Arnold Kling  

Orszag and Hanson on McAllen's medical costs

Did Obama Restore Confidence?... Lectures on Macroeconomics, No...

Peter Orzsag writes,

McAllen's per capita expenditures grew to nearly twice the national average - driven primarily by local norms that tend towards heavier use of discretionary services - such as diagnostic testing and surgical versus less invasive interventions - for which there are no clear clinical guidelines...

From what we can measure, it's not better health. It is simply more care.

Hansonian medicine strikes again. Robin himself suggests that we might want to have government health care at the municipal level. That way, McAllen's taxpayers would be confronted with McAllen's costs.

Robin doesn't understand that local knowledge is not the answer to excessive utilization of medical procedures with high costs and low benefits. Peter Orszag is going to solve the problem from Washington. By himself.

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COMMENTS (7 to date)
Dan Reed writes:

That's nuts. I just saw Skinner give a presentation about an hour ago on this topic.

ThomasL writes:

If local provision is preferable because of better knowledge and responses to feedback nearer the source, the obvious reduction of, "Have government health care at the... [McAllen] level. That way, McAllen's taxpayers would be confronted with McAllen's costs," is, "Have health care at the individual level. That way, individuals would be confronted with their own [health] costs."

Billare writes:

I really, really dislike Peter Orzasg, almost to an irrational level. His look, the way he carries himself, emphasizes all the myths that the progressives believe about their ideology - that their government officials are effective technocrats who have just finally found the perfect plan that enables them to go about willy-nilly tampering with huge swaths of the health-care system. Even if things seemingly go wrong from the very start, there's always the sense they exude that, "really, we have a full grasp of the technical issues, we've had a contingency plan in place from day one" - at least until the entire edifice crumbles and you can find no one to be held responsible within the ruins.

Robin Hanson writes:

Thomas, the idea is to find an acceptable political compromise that controls costs; fully private medicine is not now a remotely feasible political compromise.

Bob Knaus writes:

Municipal level health care is a wonderful idea. Works great for sewers, roads, police, streetlights... oh wait. We already have it. Or at least we used to, in the small town of Homestead FL where I grew up. James Archer Smith Hospital was municipally owned, just like the power plant was.

And, if you had anything serious, you went to Baptist Hospital in the more prosperous 'burbs closer to Miami.

I'd be interested to see what strategies would evolve to handle free rider problems should we go back to an era of municipally-owned health care infrastructure and provision!

George writes:

I live in Washington, DC, so municipal-run health care scares the crap out of me.

Of course, rather than subject myself and my family to the level of care at Marion S. Barry General Hospital, I'd move. That's kind of a problem for a system run based on municipalities: people can stay in a low-spending, low-quality municipality until either they get sick or have kids, then move to a high-spending, high-quality one. That would be (imperfect) free-riding (discount riding?).

Charlie Quidnunc writes:

The real cause of the cost differential is the large number of American expatriates living in Mexico. Look at a map. For the hundreds of thousands of retired Americans living in Mexico, the closest town in the USA is McAllen, TX. They enroll in Medicare in their former home towns and drive to McAllen for expensive treatments they chose not to pay for out of pocket in Mexico. The denominator is wrong in the cost per enrollee equation. Multiply by two or three and you get close to the truth.

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