Greg Mankiw on the public health plan option. Best I've seen other than thoughts penned by yours truly.
More than 47,000 elderly Americans end up in emergency rooms each year from falls involving walkers and canes. Guess what Medicare doesn't pay for? – Doctors taking more time to better fit patients with walking aids and teaching them how to use them safely.
39% of doctors communicate with patients online. But it's mainly not about medical care.
All over the developed world, the political left only knows two ways to constrain health care spending: (1) squeeze the providers and (2) deny patients care. Since they don't believe in markets or incentives or entrepreneurship — the ways costs are controlled in other markets — there really isn't much left to do but take it out on doctors and patients. Today I want to address the mistaken idea that suppressing provider incomes is a socially good thing to do.
Of all the arguments for national health insurance, the absolute worst one is the idea that a single buyer of health care can lower the social cost of care by exercising strong bargaining power. The Physicians for a National Health Program, for example, argues that a monopsonist (single buyer) will be able pay doctors, nurses, hospital personnel and other providers below market rates. [Doctors who want the government to stick it to doctors? Medicine seems to attract more than its share of masochists. The only thing worse is an economist who hates economics. Read on.]
Paul Krugman, writing in The New York Times, uses a similar argument to advocate a public plan option in President Obama's government-run, government-regulated health insurance exchange. A public plan, he writes, would have the "bargaining power needed to bring down health care costs."
So what's wrong with this way of thinking?
Were you surprised by the studies last year, concluding that candidate Obama’s health plan would insure only one-half of the uninsured? How about the Congressional Budget Office’s finding that the $1 trillion Kennedy health plan will insure only one-third of the uninsured? Remember the recurrent theme about why change is needed: problems of cost, quality and access. Here’s the latest from the Washington Post:
Obama has distilled his position to three principles: reduce cost, ensure quality and provide choice, including a public insurance option.
This is from Ezra Klein:
Paul Starr has an important column today on the dangers of a badly designed public plan. The issue essentially comes down to adverse selection. If the public plan becomes a dumping ground for the sick and the old, it will be too costly for the young and the healthy. Rates will go up, and conservatives will point to the plans as costing X percent more than private insurance, thus proving the inefficiency of the government.
Hat tip to Marginal Revolution.
President Obama and Secretary Kathleen Sebelius, whose biographies indicate zero experience in the private, wealth-producing sector of society, believe that they can launch a new "public" health plan to "compete" against the private sector. They claim that this will keep private insurers "honest." It's an interesting position for a President who also claims that he is not interested in running a car company. Imagine if he proposed a new Government Motors, in order to keep Toyota and Honda honest! What's so unique about health insurance, that it needs government "competition," an idea repellent in other areas of American life?
Robert Reich, Bill Clinton's Labor Secretary, has the answer in today's Wall Street Journal. According to Mr. Reich, a "public option" (actually a swamp of new government bureaucracies, ready from "day one" for perpetual taxpayer bailouts), would "squeeze" the profits of private health providers. It is dead easy for government to "squeeze" profits. But that is not a valid goal of health reform. A valid goal is to squeeze the profits of providers who fail to satisfy patients' needs, and allow those who do to earn increased profits. Patients are capable of doing this, but government is not.
Over ten years, that is. Steve Parente estimates that 97% of the population will get insurance (a result I have a hard time accepting). In any event, that works out to about $75,000 per newly insured person, or $300,000 for a family of four. 64 million people will lose their private coverage to join a "public" (Medicare-like) plan.
Supporters of the public option, a government run health insurance plan to compete with private insurers, say that it will make everyone better off by forcing private firms to provide health insurance for less. But if that is the case, why not allow already existing public plan options to compete with the private sector?
Give people in Medicare, state Medicaid plans, the Veterans Administration, and state SCHIP plans the choice of staying in the government run program or taking an equivalent voucher for the purchase of private health insurance and private medical care, perhaps with a health savings account option for any leftover funds.
Two new studies: No evidence that $196 Billion in World Health Programs Has Saved Any Lives.
Video: Why the left wants a public plan option.
Pelosi: No public plan, no health reform.
httpv://www.youtube.com/watch?v=HSRFS0NdoKI
She's Got Betty Davis Eyes
