Arnold Kling  

The Inevitability of Medicare Vouchers

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Tyler Cowen ruminates over Medicare vouchers. He also links to ruminations by Ross Douthat.

In my view, the question is not whether you like vouchers are not. Vouchers are inevitable, given the alternatives. Alternative 1 is to keep what we have, which is an open-ended commitment to reimburse health care providers for all procedures performed on people over the age of 65. That is not feasible--the budget blows up. Alternative 2 is to have government impose strong rationing of medical services to seniors. I think that is an unlikely alternative. It's not just that I think that government would do a poor job. When it comes down to it, do politicians really want to be put in that position?

So, one way or another, we are going to get to a voucher system, in which seniors ration their own use of medical services. There are many potential problems with it, and it will take a lot of thought and a lot of trial and error to get to a system that balances collective risk-sharing and compassion with individual responsibility and fiscal reality. But in the end, it is the most realistic approach.

I wrote an op-ed making this point in 2008, which the Wall Street Journal accepted, but never printed. Not that I'm bitter about it or anything.


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COMMENTS (11 to date)
Prakhar Goel writes:

Dear Arnold,

You forgot another "option": Wait irresponsibly and do nothing until the budget blows up and then run away.

Tom West writes:

Alternative 2 is to have government impose strong rationing of medical services to seniors. I think that is an unlikely alternative. It's not just that I think that government would do a poor job. When it comes down to it, do politicians really want to be put in that position?

They manage it in Canada. The politicians specify the overall budget, and then you have bureaucrats responsible for allocation between different aspects. Thus they're the one in front of the cameras having to explain wait-times, non-availability of expensive procedures, etc.

Kevin Bob Riste writes:

They must have gotten a last-minute editorial from Jonathan Gruber. What is it you want, that you don't get, that makes you bitter? More money or more influence? Or both? Or something else...

I get the sense, however, that you wouldn't be significantly less bitter if you lived in a libertarian utopia in which you continued to have the apparently frustrating level of influence you currently have. Maybe like 10% less. You should find a way to be happy with your successes. They're extremely non-trivial.

Jeff writes:

Hey, I just had this great idea: Universal Vouchers! They work for everything. Not only that, they come in different denominations. They're mostly green, hard to counterfeit, and they fit pretty easily into most wallets. You can use them just about anywhere!

Blackadder writes:

Arnold,

Is Unchecked and Unbalanced going to be available for Kindle?

George writes:

Regarding Alternative 2: yes, politicians wouldn't want to be responsible for that. But, they can obviously delegate that responsibility to an independent organization.

Dan Hill writes:

So where's a link to your unpublished op ed? Could you at least reproduce it on econlog for us to read?

R Richard Schweitzer writes:

Gee vouchers would be just great:

They come (via Tax) and take your money away and after bureaucratic processing (paid for out of those taxes and reducing the net) give you back a piece of paper so you can partly pay for what you could have bought with your money they took in taxes.

mattmc writes:

What if we just had a freeze for a few years while we sort out vouchers? Cover no new treatments if they are more expensive until we can afford to pay for all of the overpriced stuff we currently buying.

Tom Jackson writes:

Is there any reason why the government couldn't use a voucher system as the basis for an entire health care system, e.g. replace Medicaid with vouchers, etc. ?

malthus writes:

Medicare vouchers would be great if you could spend them overseas.

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