October 30, 2016The zero bound isn't interest rate pegging
October 30, 2016What do criminal records tell us about Adam Smith and the Industrial Revolution?
October 29, 2016Japan refutes old Keynesianism
October 29, 2016AT&T, Time-Warner and the end of competition
October 28, 2016The CEA's Mixed Thinking on Labor Market Monopsony, Part II
October 28, 2016Is the data "rigged"?
October 28, 2016Laureate Lessons for Education
October 27, 2016The CEA's Mixed Thinking on Labor Market Monopsony, Part I
October 27, 2016Yet Another Reply to Huemer on the Ethical Treatment of Animals
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Frequently Asked Questions
David Balan asked me to post his opening statement for tomorrow's Separation of Health and State Debate. Enjoy! I'll post mine at midnight tonight.
With that out of the way, let's get started. The proposition that is
being debated is "Significant governmental involvement in health care is
both economically sensible and morally just." The "economically
sensible" part and the "morally just" part are inter-related,
but at the cost of a bit of over-simplification I'll treat them separately,
starting with the "morally just" part.
Up to now the discussion has centered on the moral obligation to
provide health care for the poor, and the "economically sensible" considerations
were limited to whether this moral obligation can be satisfied at tolerable economic
cost. But there are a bunch of other, more conventionally "economic"
reasons for government involvement in health care, of which I'll list
just a few. First, healthy people are more productive. Second, there are significant
externalities and spillovers related to health: we're all better off when our
fellow citizens are healthier. Third, there is a strong case for governmental
involvement in medical research and development. Private firms only have an
incentive to do research that will lead to patentable innovations; they have no
incentive to test whether an apple a day really does keep the doctor away. Fourth,
there is a case for governmental regulation to ensure that health care is safe
and effective (no selling poisonous snake oil), and that health insurers
actually pay up when you get sick. You could argue that the market will take
care of this by itself through reputation effects, but look around!! Fifth,
there are some instances where the government is simply more trustworthy than
private firms, and that trust allows economically efficient things to happen
that otherwise wouldn't happen. For example, it seems pretty clear that in
the coming years people (not just poor people) are going to need to be induced
to limit the health services that they consume; we just can't provide
everything to everybody all the time. The problem is, it's hard to get
people to agree to limits when the ones doing the limiting are unregulated
private insurers who have an incentive to cut whatever care they can get away
with cutting, rather than cutting care that is of low value. But if it is the
government doing the limiting (either directly or through regulation of private
insurance), and this limiting is being done through a rational process that
people trust, then it has a chance of happening. I could go on.