Heathcare Q & A

In response to my recent NY Times piece on health care, I received numerous questions via email. Let me paraphrase and answer some of them:

Q: There has been a lot of blogosphere commentary on your piece. Are you going to respond to it?

A: No. Life is too short. But I will note that I am a bit surprised at some of the strong reactions from the left. California Medicine Man is correct when he writes,

Every element of Mankiw's analysis has been common knowledge in the healthcare economics field for several years and strictly speaking, none of this is really news.

Q: Does your piece mean to suggest that you are opposed to any reform of the U.S. health system?

A: No, I think some modest reforms can yield some modest improvements in the system. But the magnitude of the problems we face is often exaggerated by those seeking more sweeping reforms. Exaggeration is a common technique used by reformers to energize the public.

Q: Polls show the American people are very unhappy with the current health system. Why is that?

A: The public tends to be upset whenever prices rise. When gasoline prices rise, oil companies are accused of price gouging. When textbook prices rise, Ralph Nader investigates publishers. There is no question that the cost of state-of-the-art healthcare has been increasing, mainly because of technological progress. Egged on by some pundits, the public is inclined to think that some villain must be responsible for the increasing cost and that the government can fix the problem. On this and many other issues, I am a Caplanian: voters need to be better educated, lest we stumble into poorly motivated populist policies.

Q: Do you think the pundits of the left are similarly confused?

A: Some are, but others have an altogether different motive. Observing dissatisfaction with the U.S. healthcare system, they are using reform as a Trojan Horse to push for more redistribution of income. Almost all sweeping health reform proposals involve higher taxes on the rich to provide benefits for those farther down the economic ladder. The redistribution, rather than health reform, is sometimes the main objective.

To judge whether my conjecture is correct, ask your favorite pundit of the left the following: What health reform would you favor if the reform were required to be distribution-neutral? That is, you can change the rules of the health system but you cannot change the distribution of economic resources between rich and poor. My guess is that your favorite pundit would either object to the question or answer by retreating to more modest reforms. If so, this suggests that calls for sweeping reform are mainly motivated by the desire for increased redistribution.

Q: Are you the devil incarnate?

A: I will get back to you on that.