Later On

A blog written for those whose interests more or less match mine.

Public health option views of Nate Silver

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Very good post at

I’ve gotten a few e-mails asking whether I’m going to weigh on on the latest Greg MankiwPaul Krugman feud on the public health care option. Suffice it to say that I frequently find Mankiw both disingenuous and somewhat intellectually circumspect, and occasionally even ungentlemanly. Although Mankiw’s New York Times column is much better argued than George F. Will’s piece was, it pulls Mankiw’s typical Unfrozen Caveman Economist trick when it blithely asserts that "We don’t need government-run grocery stores or government-run gas stations to ensure that Americans can buy food and fuel at reasonable prices" when (i) the cost of premiums are not particularly reasonable for working-class families, and (ii) the level of competition is inadequate, with near-monopolies in many states. Krugman is right that Mankiw ought to know better.

With that said, and as strongly as I’ve argued for the public option, I do ultimately think it’s a means to an end, the end being lowering health care costs relative to the quality of service provided. I think the public option would be the best way to achieve this because I don’t think the insurance industry is ultimately doing anything to "earn" its profit margins and administrative costs: it’s mostly just economic rent resulting from barriers to entry within the industry. But if there are plans that can remove market distortions and lower costs without a public option, those deserve a fair hearing. Namely, this would mean removing the taxpayer subsidy for health care benefits and having some mechanism to induce competition in the market. The Wyden-Bennett bill that Mankiw mentions would do the former, and would hope to accomplish the later through increased transparency and giving consumers a more direct choice of their insurance provider; indeed, it’s the only plan on the table that would strive to end the illogical regime of employer-based health care, except for Pete Stark’s single payer-ish alternative. (This doesn’t mean you’d lose your insurance — it just means you’d be buying it directly rather than having your employer buy it for you).

But the insurance industry, I’m guessing, doesn’t …

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Written by LeisureGuy

30 June 2009 at 10:34 am

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