Tyler Cowen: belief

Transcript context

…You’ve spent too much time teaching Econ 101 where we’re worth 5 percent. We figure out that markets can handle 95 percent, and then you’re going to focus on the last 5 percent and tell me, “No, the government’s got to run everything.” Like any insurance, health-status insurance — you have to buy it before information is revealed that you’re sick. That’s fairly reasonable. Now, one answer to that is — let’s do this at the family level — I can buy health-status insurance before I conceive a child, for that child, and then if there’s a genetic problem that’s knowable, then the kid is covered. The other answer is, I will have a perfectly reasonable . . . Unless you’re at two o’clock in the morning, drinking stuff with libertarians, it is allowable for the government to step in when there’s a very clear market failure. I would be fine with — when we start this up, and you, Tyler, have some known genetic quantity that means you’re going to be more expensive, the government gives you a lump sum. “Here’s 50 grand, and we’ll put that in your health-status insurance account, and that will fund your higher insurance payments for the rest of your life. See you later.” There’s a clear argument for lump-sum transfers to the ex post insurance, mediated by the government. If that’s all the government did, and then left the rest of the healthcare and insurance industry free to cutthroat, free market, innovative competition, drive out the incumbents, serve you and me better, I’d be fine with it. Here’s a quotation from you online, which I didn’t follow. I’d like for you to explain. I think you’re talking about second- or third-best here. You wrote, “It has made me a tentative supporter of Medicare for any.” What did you mean? I mean, the biggest original sin I see now in our healthcare system is cross-subsidies. The government wants to provide for poor people and other people. It doesn’t want to make them pay — or old people — they don’t want to pay, but the government doesn’t want to raise taxes and provide their healthcare. So, what the government does is, it tells hospitals, for example, “You must treat everybody who walks in the emergency room.” The hospital says, “That’s nice, where do we get money from?” Then the government says, “You can overcharge private employer-provided insurance, which will force employers to give, and you can overcharge the few cash-paying customers who come in.” The problem with that is you can’t allow competition. If you’re overcharging people, then you can’t allow hospital B to come in and say, “We’re going to offer less price, and we won’t even have an emergency room.” So you’ve killed competition. That I think is the original sin, the deepest problem in our healthcare system. They just recently said hospitals have to disclose prices. Heavens, disclose prices! Well, that’s a sign this is a horribly uncompetitive business. An airline that tried to not disclose prices until you get off the plane would be bankrupt because no one would go there. There’s competition in the airlines. How do we solve this problem? Just forcing hospitals to post prices — they have to cross-subsidize the Medicare or Medicaid that doesn’t pay anything like what it costs from something else because the government’s not paying. You and me don’t need health insurance. We have enough money. We need maybe something catastrophic if we get something that costs $10 million, which is, you have to get some really rare form of cancer for that. You and me could afford to pay for this like we pay for our vet bills. Why can’t we be in the total free market? Well, because there’s this cross-subsidy rig going on. Here’s the deal. I said “tentatively.” Let the government just forthrightly raise taxes, pay for health insurance for poor people, indigent people. We could do a lot better job for the schizophrenics on the streets and for whoever the government wants to pay their healthcare. Do that on budget. Allocate it, so we can all see what the government’s paying for. Then you and me can be freed to the mercies of an unbridled competitive free market. If somebody wants to come in and offer us care cheaper and set up a new hospital, they don’t need a certificate of need. They don’t need all the other stuff. They can come in and offer us whatever we’re willing to pay for. We would get far better care, far cheaper, much more medical innovation than we do now. You and me could be free to the wonders of a free market if we would pay taxes to support whatever the government wants to support. Then we can look at the budgets and see what that is. We’re at the worst of all systems right now. This system of cross-subsidies is just atrociously wasteful and inefficient.…

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