Monday, July 02, 2007

Economist reviews "Sicko"

Austan Goolsbee, the Economics advisor to Barack Obama, reviews Michael Moore's Sicko here.
Here is one snippet.

So, to do as Moore wants in the United States, you would need to do more than just overcome the insurance industry. You would need to cut the salaries of doctors, reform the legal system, enrage our allies by causing their prescription drug costs to escalate, and accustom patients to a central decision-maker authorized to determine what procedures they are and are not allowed to get. Unless every one of these changes comes together, Moore's new system would end up costing an enormous amount of money.

One problem hinted at, but not addressed, in this article is the idea of rationing. As health care costs escalate someone has to pay for this stuff. If its solely the government's responsibility then people will have to accept waiting lines. End of story. The alternative, and much more politically realistic option, is to set a "health care floor" that we do not let people fall below and then allow insurance to provide alternative health care plans at differing prices. You want more coverage and less wait, then pay more for it. There are ways around the asymmetry problems discussed in the article that would allow this type of market to work.

Update: An Economist reviews an Economist's review of Sicko

Economist Arnold Kling objects to a good portion of Austin's review.

Preventive care is like motherhood and apple pie, but we don't have any hard evidence that we can use preventive care to save money. I would argue that some types of preventive care, such as cancer screening, tend to have a very high cost per life saved.

To "reward doctors for doing a good job," you have to know what a good job is and you have to be able to measure it from far away. This is extremely difficult. Imagine trying to run a system in Washington to pay professors for "doing a good job."

Forced-pooling health insurance is not a solution, because "dump and deny" is not the main problem. A bigger problem with the individual health insurance market is that there are 50 state regulatory fiefdoms, and insurance companies are not allowed to market products across state lines. The biggest problem is that most people think that employer-provided health insurance is "free." So when they do not get insurance from an employer, they cannot bring themselves to pay for what other people get for "free."

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