Justin du Coeur (jducoeur) wrote,
Justin du Coeur

The healthcare flap

It occurs to me that I really haven't talked about this mess. Not to get too deeply into it, but here's an opinion from the armchair economist.

First: the various proposals from the Democrats would all, to greater or lesser degrees (mostly greater), be subject to the Law of Unintended Consequences. There will be lots of problems, and it will take a fair number of years to iron them out. Let's be clear that nobody's got a panacea here.

That said, the current system for health management is very close to the *worst* model I can envision. So I'm pretty strongly pro-reform, because I'm pretty sure that any of the proposals seriously on offer would be improvements. Not perfect -- but improvements.

As for the objections from the Republicans, let's talk briefly about a few of them. (I'm going to ignore Palin's "death panels" idiocy and other distractions, and only talk about the objections that are actually substantive and based on the proposals.)

First, there's the point that this will cost the government more. Absolutely true. Even if it doesn't provide universal coverage, it *will* cost the government more. That said, most of the serious proposals will likely cost the *public* less, at least in the long run. Yes, more of that money will be funneled through taxes, so it will be more obvious, but that money is already coming out of your pocket -- it's just being deducted from your salary now instead. I don't have much respect for the notion that taxes are somehow more evil than other forms of taking my money, and I think having it all be more overt and straightforward is far better (and much less economically distorting) than the slapdash system of hidden subsidies and invisible taxes that we have now.

Then there's the public option, and the notion that it would cause the death of the private insurance industry. Again possibly true, but a far weaker argument than they'd like to make it sound. This argument is predicated on the notion that monopolies are fundamentally less efficient than non-monopolies, so this will in the long run necessarily be a disaster. I'm sorry, but that just ain't true. It's true that it's a statistical danger, but oligopolies (which is more or less what we have now) are also pretty good at being inefficient. We don't actually have a competitive market in health insurance now, because of the indirection between payment and provision of services: nobody has any real *incentive* to be competitive. And a decently-run regulated monopoly (which is approximately what we're talking about) is capable of certain efficiencies that the current model can't get. Put all that together, and I'm afraid that my reaction is mostly, "Yes, it might kill private insurance eventually, because it works better than private insurance does. So?"

Finally, there's the "creeping socialism" argument. This one really is just plain weak. It's economics as religion, and I refuse to play that game. Anyone who fails to grasp that the US *is* a socialist country (as are most developed Western economies), and has been for fifty years, hasn't been paying attention. This is one of the instances where centralization likely works better, based on the evidence we have from pretty much every other country in the developed world. I may prefer markets when they work, but I'm not very interested in the idea that they are *morally* better, which is essentially what the Republicans are predicating their arguments on.

It is possible that there is a market-based solution that would work better than either the current model or what the Democrats have proposed. But the Republicans really haven't offered that: at best, they've offered very slight tinkering, that does nothing to address the underlying economic foulups of the current system. So far, we have the current system (possibly slightly tweaked), and the various Democratic proposals. Of those proposals, the more extreme ones, that include a *strong* public option, are the more plausible ones economically, and they're the ones I would most like to see implemented. They make sense, they're conceptually *far* more straightforward and workable than what we have now, and they're overall much realer than the fantasies that the Republicans have been cooking up.

(And I should be clear here: IMO, simple single-payer *is* probably the best approach of the ones that have been discussed. But I'm not spending a lot of time on it, because I don't think there's politically any chance of it happening any time soon. We make do with what we can get...)
Tags: economics, politics

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