Arnold Kling  

Some Health Care Reform Discussion

Applied Economics Assumes Self... Remarks on Safe Assets...

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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COMMENTS (4 to date)
David C writes:

I think you misread David Leonhardt. What he actually said the answer was:

"The cleanest solution would have been a radical overhaul — including the elimination of the employer-based insurance system, with its inefficiencies and perverse incentives. But the politics of such an overhaul never worked."

But his main point was that the person in charge of Medicare needs more time to prepare. That's his analysis of the best way to move forward in the present situation, not his analysis of the best way to move in an ideal situation.

Although Michael Cannon's is the most comprehensive criticism of health care I've seen from this blog yet. For that I am thankful.

E. Barandiaran writes:

In relation to Gruber, read this

Niklas Blanchard writes:

Incumbents do not innovate

Best line. Although, I would make a stronger claim:

Firms do not innovate, markets do.

Frankly, I would love to see Obama, Reid and Pelosi try to ram Health Care through using their Chicago-style thug politics. They would fail (at the hands of Blue Dogs and Republicans) and it would be the final nail in the November coffin being prepared for the Liberal Members of Congress.

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