Acton Institute Powerblog

Two recent essays on health care/insurance and reform

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Published in newspapers across Indiana– for example, here and here in the (Jeffersonville/New Albany) News-Tribune

Excerpts from essay #1:

…We also hear assertions that various forms of government involvement in health care are likely to be effective in the U.S. because they work well in other countries. Aside from whether this is true, it should be noted that these other countries have lower populations and, typically, far less diversity in their populations. So these comparisons are somewhere between somewhat helpful and useless. One of the ironies of the health-care debate is that such comparisons should encourage us to consider state-based reforms (instead of a single, grand federal experiment), since the population and diversity of our states is similar to other countries.

A second myth is far more important: We’re often told that our current health-care system is “free-market.” This is akin to blaming the Great Depression on markets — while ignoring the four tax increases of Hoover and FDR, massive trade protectionism, restrictive monetary policy, laws that artificially increased prices and wages and so on. In both cases, the extent to which we should blame the government is an open question. But ignoring its role in either mess is neither legitimate nor useful.

With health care, there is already massive government intervention. The most obvious example is the double debut of Medicare and Medicaid in the 1960s. In addition, there is a wide array of relatively minor but still significant issues: various labor market restrictions (e.g., you and I are not allowed to receive medical services from professionals who provide the same services to our armed forces), mandated insurance benefits (for everything from in-vitro fertilization to hair transplants), the explosion of medical malpractice awards (and thus, malpractice insurance rates) and so on.

But the most important public policy in this realm? The subsidy of health insurance acquired by workers through the firm….

Excerpts from essay #2:

The current mix of government and markets in health care certainly has an amazing amount of inefficiency. But will bureaucracy and red tape be reduced or enhanced with more government?

It’s difficult to imagine much if any gain. Thus, extending health-care availability will probably involve higher costs or reduced access in other contexts (rationing)….

Barack Obama’s proposal is to subsidize public insurance that would “compete” with private insurance. By definition, subsidized insurance would undermine private insurance to some extent — somewhere between attracting people at the margin and entirely destroying the industry. It would depend on the extent of the subsidy….

One last thought: It’s interesting that we’ve become so fixated on a federal approach to this problem. Why not allow the 50 states to try 50 different experiments rather than betting everything on one grand, federal experiment that would be difficult if not impossible to reverse?

Eric Schansberg Dr. Eric Schansberg is a Professor of Economics at Indiana University Southeast in New Albany where he has been on faculty for 17 years after earning his Ph.D. in Economics from Texas A&M University. Dr. Schansberg is the author of Turn Neither to the Right nor to the Left: A Thinking Christian's Guide to Politics and Public Policy, Poor Policy: How Government Harms the Poor. He is co-author of Thoroughly Equipped, a 21-month Discipleship Curriculum, and he is the editor of SchansBlog. Eric has been married to Tonia for 13 years and is the proud father of four boys—two by adoption and two the more conventional way. Their family is active in K-TAG—the Kentuckiana Trans-racial Adoption Group.

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