benefit from an expanded menu of diagnoses crafted by guileful Americans. In the UK, pay schedules are fixed by the NHS. But for American psychiatrists it’s a different story.

Indeed, APA members stand to gain from new regulations they lobbied for. In other words, if Til Wykes were an American psychiatrist, he too might be seeing dollar signs in temper tantrums and pot use “disorder.” But when it comes to medicine, America is the special interest state. And make no mistake: this is not the free market at work. It’s what happens when greed and government power commingle under a blanket of good intentions.

Mental Health Parity

Health insurance mandates are a great way for favor-seekers of all types in the medical profession to make more money. Chiropractors got into the game a long time ago. In North Carolina, for example, you can get your back cracked and shift the costs onto the insurance pool. It’s the same in a number of other states. Why? In these states you’re forced to buy chiropractic in your insurance plans and the insurers are forced to cover it. So many people think: if I’ve got chiropractic in my plan and I have to pay for it, why not use it? The chiropractors clean up. You get two days of good posture for the price of a copay. The problem? The cost is shifted. Insurance premiums ratchet up and up -- for you and everybody else.

Now psychiatrists have gotten in on the action. Congressional Democrats sneaked national “mental health parity” into one of the bailout bills of 2008. The legislation was designed to complement Obamacare, but it has been decades in the making. Mental health parity means insurance companies now have to cover mental health just as they do all other health services. Of course, the more things they have to treat, the more psychiatrists stand to benefit from the system.

And the incentives kick in: Now that you have to buy mental health coverage, you might as well use it: I’ve been feeling a bit blue. I should go get some Lexapro. Of course, if you were paying the full cost of the scrip, you might decide to get more exercise or practice positive psychology. But Lexapro is virtually costless to you and you don’t have to speed walk in the rain at 6 am.

Wait. So which is better: exercise or Lexapro? It’s hard to tell whether one can rely on the experts anymore. David H. Freedman, featured in the Atlantic, writes:

[M]edical-science “never minds” are hardly secret. And they sometimes make headlines, as when in recent years large studies or growing consensuses of researchers concluded that mammograms, colonoscopies, and PSA tests are far less useful cancer-detection tools than we had been told; or when widely prescribed antidepressants such as Prozac, Zoloft, and Paxil were revealed to be no more effective than a placebo for most cases of depression; or when we learned that staying out of the sun entirely can actually increase cancer risks;... (Emphasis mine.)

One has to wonder how much of this sort of thing comes from the inherent imprecision of medical science and how much comes from regulatory capture.

Guilds are created to benefit themselves, not necessarily consumers. And one thing is certain: the psychiatric guild has become powerful. As healthcare moves further into crony capitalism, it will be increasingly difficult to tell if the prescription pad is doubling as check book linked to a taxpayer-funded expense account.

Leveraging Information Asymmetries

I can hear the howls of indignant psychiatrists now: ‘Mr. Borders: You’re no psychiatrist. How dare you meddle in the affairs of trained medical professionals!’ I dare first because some of the proposed diagnostic criteria in the DSM-V defy common sense. Second I dare because many of these new criteria are being disputed by other reputable psychiatrists abroad.

The APA reckons it can leverage both its authority and information asymmetries against an unwitting public. If I understand Public Choice Theory it can and will. But we should question the APA’s motives. We should at least ask: who benefits? Because given new political realities like mental health parity and Obamacare -- which extends Medicaid benefits to the middle class and keep “children” on policies till they’re 26 -- it’s becoming increasingly clear that the DSM is not being re-designed so much to treat mental illnesses, but to invent them.

It’s perfectly rational. If the APA gets to make up its own rulebook, it will exploit that fact to its advantage. You will pay them through Medicaid, Medicare or higher insurance premiums. But one way or the other, you’ll pay. Medscape (WebMD)’s Steven Fox writes:

The introduction of the new category of addictions and related disorders includes, as a subgroup, several "substance-use disorders," categorized by drug — for example, "alcohol-use disorder" and "cannabis-use disorder." Dr. O'Brien said that although the language for DSM-V will be modified significantly from earlier editions of the manual, the diagnostic criteria for these types of disorders will remain essentially the same.

Translation: we’re all going to be paying inflated prices for an army of new patients--many with vague, dubious diagnoses. The pothead no longer simply has to put down the bong. He can seek treatment from a licensed professional who will charge exorbitant prices the pothead will never have fully to pay.

The Expense Account Effect

America’s healthcare system is a mess. There’s no question. But the problem cannot be remedied by more government intervention--the source of the pathology. It can only be remedied through a holistic approach. One aspect of such holistic reform has to be a change in who pays for what and the incentives of players in the system -- patients, providers and insurers.

In other words, America’s PPO/HMO/Medicare system with all its mandated coverage items, turns the healthcare industry into one big all-you-can-consume buffet. When I go to lunch with my corporate expense account, I behave differently from how I behave with my personal debit card. And so does everybody else. The American healthcare system -- public and quasi-private -- gives everyone a medical expense account card that’s linked to his neighbor’s wallet.

Short of the ethical questions surrounding the contrivance of new disorders like “temper dysregulation disorder,” psychatrists are perfectly rational to take advantage of the system. Why let the AMA and Big Pharma divide all the spoils? Why not get in on the action?

Speaking of Pharma, drugmakers also stand to benefit from this mental health free-for-all. Along with changes to the DSM, you’re likely to see the FDA being captured even more than it has. Drugs once indicated for X may suddenly also be indicated for Y. It happens all the time -- but with questionable efficacy. That’s what happens with the growth of the regulatory state. Special interests game the system. The APA is a laggard in this regard. The AMA paved the way. But the psychiatrists are catching up. And we have to wonder who’s next. Heaven forbid the personal trainers and health food grocers get organized.

The Primary Care Canard

To duck charges of legal corruption (no pun), you’ll hear many in the psychiatric community use the old “primary care” canard. For example:

[Dr. Charles O’Brien] acknowledged that more money will go for treating the disorders early but stressed that numerous studies have shown that early intervention saves money later on, for example, avoiding the cost of liver transplantations in alcoholic patients. "It means we're likely to catch these problems earlier, when they're more amenable to treatment," he said.

This rationalization rolls so easily off the tongue. But rarely do those making it cite these “numerous studies”.

In fact, writing in the New England Journal of Medicine during the last presidential election, health economists Cohen, Neumann and Weinstein concluded:

"Our findings suggest that the broad generalizations made by many presidential candidates can be misleading. These statements convey the message that substantial resources can be saved through prevention. Although some preventive measures do save money, the vast majority reviewed in the health economics literature do not. Careful analysis of the costs and benefits of specific interventions, rather than broad generalizations, is critical. Such analysis could identify not only cost-saving preventive measures but also preventive measures that deliver substantial health benefits relative to their net costs; this analysis could also identify treatments that are cost-saving or highly efficient (i.e., cost-effective)." (Emphasis mine.)

Even if you could justify rent-seeking on grounds that taking preventive measures with, say, “alcohol use disorder,” it ought to be difficult to use the primary care rationale for any number of other kooky disorders dreamt up by the APA inner-circle, its lawyers or its supplicants. Oh but they will: If we treat temper tantrums early, there will be less crime, etc. People get creative when it comes to rigging the game..

It’s not just the psychiatrists and Pharma who stand to gain. This is also a subsidy largely for the wealthy. A new bonanza for the so-called “worried well” is likely to pull psych doctors away from helping those who need it most -- the chronically mentally ill poor -- and into practices built to treat wealthy people with newly-minted Cadillac mental health plans.

The Separation of Medicine and State

It’s a classic case of Bootleggers and Baptists -- except in this case, the APA is both selling us moonshine and calling it holy water. It’s also a case of concentrated benefits, diffuse costs -- just like Mancur Olsen predicted. Of course, all of this rent-seeking gets justified by the crocodile-tear community who exploits the fact that psychiatry has gotten unequal treatment relative to other types of medicine. And up to 2008 they’d have been right.

But I’d argue that one of few available ways to start reining in medical inflation is not to belly everyone up to the mandate trough. Quite the contrary: it's to take them all off. We should have a far stricter separation of medicine and state: rely more on heatlh savings accounts (HSAs); stop subsidizing employer-based care; and eliminate coverage mandates (or at least implement so-called “Mandate Lite”). Because the perverse effects of giving psychiatrists access to the trough is that they are turning themselves, day by day, into quacks (and threatens to turn psychologists into losers).

I don't agree with everything psychiatrist Thomas Szasz has to say. But I agree with this:

For centuries the theocratic State exercised authority and used force in the name of God. The Founders sought to protect the American people from the religious tyranny of the State. They did not anticipate, and could not have anticipated, that one day medicine would become a religion and that the alliance between medicine and the State would then threaten personal liberty and responsibility exactly as they had been threatened by the alliance between church and State.

The ongoing blurring between psychiatry and the state is a means to an end. But it is not and end you and I share. It is collusion between guild and government for mutual gain -- only we pick up the tab.

Max Borders is a writer living in Austin. He blogs at Ideas Matter.