Tuesday, March 23, 2010

Health Care Bill

Here is Greg Mankiw on the health care bill:

Well, it appears certain that the healthcare reform bill will become law. One thing I have been struck by in watching this debate is how strident it has been, among both proponents and opponents of the legislation. As a weak-willed eclectic, I can see arguments on both sides. Life is full of tradeoffs, and so most issues strike me as involving shades of grey rather than being black and white. As a result, I find it hard to envision the people I disagree with as demons.

Arthur Okun said the big tradeoff in economics is between equality and efficiency. The health reform bill offers more equality (expanded insurance, more redistribution) and less efficiency (higher marginal tax rates). Whether you think this is a good or bad choice to make, it should not be hard to see the other point of view.

I like to think of the big tradeoff as being between community and liberty. From this perspective, the health reform bill offers more community (all Americans get health insurance, regulated by a centralized authority) and less liberty (insurance mandates, higher taxes). Once again, regardless of whether you are more communitarian or libertarian, a reasonable person should be able to understand the opposite vantagepoint.

In the end, while I understood the arguments in favor of the bill, I could not support it. In part, that is because I am generally more of a libertarian than a communitarian. In addition, I could not help but fear that the legislation will add to the fiscal burden we are leaving to future generations. Some economists (such as my Harvard colleague David Cutler) think there are great cost savings in the bill. I hope he is right, but I am skeptical. Some people say the Congressional Budget Office gave the legislation a clean bill of health regarding its fiscal impact. I believe that is completely wrong, for several reasons. My judgment is that this health bill adds significantly to our long-term fiscal problems.

The Obama administration's political philosophy is more egalitarian and more communitarian than mine. Their spending programs require much higher taxes than we have now and, indeed, much higher taxes than they have had the temerity to propose. Here is the question I have been wondering about: How long can the President wait before he comes clean with the American people and explains how high taxes needs to rise to pay for his vision of government?

This is as nice an explanation of the limits of economics as I have read on this issue. I am more confident that significant cost savings can be achieved by the way. I believe this because many countries achieve as good or better health outcomes as ours without spending nearly as much money as we do, so the savings are there, we just have to a better job getting the incentives right. But regardless, providing health care for is partly a moral issue and not just an economic one.

1 comment:

Varsha Pawar said...

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A group health policy is not really for family members or individual people. It is bought by bosses who wish to provide their useful workers with health coverage. For employee to prefer into the organization health insurance plan, he or she must work a specified amount of period each 7 days or more.

All insurance policies plans are different. They will come at different expenses and will include numerous types of factors. To uncover out what your insurance plan details are, you will require to question your boss about your insurance policy, so you can find out how it succeeds.

Employer health Insurance plan