Free Trade in Health Care and the Federal Deficit
Dean Baker beats up on something from David Leonhardt. Leonhardt writes:
Mr. Holtz-Eakin came into Mr. McCain’s orbit during the 2000 presidential campaign, and the two men were a good match. Both of them are economic conservatives who focus more on the need to restrain government spending than on the social good it may accomplish. And they’re absolutely right that spending is the main long-term problem. In all, federal taxes now equal about 19 percent of the nation’s economic output, which is in line with the historical average. But the costs of Medicare and Medicaid, on their current path, would require that number to rise to an unmanageable 30 percent, and beyond, in coming decades. “We as a nation cannot tax our way out of this problem,” Mr. Holtz-Eakin says. “It’s just not an option.” To deal with the deficit, Mr. McCain has said that he will get tough on year-to-year spending, both in military programs and domestic ones.
Translation – tax cuts are not the problem, spending is. But the suggestion that McCain will slash and burn spending is not credible. Dean rises above this silliness and offers:
the reason why the costs of these programs are projected to explode is that health care costs in the United States are projected to explode. This would seem to suggest that the problem is health care, not spending. The country has to fix its health care system. Or, if the government is too incompetent or corrupt to fix the health care system we could simply outsource much of our health care to countries that have more efficient health care systems. Unfortunately, the protectionists in Washington and in the media are doing their best to prevent the idea of free trade in health care services from even being discussed.
Dean offers us this paper to review.