Some Health Care Reform Discussion

Cato's Michael Cannon warns,

Over smaller ranges of earned income, the legislation would impose effective marginal tax rates that exceed 100 percent. Families of four would see effective marginal tax rates as high as 174 percent under the Senate bill and 159 percent under the House bill. Under the Senate bill, adults starting at $14,560 who earn an additional $560 would see their total income fall by $200 due to higher taxes and reduced subsidies. Under the House bill, families of four starting at $43,670 who earn an additional $1,100 would see their total income fall by $870.

Of course, since this analysis does not come from Jonathan Gruber™, it does not really belong in the public discussion.

Elsewhere, David Leonhardt really nails a problem.

Remember that this bill won't insert the federal government into the business of health care. The government is already in that business, to an enormous extent. Government agencies spend about $4,500 a person on health care -- roughly as much as the public and private sectors spend, combined, in many other rich countries. (Our private sector spends $3,000 or so on top of that.)

The agencies that will be managing health reform are often the same ones that have helped build the current system. Many talented people work in these agencies, and unlike the Medicare administrator, they are already in place. But there are all sorts of reasons to be skeptical of how easily a sprawling, existing organization can innovate.

People at old-line organizations tend to rationalize the usual ways of doing business and to worry about the downsides of change. I.B.M. didn't invent Windows or the Mac. Newspapers didn't invent Craigslist.

Incumbents do not innovate, and when it comes to health care in the United States, government is the incumbent. To me, this suggests that real health care reform requires reducing the role of government. Instead, Leonhardt says that appointing a wise, courageous technocratic leader for Medicare is the answer. Jonathan Gruber could fix everything, no doubt.

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