David R. Henderson  

John Goodman on Magnitude of Health Problem

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Falkenstein vs. Sumner... Second Thoughts on Economics...
We now know how many people have the problem most often cited as the reason for last years' health overhaul legislation. Answer: 8,000

No, that's not a misprint. Out of 310 million Americans, only 8,000 people have the problem given as the principal reason for spending almost $1 trillion, creating more than 150 regulatory agencies and causing perhaps 150 million or more people to change the coverage they now have.


This is from health economist John Goodman's latest blog post, "Health Problem Quantified." The whole thing is eye-popping.

John, who has also done some serious work on public choice issues, lays out how the basics of public choice imply that Obamacare should be easier to repeal than most laws. The reason: the few winners are unorganized whereas at least some of many losers are organized.

One thing that doesn't seem to compute is how the state governments could run out of money on this program, given that 8,000 people have $5 billion to share. That works out to $625,000 per person, which seems, shall we say, high. Could a substantial portion of that $5 billion be for administrative costs? Or does the $5 billion cover a few years? I'm not sure.


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COMMENTS (12 to date)
MernaMoose writes:

John, who has also done some serious work on public choice issues, lays out how the basics of public choice imply that Obamacare should be easier to repeal than most laws. The reason: the few winners are unorganized whereas at least some of many losers are organized.

Sorry but no, this is missing the whole boat. "Protecting the uninsured" was never, ever the purpose of ObamaCare.

Imposing (at least quasi-) socialist policies upon the American people at large, was the primary purpose. Anyone who hasn't recognized this yet is either unable or unwilling to see what really motivates liberals.

Repealing ObamaCare will be about as easy as expelling Communists from Vietnam was in 1975 (who, need I point out, also claimed they were doing what they did for the sake of "protecting" the poor).

Socialists have never stopped claiming they're out to help the poor. And they have never stopped doing things that are the exact opposite of actually, in fact, helping the poor. Why is this situation going to be any different?

David C writes:

Why do you keep linking to John Goodman? Doesn't it cause an alarm bell in your head to go off every time you read somebody making a wide variety of claims on a number of different issues while citing very few of them? If it were true that the majority of lobbyists were opposed to health care reform, health care reform never would have passed in the first place. In Washington, it's much, much harder to change something than it is to prevent change. Here's a simple rundown of what the lobbyists actually think. The only groups who want to repeal health care are the Republicans and possibly the insurance companies. The rest of the interest groups want to make various changes, but largely maintain the primary focus of health care reform.

David R. Henderson writes:

Both MernaMoose and David C write as if I said that it would be easy to repeal Obamacare. I didn't.

david writes:

To nitpick, David C didn't claim that you said that it was easy; he asked why you keep linking to someone who said it was easy.

Hyena writes:

Prof. Henderson,

I'd wager that the $5 billion was to be spread across 300,000 or more people for about $17,000 per person.

The lower numbers would justify a reduction in funds to that program.

David R. Henderson writes:

@Hyena,
Right, but the reason I did the math I did is that the program, with 8,000 people in it, not 300,000 people, might go broke, according to the WaPost news story to which John links.

Ryan writes:

Prof. Henderson,

Does it matter? =) They'd be more honest, if they just held up a big blank check. Don't let my sarcasm let you down though, my understanding is that $5 billion is the initial allotment to last until 2014:

The program is meant to last until Jan. 1, 2014, when the reform law will require insurance companies to cover adults regardless of any pre-existing conditions.

but,

But the federal funding will be exhausted before 2013 if more than 200,000 people participate, the Congressional Budget Office estimates.

By 2013, CBO expects enrollment to swell to 700,000 and federal spending to reach as much as $15 billion.

http://money.cnn.com/2010/06/29/news/economy/high_risk_pools/index.htm

Daniel writes:

It's a bit out there to suggest that there are only 8000 people with this problem, especially when many have been prevented from using this program because they already have access to (more expensive) state programs:

http://www.usatoday.com/news/health/2010-04-29-health-care-law-undercuts-risk-pools_N.htm

[link fixed. You needed to close the html and put a word or two, or the text of the link, in between the opening and closing codes.--Econlib Ed.]


Daniel writes:

Hmm, my link for the above comment didn't get included. Let's see if this works if I just do text:

http://www.usatoday.com/news/health/2010-04-29-health-care-law-undercuts-risk-pools_N.htm

John Goodman writes:

David, I believe it's the first year's allocation that is being exhausted.

steve writes:

Some economists have interesting time issues. A program exists for a few months, then they proclaim it a success or failure depending how they want to spin it.

Steve

Neil Henriksen writes:

Russ, I enjoyed the Robin Hanson interview. Having listened to four talks only, I apologise if you have addressed the following already. You say that you don’t subscribe to the planet’s vulnerability, I think. Perhaps you agree with our ex-chancellor Nigel Lawson? That’s by the way.

I have searched past interview titles for Herman E. Daly. His Steady State Economics was published in 1991, and to my surprise he lives, attending a conference here last year.

One of his theses (invoking the second law of thermodynamics) concerns Earth’s finitude, both of resources and as a rubbish repository. Economists, from Adam Smith to the present day, bracket their systems between assumptions of inexhaustible sources and infinite sinks… failing to address the beginnings and ends of all wealth. He gives a ‘catechism’ of growth fallacies, and a number of (eminently) practical suggestions. Might you consider inviting Daly?

Professor Tim Jackson picked up the baton for the Sustainable Development Commission in March 2009 with Prosperity – Without Growth? I am told that the Treasury insisted on the question mark!
(vide www.sd-commission.org.uk)

Best regards,
Neil Henriksen

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