A Cure That Prolongs the Pain, Redux


I've never let my lack of expertise keep me from opining on today's hot topics, so why stop now? If I may make a few quick points concerning Washington's current health care debate:

* First and second, per Greg Mankiw's column in this past Sunday's New York Times, there are two costs that many people who are for Obama's health care plan fail to take into account (or, perhaps, naively think will not be borne): 1) anything that is publicly provided actually does have to be paid for (i.e. by all taxpayers), and 2) any time you force a lower price than the market is willing to sell for, you'll have shortages (remember long lines at the pump in the 1970's?).

* Third, per David Brooks' column in last week's New York Times, taxing health care benefits is probably the most prudent way to go, in terms of fixing the system's distortions and controlling costs. Funny, Candidate McCain ran on this and was vilified by Candidate Obama; let's hope President Obama flip-flops, listens to what his own advisors have been saying all along, and throws his support this way.

Much of the American public appears to not understand just how easily unintended consequences can rear their ugly head (job-creating legislation can destroy jobs, saving a car company can destroy the car industry), or how taxing something can actually be the fairest, easiest, and most effective way to reform (taxing health care, taxing carbon). Congress, with a few exceptions, sure doesn't seem to get that. 2010 and 2012, it seems, can't come soon enough.

Comments

LH said…
A comment and my reply from Facebook:



The comment -

Good points Lee - but what about the whole litany of other costs that are created by the absense of comprehensive health coverage...higher costs for businesses, especially small businesses; higher costs of emergency treatment as the primary means of healthcare for the poor; and then the less tangible costs of the huge impact of ill health to the poor, and society as a whole, in terms of quality of life.

An insurance based system can't just cherry pick those who are able to afford the offered coverage. To make this market work there needs to be an effort to expand coverage and I completely agree that that needs to be paid for. Higher taxes (of whatever form) and insurance premiums that redistribute the risk are going to be the price, but one that is worth paying.

The #1 health spender can become the #1 in terms of outcomes and standards; that the US is lagging in terms of life expectancy and health outcomes for everyone is a disgrace - economically and morally.



My reply -

Thanks for your comment. I completely agree with the sentiment and wanted to add two points.

This article from Business Week (http://www.businessweek.com/magazine/content/09_27/b4138034173005.htm) suggests that the cost issue is based on a current distortion in our system that compensates providers for quantity of services delivered rather than quality of life enjoyed. Hence, one of the main reasons we rich Americans (I say "rich" meaning "compared to the rest of the world," and thus I am including even the poorest among us in this country) have poor health outcomes is our inability to remedy mostly behavioral problems related to obesity, smoking, diet, and exercise . . . and our health care system isn't currently set up to reward anyone for making these behavioral changes! Instead, incredibly, everyone is rewarded for running more tests, prescribing more pills, and (morbidly) letting people get really sick so we can then do complicated and costly procedures on them. So any reform that doesn't deal with that distortion is destined to provide neither cost savings nor better health outcomes, no matter how comprehensive the coverage tries to be.

Once Congress accepts that that kind of reform is needed and anything else is just larding inefficiency on top of inefficiency, then we can talk about how we can make sure, for moral and economic reasons, we can take care of the currently uninsured. And that's where taxing health care benefits nicely solves two problems at once: it raises revenue to cover those who can't otherwise afford coverage, and it minimizes the distortion in the current system that helps lead to over-coverage and loss of cost control. Which is why I'm hoping President Obama listens to his own advisor, who would be the Furman of the Furman-McCain plan (http://gregmankiw.blogspot.com/2008/09/post-partisan-health-policy.html), and enact what McCain ran on and what Obama skewered in the '08 campaign.

Having blabbered on for two very long and incoherent paragraphs, I would now simply say that instead of reading what I just wrote, you should read the Economist's cover story from last week (http://www.economist.com/opinion/displaystory.cfm?story_id=13900898), since I just shamelessly cribbed from it. You Brits are good for a thing or two every once in a while. :)

LH

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