Beating The New Republic by Seven Days, or Does Jonathan Cohn Read AB?

Yes, it’s another “AB was right” post. Detractors of this blog in general and me in particular could stop reading now.

But they shouldn’t. Anyone who thought through the economics could have pointed out what I did on the 17th:

From [Republican Congressman John] Boehner’s site:

At least 30 percent of employers would gain economically from dropping coverage even if they completely compensated employees for the change through other benefit offerings or higher salaries.

This should be intuitive. If the company is paying $1,000 a month for my family’s health care along with my $800 a month, it can raise my paycheck by $1,000 a month—employee compensation is employee compensation—and cut back on its health care administration. If I’m not a health-care administrator, it’s win-win.

Any economist worth her salt should know that lower costs of employment increase overall employment (assuming there is not a demand-side problem).

If the McKinsey “study” were accurate—again, not the way to bet—we should expect overall employment to increase….

The follow-on effects in that universe: more people joining the HIEs than expected, improvements in the measurement of “real” wage growth, greater transparency in the current health-insurance system, and arguably a larger contingency of workers demanding something closer to a single-payer solution, all improve efficiency and provide opportunity for economic expansion.

Or what Jonathan Cohn wrote for the Kaiser Health Network and The New Republic a week later:

But here’s the irony: Most people like the insurance they get from their employers, which is why you hear politicians from both parties constantly promising to keep that coverage in place. In the long run, though, workplace-based insurance is probably not an arrangement worth preserving….

An ideal health care system would…liberate employers from the responsibility of administering health benefits for workers, allowing them to concentrate on other, more productive activities. Let the car companies make cars and the grocery stores sell groceries and the software firms design software. They don’t need to be running health insurance plans, too.

I’ve left out Cohn’s historically-illiterate paragraph about the groups of private health insurance, since he omits the main reason it developed: wage controls during wartime left employers looking for other ways to attract and keep workers.* At least he comes to the correct conclusion:

A single-payer system, with a combination of basic government insurance and private supplemental coverage, would be a much better alternative. So would a “competition” system that looks like what is currently in place in the Netherlands or Switzerland, or what Senator Ron Wyden, D-Ore., first proposed back in 2007. The Affordable Care Act could evolve into such a system, particularly if the new insurance exchanges work well and workers feel comfortable the insurance available there is as good as what they’d get from employers. But that transition would probably take a lot of time, no matter what corporate officials were telling the survey-takers at McKinsey.

It’s not just a lot of time. It’s a lot of opportunity cost and underutilized human capital. And we have enough of that already,** no?

Good to see the Mainstream catching up with AB.

*As an alternative history, consider that, if that industry hadn’t begun to develop during the War After the War to End All Wars, the U.S. might have followed the same path as the United Kingdom and founded the National Health Service, instead of leaving the country, almost sixty-five years later, trying to pretend that Barack Obama is Tommy Douglas.

**Yes, I would have found a way to link to this piece just for the title. When Brad DeLong is starting to entitle his pieces as if he were Lee Papa (or at least me; see the following link), the Sensible Centrists are once again signaling that their imminent move into the Activist camp.

Tags: , , , , Comments (3) | |