Are Economists Idiots or Just Delusional?
I apologize for actual discussing economics and health care today, but this one I couldn’t let lie.
The University of Chicago’s Booth School of Business’s IGM Forum Mark Thoma) reports; you decide.
If reducing the value of the policies held by those who are continuously employed, either by taxing them or forcing those people to move to a less comprehensive plan than their risk-aversion preferences, is going to “reduce costly distortions in U.S. health care,” the only possible conclusion is that total health care spending is going to get costlier on average.
Yes, you might argue this will reduce “distortion.” But you would have to be an idiot—or, apparently, Alan Auerbach (Strongly) or Austan Goolsbee—to believe that is a good thing.
Note the eminently-sane, just as certain, Carolyn Hoxby’s comment:
The Cad[illac] tax is meant to counter other distortions so this is a q[uestion] of whether 4th best fixes 3rd best. An economist who says he knows is wrong.
which acknowledges that this is a distortion of a distortion and, as a first-order approximation, less ideal than the status quo.
Contrast this with the silence in the face of blithering certitude from Auerbach and Goolsbee, who are happy to reduce “distortion” without noting the concomitant reduction in overall utility.
Well for many economists free markets are a religion. Any interference is “wrong.” And that eventually becomes a moral judgement. Whatever answer a free market gives is the “right” one and that means that any constraint that gives one a different answer is morally suspect.
Healthcare insurance is a reflection of healthcare cost plus administration and profit which is controlled. Indeed while controlling healthcare insurance keeps the cost of it resulting from that not going to pay healthcare cost; it does nothing to control the cost of healthcare which is the culprit. Our friendly congressional representatives in the House and the Senate have made it near impossible to assail the healthcare industry.
Calls for single payer and universal do not necessarily control healthcare cost. Few countries have single payer as Barkley Rosser has pointed out and I have repeatedly as well as Maggie Mahar and other healthcare writers have also. Most countries are two tiered with public and commercial/private funding.
My point? The distortion to healthcare is the healthcare industry. Controlling healthcare industry cost like every sane country does in the world is a control to distortion. I am sure you already know this and I am just trumpeting. 🙂
The idolized “free market” is a graven image whose worship is damaging in any culture (captive of money) where greed is a virtue.
Taxing (or reducing expensing those plans) Cadillac plans is a virtuous as is taxing profits from monopsony sellers at high rates.
The distortion of US health care is profit does not deliver!
Profit is a tithe demanded by the free market image.
What other racket aside from corporation who are able to avoid taxes altogether comes even close to health care insurance system that not only limits your choices and can bankrupt you with copayments, for drugs or treatments you didn’t know were not covered.
What other system makes you check each doctor that see or treats you are in the system; so as not be surprised with an unexpected bill because one of the doctors at the hospital you were in was not on the approved list.
Then the best part is the USA health care system is almost double the cost of that other countries and ranks 37th in the world.
For those who think Bernie or Trump is wrong about the corruption on Wall Street and our political leaders in DC.
Here is some personal story about car insurance. When I moved from Tenn. car insurance was not required. I had zero deductible plus $160.00 and full coverage in Tenn.; then moved to MA. with $1,000.00 deductible plus $540 where car insurance was required.
What a game ,what a racket. When I went on the HSA plan the coverage was ok but to pay the premium I was dependent on good constant returns from the stock market which was ok until the market crashed. After that I had to reduce coverage to stay affordable. Still after that I had to resort to ACA as premiums soared. I think the ACA has now put a reasonable cap on the ever rising cost of health care if I’m correct. I do not want to go back to HSA, as they easily become entangled with unrealistic stock market risk. IMHO.
Are economists idiots? Absolutely not!
In what other job can you be wrong more often than a magic 8-ball and still earn a living? A baseball player with a batting average that low would never get off the bench.
“the only possible conclusion is that total health care spending is going to get costlier on average”
Correction to the link by run75441. Arne, I corrected the link as I wanted to read it also. Hope you do not mind.
I believe they are talking about a spending decrease on healthcare insurance. This would not be the same as healthcare (pharma, doctors, procedures, etc.) costs.
Run – Precisely. And this is exactly the wrong way to lower overall health care costs. Which will be the follow-up, since Mark threw down a gauntlet.
If its on Economist’s View, I went through this with Anne and another person already. I also read that article and it really does not say much other than the experts say. My expert Maggie Mahar says differently as does Ezra Klein.
Calling for single payer and universal healthcare is not the magic bullet either. Increasing healthcare insurance costs to control over priced insurance only moves the cost around. The key is to control actual Healthcare costs is in a variety of ways such as bundling, result proven procedures and pharma (for example medicine over stents, instead of time release capsules use normal tablets [VA just did this with Metoprolon], fewer colonoscopies, etc.), etc. There is more to this and I can probably dig it out if you want it.
Ken, he has a weak argument going on there. I know he got angry at me one time when I gave the time line for 2008.