Is Douglas Holtz-Eakin still an economist?

Via Dr. Black, we get CNN reporting:

Younger, healthier workers likely wouldn’t abandon their company-sponsored plans, said Douglas Holtz-Eakin, McCain’s senior economic policy adviser.

“Why would they leave?” said Holtz-Eakin. “What they are getting from their employer is way better than what they could get with the credit.”

And why is it better? Because of the tax credit that is going away.

But let’s be nice to a man who has, in the past few months, eliminated his credibility to ensure that no ex-GWBush Administration official retains his or her reputation after leaving office.* Let’s assume he’s telling the truth.

So the young, healthy workers stay with the employer plan (that, miraculously, doesn’t go away in a miasma of Moral Hazard**). This leaves the older workers, who no longer get a decent deal from their employer, to find something in the marketplace.

Gosh, guess what happens when your selection group becomes more Adverse? Costs go up.

So let’s review what Holtz-Eakin has actually declared, explicitly and by implication:

  1. Younger workers will keep the employer-provided health insurance, since it would cost them more to buy on their own
  2. Older workers won’t be provided with insurance, and it will cost them Even More than More to buy health insurance on their own.

Even if we were ignoring that Health Insurance is NOT HEALTH CARE,*** John McCain’s proposal, by the admission of his own Economic Advisor, makes the current situation appear Pareto-optimal.

Which leaves us only one question: Why would any economist support it?

*I should probably stipulate positive here. For instance, anyone who followed Condi “I was National Security Advisor on 11 Sep 2001” Rice’s prior career wouldn’t have expected much from her.

**Using the actual Health Economics definition here, not the generic phrase to describe why we need to give Goldman Sachs and Jamie Dimon $700 Billion.

***Yes, I’m shouting. Claiming to address health care when all you address is health insurance is like claiming to have fixed a smashed-in door by changing the lock on it.

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