Do you believe in Stein’s Law?

Ezra Klein asks:

Do you believe in Stein's Law?

Stein's Law is the dictum named for the economist Herbert Stein.
If something cannot go on forever, he's reported to have said, it will
stop…It cannot be the case that we
will let health-care spending literally consume 100 percent of
America's gross domestic product before the end of the century.
Health-care spending cannot continue to increase at this rate. Thus, it
will stop.

I can imagine health care consuming thirty to forty percent of U.S. gdp at some point well short of the next century.  (When did people first realize that agriculture would fall to such a tiny share?)  In any case, Ezra frames a key issue:

Every year, we contain costs by quietly letting 2 million or so more
people fall into the ranks of the uninsured. And why not? It does not
require an act of Congress. It does not require a war with a powerful
interest group.

Recent polls notwithstanding, I still don't see the median U.S. voter as either a) willing to have his or her own health insurance taxed, b) accepting serious restrictions on Medicare reimbursements relative to the status quo, c) accepting the mix of HMOs and co-ops that could actually control costs, or d) taking lots of money away from "health care" and putting it into arguably-more-effective public health programs.

Polls are tricky.  The HMO revolution of the 1990s did not "poll" well ex post and that is why it is no longer with us.  Remember also that Harry Truman ran and won on a single-payer platform.  That was a long time ago.  That and other health care reform ideas have been popular in this country except when it comes to doing them.

So to answer Ezra's question, no I do not believe in Stein's Law.  The impossible will likely continue (until it stops).  If economic growth exceeds one percent and progress against disease continues, rising health care costs imply a semi-stable equilibrium for a long time to come, even if it's far from an optimum.  Cheaper, uninsured "retail" care, run on a walk-in, Wal-Mart sort of basis, may alleviate the burden on the uninsured to some extent.

Addendum: Read the comment by Garett Jones:

If the median voter hasn't changed her position much in the last
year or two, then by the MVT the policy outcome won't change much.
Whether the median voter is the "median member of Congress" or the
"median voter at the booth" is a minor question at that point.

The Dems have picked up a lot of culturally-conservative seats so
the median member of Congress probably hasn't changed her views all
that much. When you hear "The Dems won a seat that had been GOP for
decades" you should probably think Blue Dog.

And on Krugman's alleged evidence of unmet demand for health care
reform: As Larry Bartels's resarch shows, voters always say they want
more government services and lower taxes: They want more for less, no
surprise to economists. This is true even in Sweden. Voters leave it to
the legislators to figure out how to optimize their re-election chances
subject to those preferences and the government budget constraint. Is
there also a massive unmet need for tax cuts?

As the link..shows, support for massive health care reform
is lower now than in 1993: The median voter—whether in the booth or
on the floor on the House–is probably less supportive of massive
change than in 1993. Bad news for universal health care, if the MVT is
roughly true.


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