If You’re So Smart Then What’s Your Plan?

Tyler Cowen proposes a fourteen point healthcare reform as an alternative to the version of healthcare reform making its way through the Congress. Tyler explains his objective as not to outline the perfect healthcare reform plan but to lay out a few things that would be better than the reforms making their way through the Congress but still possibly within the realm of the politically possible:

These are not my first best reforms or even my second best reforms. They’re my “attempt to work with some of the same moving pieces which are currently on the table” set of reforms. I would trade away the Obama bill for these in a heart beat. Keep in mind people, with a “no insurance” penalty of only $750, the current bill isn’t going to work (and that’s ignoring the massive implicit marginal tax rates on many individuals and families, or the “crowding out” of current low-reimbursement-rate Medicaid patients), so we do need to look for alternatives.

To his credit Tyler’s proposals include some attention to expanding the supply of healthcare, e.g. bigger subsidies for research, hurry the spread of “low cost, walk-in health care clinics” and so on. He’s also concerned about pandemic preparation which I find interesting.

Read the whole thing. His bullet items are too short to summarize and, if I quote it in full, you might as well read his post.

I’ve already mentioned here that I think that Wyden-Bennett would be better than what the Congress is likely to come up with in nearly every way (Ezra Klein thinks so, too). Wyden-Bennett has been criticized on the grounds that it is politically impossible. I think that’s ultimately a circular argument which applies to not only Wyden-Bennett and Tyler’s policy preferences but any plan that doesn’t come from the Congressional leadership. A plan is politically impossible unless it’s approved by the Congressional leadership and any plan that is approved by the Congressional leadership is ipso facto politically possible so why not encourage the Congressional leadership to support something worthwhile?

I think the fundamental question is what you want to accomplish with your plan. It appears to me that many people including many in Congress would like to see a healthcare system in which all healthcare for everybody cradle to grave, stem to stern is automatically paid for. In my view there are only two systems that can accomplish that, one in the short term and one in the long term.

A British-style national health plan can accomplish that objective in the short term. Prices (and physicians’ incomes) would be set by the government and financed by taxpayers. However, it will only work in the short term. The iron laws of economics, i.e. the laws of human behavior, tell us two things, that such a system will be increasingly bureaucratized and, consequently, increase in costs per unit of output until it becomes unworkable and that fixing the price at too low a level, an inevitable temptation, will reduce the supply of healthcare.

In my view such a plan can only be achievable in the long term if the practioners are celibates who have taken vows of poverty and whose eyes are fixed on saving the souls of their patients as well as their bodies.

Each of these solutions has serious shortcomings and I can’t recommend either of them or imagine them ever being adopted.

I would have much more modest goals for a government-administered healthcare plan: I think that its objective should be to prevent people from being reduced to penury through paying for the healthcare they legitimately need. The implications of such an objective would be that only catastrophic care would be covered and even that would be strenuously means-tested.

3 comments… add one
  • Sam Link

    “why not encourage the Congressional leadership to support something worthwhile”. It takes a lot of encouragement to want to see all your re-election campaign money go to your future opponent.

  • Andy Link


    I agree with the idea of government-provided catastrophic coverage. This would aid employer and private insurance as well since catastrophic coverage would essentially create an insurance cap.

  • PD Shaw Link

    I have to admit since reading the Atlantic article on how
    “American Health Care Killed My Father” that I’ve thought that Congress should pass a law holding medical care facilities strictly liable for the medical costs caused by hospital born infections. It’s interesting that Tyler picks up on this issue as I wasn’t certain whether it was that significant.

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