A Neolib New Deal?

A Neolib New Deal?

A mostly political Weblog.
Aug. 22 2006 7:56 PM

A Neolib New Deal?

Health care for all, not pensions for the rich.

Matthew Yglesias takes issue with my suggestion that a "decent" national health care system, added on top of our current Social Security system, will require a "larger tax burden than citizens are willing to bear." He argues:

The U.S. government currently spends a phenomenal sum of money on health care by world standards ... [W]hen you're talking about universal health care you're not really talking about increasing the aggregate resources poured into American health care. There's already tons of money being spent on it. You're talking about redistributing the spending somewhat from richer to less-rich people and altering the path through which the money flows.

I'm not a health care expert, but it seems to me:

1) If we want a system that reinforces social equality--everyone in the same waiting room-- that means we need basically the bottom 90% to use the same system. The hardest (i.e. impossible) way to do this is by forcing the affluent to get less care than they are willing to pay for ("redistributing the spending somewhat from richer to less-rich people," as Yglesias tactfully puts it.) The easiest way to do that is to offer subsidized universal care good enough so that the vast majority of the affluent will be content to use it. In other words, you can't just "insure" the poor with bare-bones HMO treatment. This will be expensive.

2) Medical technology will offer more and more complex and costly ways to treat illness. Some of these treatments will work. We want to offer them to everyone, with a minimum of rationing--again, in a system that most of the affluent will also sign up for. The alternative seems to be a system in which the upper middle class lives (because they can afford fancy treatments) and the working poor die. Avoiding this will be expensive.

3) We will still want to encourage future medical research and technological advance--or at least we want to retard it as little as possible. That's why I'm skeptical of some plans for realizing huge cost savings. For example, the government could undoubtedly use its monopsony power to lower the price it pays for drugs--maybe lower the price to something approaching the marginal cost of producing additional pills. It's not at all clear, however, that this is the price we should want to pay, because it does little to fund research and development costs of developing both the existing drug and new drugs. See Michael Kinsley's analysis here. Paying medical providers enough to fund future advances will be very expensive.

4) Yglesias writes

The significant financial challenge has to do with covering the bills for old people, but that challenge exists one way or another thanks to Medicare (and the basic reality that senior citizens are largely uninsurable in the private sector) and has relatively little to do with whether or not we can afford to bring universal coverage to the under-65 crowd.

If you're trying to assess the overal budgetary burden, it won't do to pass off the cost of caring for old people by saying 'Oh, that's just Medicare.' Caring for old people is still part of the health insurance system, and to the extent (a very great extent) that government will have to pay the bill through Medicare then that will be a budgetary burden that might "require a larger tax burden than citizens are willing to bear."


All these factors tell me that national health care --at least "decent" egalitarian, national health care--will require a big increase in government expenditures.**  Something will have to give--either a) the overall quality of health care, b) the egalitarian fairness of health care, or c) the cost of other big programs like Social Security's pensions.

I say what gives should be (c), and the way it should give should be to stop mailing out pension checks to the richest Americans. Sending checks to everyone is a nice thing to do. But we can't afford every nice thing to do.

**If Robert Reischauer or Henry Aaron tells me I'm wrong, I'll reconsider. But I bet they don't. 4:36 P.M. link

Osama Bin Laden has "copies of Playboy" in his briefcase? You'd think there might be some propaganda value in that tidbit, if skillfully deployed. ... 3:32 P.M.

I see my colleague, the evil triangulator Bruce Reed, has discovered the secret of attracting hits: gratuitously mention "Ann Coulter" in your hed or sub-hed. I was onto that weeks ago. (Then I switched to "neolib." It's not the same.) ... 3:21 P.M.

He's so entitled to take this shot: MSNBC's Tucker Carlson, on Dan Abram's reappearance as an anchor (after being promoted to general manager of the network):

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