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Wednesday, November 7, 2007

Health Care Problems Exaggerated?

This article is a blogpost by the author of 'Economics and. . . ' blog from today. This post is well written and I agree with everything he says. He indicates that the issue is not whether or not it is a right. The issue is not whether or not the government should pay for it. The problem with the health care system is that we already have a government that has promised more services than it can deliver. Before we start promising more services, we need to figure out how we can deliver on the promises that we have already given. While it is important that we provide coverage for the poorest of Americans, Medicaid is designed for that. Apart from that, the system where the coverage is provided by the employer works pretty well. Those that don't have access to employer sponsored coverage generally have access to an individual plan. He theorizes that the problem becomes when people who do not have the option to get employer coverage and also don't have any individual coverage available due to a medical condition. It is a well written post and I hope you enjoy reading it.

Economics and. . .

I’m a bit confused by Greg Mankiw’s latest blog post on the subject of health care. He seems to be arguing that, aside from redistribution issues and the perception of rising prices, the problem is relatively minor. (“...the magnitude of the problems we face are often exaggerated by those seeking more sweeping reforms...”) I suppose Greg regards the actuarial insolvency of the Medicare system as a problem of smaller magnitude than those alleged by reformers, or perhaps as a purely demographic problem that is only nominally related to the health care issue. But it seems to me, if the government has made a commitment to pay for certain things, the fact that the prices of those things are rising rapidly – regardless of whether quality is rising faster than prices – is a big problem.

I agree with Greg’s contention (in his New York Times piece) that it can be perfectly rational to spend a larger and larger fraction of our income on health care, but that doesn’t change the fact that, under current institutional arrangements, figuring out how to pay for it is a big, big problem. To put my point a little differently, those “pundits of the left” who pretend to be concerned about the health care system but really have a redistribution agenda, they would seem to be holding some pretty good cards right now, given that the government has already promised more free health care than it will be able to deliver under current fiscal arrangements.

When Greg asks the question, “What health reform would you favor if the reform were required to be distribution-neutral?” it is impossible to answer without making an assumption about how the distributions will be worked out under the current system.

Continue reading the blog post here.

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