Arnold Kling  

Quibbling with Mankiw

Two Systems... David Cay Johnston Plays with ...

In this talk, Greg Mankiw says a number of wise things. For instance, he says that in health care, the main issue is whether spending restraint is going to be conducted top-down from government or bottom-up from individual choice.

But then he says that a compromise solution would be some sort of regulated competition among health plans. I do not see how that could turn into anything other than top-down. It is where Massachusetts is headed, for example.

Other possible compromises:

1. Federalism. Let different states choose different paths. Vermont wants to be single-payer. Maybe some other state wants to be market-oriented.

2. Two-tier health care system. A top-down, government-run system, perhaps modeled on the VA (remember a few years ago when that was being touted as a model system?), that is available to everyone, along side a market-oriented system that is available to those who want and can afford it. In fact, you could give poor people vouchers, so that everyone can choose between the market-oriented system and the VA model.

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COMMENTS (3 to date)
Aidan writes:

In the federalism option, would the federal government set any minimum standards for coverage? Will states be allowed to decide if they want to deny insurance based on preexisting conditions? If not, will there be some sort of mandate in a market-oriented plan? Would there be any role for the federal government if a state was offering poor or insufficient coverage?

johnleemk writes:

Compromise #2 sounds a lot like the Singaporean system.

Ignacio Concha writes:

Compromise #2 also sounds a lot like the Chilean system where there is a public provider where anyone can enroll for 7% of their salary (they also have plans for poor people where they do not pay anything), but everyone is free to choose a private, generally more expensive, insurer. There ar many private insurers so tehre is competition among tehm.

A difference is that insurers cover up to certain amount per medical service, but doctors can charge whatever they want. Thus, if a patientwants an expensive doctor, the patient has to pay the difference.

There is also a market for secondary insurance (to cover what your primary insurance does not cover), which is generally provided by the employer.

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