Arnold Kling  

If the Median Economist Set Health Care Policy

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Bryan writes,


Contrary to Arnold, I think it would be a vast improvement over the status quo. I've talked to plenty of left-wing economists about this topic. On balance, their views are much more reasonable than the median non-economist's.

The median economist might be someone like David Cutler or Jonathan Gruber.

Bryan thinks that the median economist would raise deductibles on government insurance, impose means-testing on Medicare, and deregulate medical practice to some extent. Perhaps the median economist also would allow health insurance to be sold across state lines--eliminating the impediments imposed by having different insurance regulators in all 50 states and the District of Columbia. If so, then all of these would be good things. But I am not sure that the median economist would do these things.

Things that a median economist would do that I would like:

--Cost-effectiveness research (Bryan implicitly mentions this)
--Eliminate the tax differential between employer-provided health insurance and individual insurance

Things that a median economist would do that could be dangerous:

--Try to deal with health care costs by setting health care provider compensation policy in Washington

--Address the alleged problem of adverse selection in health insurance with regulations on the supply side (not allowing health insurance companies to take risk into account) and a mandate on the demand side.

Things that a median economist would not do that I would do:

--phase out Medicare by gradually raising the age of eligibility
--replace Medicaid with a voucher system
--completely deregulate medical practice

Maybe Bryan is right, and that the median economist's policies would be better than the status quo. I am not sure. Actually, I think a lot depends on how well the median economist learns from mistakes. If we can assume that the economist figures out that setting compensation policy in Washington is a bad idea, and so eventually gives up on that approach, then I become more optimistic about having the median economist be in charge of health care policy.

Bryan also could argue that even though the median economist would not adopt the policies that I favor, the median economist would be much more open to them than the median voter.

I think I have to give this round to Bryan.


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COMMENTS (3 to date)
David writes:

Isn't one of the maine issues how the median economist would transition to his/her preferences? Does the median economist ever consider possible unintended consequences? Wouldn't the median economist institute policies to benefit the median economist and people like him/her?

david writes:

@David

Any theory that stops assuming perfect rationality on the part of voters, presumably also has its own model of behavior of technocrats.

So I'm guessing, anyway. Caplan's talk does not make this explicit, but it does contain statements like:

With irrational voters, in contrast, policy-makers may be able to give the public the policies that it needs, rather than the policies that it wants... With irrational voters, in contrast, policy-makers may be able to give the public the policies that it needs, rather than the policies that it wants.
which rather implies that non-self-interested technocrats may exist. Gasp, shock, and horror.
david writes:

Whoops, the blockquote was supposed to be:

With irrational voters, in contrast, policy-makers may be able to give the public the policies that it needs, rather than the policies that it wants...

When politicians hire economist advisors who support free trade and other unpopular positions, the public almost never retaliates at the polls. It is no wonder, then, that free trade has made so much progress: Policy-makers can support it despite its unpopularity, and the irrational electorate lets them get away with it.


Pro-free-trade rather than rent-seeking economists, then.
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