October 31, 2005

The Healthcare Struggle

Excellent article by Reed Ableson. Read it all, which overall presents a nicely balanced discussion. But once again, the idea of paying for healthcare is muddled with who should be providing it:

The Wal-Mart quandary involves a fundamental national issue: Who, if anyone, should provide care to the bulk of Americans.

"Whose responsibility is this?" said Carolyn Watts, a health professor at the University of Washington. "Is it the government's responsibility or the employer's?"

I presume doctors and nurses and pharmacists and technicians should be providing care, while people should be paying for their own routine care, and should be paying to insure against catastrophes. The real question then, is who will pay for care and insurance for those who cannot afford to pay their own way. Our answer has long been: the government.

Alex Tabarrok comments:

As the value of the wage component of the Wal-Mart benefit package has declined relative to the value of the health insurance component Wal-Mart has attracted more workers who want the job for the health benefits, i.e. sicker workers.
Should Wal-Mart try to make its current workers healthier?

UPDATE: Do you want to know which camp I am in? Arnold Kling's:

Health insurance costs will not fall for American workers unless costs in the health care system are reduced. I have spent considerable time looking into this issue, and my belief is that there is no free lunch. That is, none of the usual scapegoats for health care costs -- spending on the last year of life, excess profits of suppliers, administrative overhead, malpractice lawsuits -- is quantitatively large in relation to the level of health care services that Americans consume.

The only way to bring down health care costs is to consume less in terms of health care services. That in turn will require a major cultural change. One change could be centralized rationing of health care, with supply controlled by the government. Another change would be to dampen demand by switching consumers from comprehensive health insurance to catastrophic health insurance.

In the absence of cultural change, I believe that America will continue to be the leader in Activist medicine, with heavy use of specialists and technological apparatus. Activist medicine may or may not be the right way to approach health care. But it is the reason that health care in this country consumes such a large share of our GDP.

I am in favor of getting rid of employers as the health insurance Middle Man. I believe that employer-provided health insurance is inefficient and an economic distortion. However, it is important to recognize that America's large health care bills and the competitiveness of our large firms is not going to be much affected by changing to a different system.

Posted by Kevin on October, 31 2005 at 08:26 AM