2/28/2010

Mankiw's Take on Healthcare Reform

Many of us in class have expressed concern over the health care bill and what it means for that industry. Greg Mankiw, Harvard professor, wrote a post on his blog giving his opinion on this not-so-new idea. As he points out, price ceilings are nothing new to the government. For all of us in this class who have taken the beginning levels of Micro and Macroeconomics, this translates ultimately to a queue, lines, and even black markets. Now I am not saying that this bill will inevitably result in a black market of hospitals as the far-right congressmen would like you to believe, but there is room for organizations like this.
We have seen this type of bill before and not just from the Democrats. After all, as Dr. Tufte has pointed out on several times in class, Nixon introduced a bill with many of the same objectives. Mankiw points these similarities in his blog.

5 comments:

Anonymous said...

This article from the new york times mentions that the healthcare will mostlikely have enough votes to pass the senate. It also touches on the subject that no republicans will vote for it. We have discussed also this in class; that it doesn't matter what side proposed it, the opposite side will always oppose it.

http://www.nytimes.com/2010/03/01/us/politics/01health.html

Kit said...

For another class, I did an in-depth analysis of a major insurance company. A fundamental truth in insurance is that individuals with higher health risks are more likely to seek insurance. Insurance companies however, reserve the right to refuse or pro-rate insurance to individuals whose chances of filing a claim are statistically above the mean. The industry simply can’t compete with a government entity that can artificially lower prices beneath what the market would naturally determine. Besides the risk and cost of insuring 46 million uninsurable Americans, there are other citizens in lower income brackets with insurance that will be tempted to change carriers to the new government plan that can offer unnaturally low premiums.

Menger said...

Friedman's Law states that anything that government produces can be produced at half the cost by private industry. This "law"is not universally accepted as true, but it is generally accepted that government does not provide services as efficiently as the private sector. Thus it is not reasonable to believe that the government will be able to provide health care even at the same cost for the same group, so why would it be believable that they could provide cheaper heath care for a larger higher risk group.

Logan said...

Though the United State's culture and political atmosphere is surely different from other random countries, I think it's strange that debates over Government-run healthcare oftentimes forget to look at other countries and whether or not they are better off with their system of healthcare. Thomas Sowell wrote several articles on universal healthcare and focuses much of his attention on how efficiently other countries' systems work.

http://jewishworldreview.com/cols/sowell030210.php3

Dr. Tufte said...

"Black market" hospitals and clinics are actually fairly common in countries with nationalized healthcare.

I think the post and all the comments are good.

What gets lost in all this debate is that healthcare is clearly a growth industry, and that some of the fastest growth comes in areas where the government isn't paying attention (e.g., Lasik). Why are they so interested in this industry, but uninterested in other ones, like software?