Arnold Kling  

David Cutler on Health Care Policy

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Does the Public Get This Right... The Next Bubble?...

Steven Landsburg writes,


My gut instincts point me in a different direction that Professor Cutler's do, but I think we agree on what the big problems are and on what would count as solutions. I think almost all economists would agree on that much, and that's a lot.

My disagreement with Cutler is more than mere gut instinct. Cutler and I might agree that there is overuse of medical procedures with high costs and low benefits. We might agree that incentives affect this. However, Cutler is confident that central planning represents the solution, not the problem. He believes that remote bureaucrats can measure health care quality well enough and implement compensation schemes that are fine-grained enough to achieve significant improvement.

I suspect that he has no administrative experience either in business or government. Suppose that you told him that middle managers in America make many mistakes and often are compensated for doing the wrong things. As an academic, he would think in terms of having experts in Washington design better compensation schemes for middle managers. It would never occur to him that what works in theory fails in practice, because it incorrectly assumes that central planners have superior knowledge and face zero political constraints, and that in a dynamic environment the planners will stay one step ahead of those with an incentive to game the system.

Going back to Landsburg: if "almost all economists" would agree that it is useful to model the world as one in which government experts are politically unconstrained, have full knowledge, and adapt as rapidly as those that they regulate, then Cutler does represent those economists. I tend to think that although Cutler represents more economists than I would prefer, he does not represent "almost all."


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COMMENTS (3 to date)
Adam writes:

David Cutler deserves only LOLs. There are billions of personal relationships involved in health care (hat tip: Don Boudreaux). David can perhaps manage a few of them, but certainly not 50 or 100 of them, let alone billions.

Central planning is doomed to comedy, at best, and tragedy, at worst. If Congress wants to help, deregulation is long overdue.

A truly competitive market reduces costs and transforms scarcity to prosperity. Health care example: "Henry Ford of Heart Surgery," WSJ, 11/25/09.

Robert Johnson writes:

"Suppose that you told him that middle managers in America make many mistakes and often are compensated for doing the wrong things. As an academic, he would think in terms of having experts in Washington design better compensation schemes for middle managers."

What a concept! Public sector bureaucrats fixing the failures of private sector bureaucrats!

You did a good job illustrating the farce in that proposition.

wintercow20 writes:

I think Cutler served as a (associate?) Dean for some time at Harvard ...

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