In yesterday’s New York Times, former Dubya Council of Economic Advisors Member N. Gregory Mankiw tells us the following (here)…
IN the debate over health care reform, one issue looms large: whether to have a public option. Should all Americans have the opportunity to sign up for government-run health insurance?
President Obama has made his own preferences clear. In a letter to Senators Edward M. Kennedy of Massachusetts and Max Baucus of Montana, the chairmen of two key Senate committees, he wrote: “I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans. This will give them a better range of choices, make the health care market more competitive, and keep insurance companies honest.”
Even if one accepts the president’s broader goals of wider access to health care and cost containment, his economic logic regarding the public option is hard to follow. Consumer choice and honest competition are indeed the foundation of a successful market system, but they are usually achieved without a public provider. 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.
And from here, Paul Krugman of the Times tells us…
Both George Will and Greg Mankiw basically argue that we don’t need a government role because we can trust the market to work — hey, we do it for groceries, right?
Um, economists have known for 45 years — ever since Kenneth Arrow’s seminal paper — that the standard competitive market model just doesn’t work for health care: adverse selection and moral hazard are so central to the enterprise that nobody, nobody expects free-market principles to be enough.
Further, this somewhat tongue-in-cheek post from Matt Yglesias brings us this excerpt from a Q&A session President Obama held on the matter…
QUESTION: Wouldn’t (a public option for health insurance) drive private insurance out of business?
OBAMA: Why would it drive private insurance out of business? If private insurers say that the marketplace provides the best quality health care; if they tell us that they’re offering a good deal, then why is it that the government, which they say can’t run anything, suddenly is going to drive them out of business? That’s not logical.
Now, the — I think that there’s going to be some healthy debates in Congress about the shape that this takes. I think there can be some legitimate concerns on the part of private insurers that if any public plan is simply being subsidized by taxpayers endlessly that over time they can’t compete with the government just printing money, so there are going to be some I think legitimate debates to be had about how this private plan takes shape. But just conceptually, the notion that all these insurance companies who say they’re giving consumers the best possible deal, if they can’t compete against a public plan as one option, with consumers making the decision what’s the best deal, that defies logic, which is why I think you’ve seen in the polling data overwhelming support for a public plan.
Indeed, as noted here, 72 percent of those polled favor a public option in the health care bill (with HHS Secretary Kathleen Sebelius appearing to waffle a bit on that, though she did come out strongly in favor of the public option on a Fix Noise program, as noted in an Update to the post).
And Mankiw has been critical previously of compiling information on life expectancy in this country, saying it’s “schlocky” to compare such numbers in the U.S. versus other countries here; Mankiw proposes instead that we compare the number of, say, hip replacements and cancer survivors (yes, that information is important I’ll admit, but specialized surgeries and treatments are just a part of what health care is about – to ignore the “big picture” here reflected in the life expectancy numbers is willful stupidity).
Besides, the whole issue of “choice” in health care coverage, as far as I’m concerned, is a “red herring”; as more and more employers see that they’ll be better off by paying the tax in lieu of actually providing coverage for their employees, you’ll see them choose to not offer coverage, thus forcing their employees to choose the public plan anyway.
And again, here is a Think Progress post from former Bush confidant Turd Blossom himself (and once more, I must ask this question) echoing much of what Mankiw wrote in his column yesterday. In the “Truth” statements, we learn (among other things) that, contrary to the talking points, private insurer participation in Medicare Part D has actually increased costs for plan participants instead of reducing them (as claimed by Rove).
Finally, I leave with the following from Krugman, in response to both Mankiw and Will (the former at least has some degree of economic “cred,” but I’ll never know how anyone could presume that of Will)…
To act all wide-eyed and innocent about these problems at this late date (concerning the lack of health insurance in this country for so many) is either remarkably ignorant or simply disingenuous.
Equal parts of both would be my guess.