Three especially worthwhile posts

Comments

Mankiw's post is flawed and potentially disingenuous.

You can have a "public" plan that is equal in administrative function and cost structure to a private non-profit plan, but the difference is in the marketing function.

The public plan should require premiums that are not subsidized by taxpayer dollars, while at the same time not rejecting or gouging patients over pre-existing conditions and the like. Removing the profit motive makes this easier to do, but in order to truly be viable, the risk pool must be immense.

A non-profit private plan that ran for the public good would most likely remain small enough and attract only people sick enough that it would soon collapse. In order to attract enough people (read: healthy people) you do need the resources of the government to publicize the option, and in that regard I have no problem with the costs of the initial marketing function being borne by the government, as long as it backs off once the public plan is successfully established.

Mankiw scares me. He's a political strategist who pretends to be shocked (shocked!) by political strategies. Krugman knows that Obama is playing politics. Of course it's a backdoor that *may* lead to a single payer plan in the murky future if Obama is lucky. But Mankiw plays games and asks if the public option would have access to taxpayer funds not available to private firms, and the answer is certainly "yes," since taxpayers would be buying into the plan and diverting money away from private plans via a process called "competition." But Mankiw thinks this is not "honest" competition. Gee whiz, Mankiw, good point: Let's ignore the notion that universal health care is a foundation of a modern civilized society. In fact let's ignore all values that have to do with sympathy and egalitarianism, and instead ask leading questions about "honest competition."

Colin makes sense. Jim comes off as a poosay. "Waaaaaah, universal health care is a universal right in modern society." That is total BS. Listen, if you look at the chart of the uninsured, it's mostly young folks who wish to divert money into other resources. Is that so hard to understand?

I'm surprised you post the McArdle link as as worthwhile. She makes quite a few assumptions that make very little sense.

"In those six years, the percentage of uninsured families ground upward, and health care cost continued to rise at about twice the rate of inflation. But a 2.5% real annual increase in the cost of a budget item that accounts for something like 5% of annual household expenditures shouldn't make the bankruptcy stats jump that much."

Anyone that has insurance from a large employer will tell you why this is not so strange: Insurance costs are rising, but many employers are just choosing to select far weaker insurance plans to be offered to their employees. What used to be $100 deductibles are now $1500. Hospital stays are not fully covered. Out of pocket maximums get past the mid four figures, while maximum lifetime benefits sometimes don't reach the seven figures. Long term disability protection drops, and many people just don't buy their own.

So, for those people that do not require major medical treatments, costs are flat. All the increases come from those that end up having that hospital stay, and suddenly get hit by a nice, 5K+ hit to their finances. It might not be bad for you and me, but imagine what that would do to your typical Sears or Home Depot employee. Add to that any long term disability, and that family is done.

Now, if the nations employers decided to just select the expensive premiums over leaving most of their labor pool underinsured, we'd see a smaller increase in bankrupcies, but healthcare costs would be up for everyone, not those unfortunate enough to have a heart condition, or a son that had to spend his first two weeks of life in a NICU.

Of course the public plan won't be competitive with private plans unless it's subsidized. This is not because the public plan is inherently inefficient because it is state run but rather because it will have less ability to discriminate against people who are likely to have high medical expenses. This is a big part of why it is even being proposed. To ignore this fact and paint a subsidized government plan as having an inherent advantage is either dumb or deceitful.

The US Postal Service is a good example of the same sort of thing. If the US Postal Service didn't have to deliver mail to remote places, and distant places at the same sorts of rates and frequencies as more accessible places, if it wasn't shackled by serving specific public functions perhaps it could be competitive with private industry. Maybe not. Personally I think daily delivery of mail to rural areas is probably not a particularly compelling service to be subsidized but I think providing healthcare to those most in need might be.

God forbid that someone who has a medical condition should have to pay more for health care that someone who does not. That would be like a risky driver paying more for car insurance than a safe driver! Couldn't have that! Wouldn't be fair!

God forbid that people who lead a healthy lifestyle and take care of themselves should reap the rewards, instead of being punished by being strapped into the yoke of paying for everyone else's healthcare.

Janice K

Though your arguments for not having universal healthcare has its merits, how exactly is our military (spending ) efficient ?

http://www.globalissues.org/article/75/world-military-spending

When we spend more than the next 15 countries combined, you have to question the efficiency of that spend.

If cutting govt spending is the goal, surely the largest line item must be on the table ?

SN, no argument that our military spending is not as efficient as it could/should be. However, at the moment I cannot find a better model. I firmly believe in a strong military, especially in time such as these. And at least the function of national defense is addressed in our Constitution, unlike health care.

The Ugly Truth About Canadian Health Care
http://www.city-journal.org/html/17_3_canadian_healthcare.html

The Top Ten Things People Believe About Canadian Health Care, But Shouldn't
http://www.heritage.org/research/healthcare/hl856.cfm

Canadian Health Care
http://www.snopes.com/politics/medical/canada.asp

Healthcare To Die For in Britain?
http://www.capmag.com/article.asp?ID=4157

Britain's healthcare system 'worse than Estonia's'
http://www.telegraph.co.uk/health/healthnews/3453628/Britains-healthcare-system-worse-than-Estonias.html

Further information is very easy to find IF you look for it.

Janice, do you honestly put stock in anecdotes? Why don't you make an argument using comparative statistics, instead of cherry-picked stories?

The fact of the matter is that a free market would not to get care to the people who need it. It would respond to supply and demand, not medical necessity, and the result would be quite simply inhumane: people will face the impossible choice of having ruined health or ruined life (60% of all bankruptcies are caused by medical costs).

By the way, did you know 31% of US per-capita spending on health care goes to health care administration, as opposed to 17% in Canada? Canada's public health insurance program has a mere 1.3% administrative overhead. There's your "inefficient government spending."

Janice, do you honestly put stock in anecdotes?

Neal, when you're arguing with someone saying "I'm having trouble trying to find any Japanase, Canadian, European people complaining about their universal health care system killing people" pointing to Canadian and British people complaining about their health care systems killing people seems quite useful.

As for making policy decisions, not so much.

To Careless, Janice, dearieme, etc: The Krugman/Mankiw thread is about INSURANCE. It's not about quality of care. People will complain (to put it mildly) about any kind of medical standard of care until all diseases are cured and we all live forever, but the cause and effect will differ (i.e. long waits in Britain / perverse incentives from drug companies in the USA).

To Cliff: Yes, as any good doctor will tell their patient with congenital cancer, or chronic pain, etc... "If only you made better decisions!"

And back to Janice: Governments don't have a lock on waste and inefficiency. Businesses routinely throw cash around (ever heard of "business class"?) and the incentives to minimize taxable profit relative to substantial positive cash flow are enormous.

Mankiw is full of it. The economies of scale are a big barrier to entry into insurance market for non-profits. Who would provide the starting capital required to fund a startup until the pool of subscribers gets big enough to for the underwriter to break even?

I would support a public insurance option for the purpose of allowing otherwise uninsurable people to get coverage. It would charge above-market but not crippling rates, and wouldn't be expected to break even. It would essentially be welfare, but that's fine; welfare is exactly what people with chronic and expensive medical conditions need.

Seriously, who would provide the startup costs for such a non profit? It's not like there exist some incredibly rich liberal businessman who have been pushing universal health care right? It's not like any of those hypothetical people have been managing hedge funds or have made tons of money off of the currency market or have given billions to political groups. Where oh were can we find some rich millionaire and billionaire liberals who can put their money where their mouth is?

>>Seriously, who would provide the startup costs for such a non profit? It's not like there exist some incredibly rich liberal businessman who have been pushing universal health care right? It's not like any of those hypothetical people have been managing hedge funds or have made tons of money off of the currency market or have given billions to political groups. Where oh were can we find some rich millionaire and billionaire liberals who can put their money where their mouth is?<< So you are saying a liberal hedge fund manager will give billions to a startup non profit with no expectation of returns on his money? Are you saying he uses the hedge fund money or his own? Ah, forget it...

Jim,

Of course some medical conditions cannot be controlled. Similarly, bad fortune in general cannot be controlled. Is it a fundamental right for your life to be free of misfortune? If you are hit by a car or struck by lightning or infected with lyme disease, through no fault of your own, with no way of being compensated, should the government then step in and offer you compensation?

Health care in general is not EVEN misfortune. Your ability to prevent through lifestyle choice cancer, heart disease, diabetes, chronic pain, all the most deadly and serious conditions, is profound. MOST health care spending is primarily a result of lifestyle decisions. Why should the healthy subsidize the ill (a welfare issue really separate from any "insurance (i.e. risk-avoiding)" issue)? Why should the careful subsidize the reckless?

You act as if bankruptcy destroys someone's life. You are wrong. Tons of people go through bankruptcy, sometimes multiple times. It discharges your debts! Life goes on. It is not the end of the world. That is why we have bankruptcy, so that the unfortunate get a second chance at a life unburdened by debt.

If not unforeseen medical costs, what else should cause a large number of bankruptcies in the majority of people?

Most people don't start small businesses. Would we feel better if more bankruptcies were caused boneheaded moves like buying too much house based on both precarious incomes?

People who want misfortune to be handled by the government pretend two things, first, that by spreading the pain around it disappears, and second that there aren't already voluntary methods to insure against catastrophe.

If you are hit by a car or struck by lightning or infected with lyme disease, through no fault of your own, with no way of being compensated, should the government then step in and offer you compensation?

If any of these things happen to you and you don't have enough cash in the bank to pay for medical treatment, there are two options:

1. You can be left by the side of the road, or
2. You can be provided medical care without paying the full amount of the bill

#2 is the consensus result in the developed world. Now, who do you suppose pays whenever an uninsured person gets medical care without paying?

Erik & Chai,

Do I understand your claims correctly? As I read your posts, you claim that the government can establish an insurance company, and without it recieving a dime in subsidy, just because it bears the government seal and is run the government way, it will (1) be able to offer better care at a lower price than its private competitors and (2) will be able to offer the same rates to all comers and yet not be subject to the adverse selection problem. Is that right? You know, not even the liberal policy wonks working on single-payer plans make those claims. All of them assume a substantial public subsidy.

On the contrary, Cliff, while we may (will!) have to agree to disagree about whether it's a fundamental right not to have life destroyed by misfortune, I contend that society already has mechanisms in place to assist those whose lives are ruined. If my server melts down and my business collapses and my wife leaves me and I'm kicked out of our apartment and, to top it off, my fish dies, I can (or should be able to) draw welfare assistance, move into a government homeless shelter, and get food stamps. Same with bankruptcy protection, as you pointed out earlier - better than being tossed into debtor's prison or sold into slavery to settle your debts.

Note that the scenario you outlined (or the meteor falling on a house - which, I note, that person can also draw on welfare) does not destroy the unfortunate person's ability to contribute to society or, as you might put it, make his own way. Health problems do.

As far as whether it's moral for an agency to, by threat of force, drag money from you and redistribute it, I'd point out that if the marginal utility of your income is significantly less than the marginal utility of someone else's, redistribution actually increases social utility.

You can always find his email address at the Harvard website.

BTW, introducing a government-run plan makes quality of care a political issue, and people arguably have more say in the political process than they do in the corporate governance of their insurance company or hospital.

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