Avik Roy on Health Care: Faith in Markets, Prejudice Against Government Hurt Otherwise Good Proposal

Avik Roy is on to something with his call to conservatives: focus on health care costs. The Affordable Care Act isn’t really about controlling costs and has just thrown in a grab bag of miscellaneous stuff to address it. (Some of those ACA bits and pieces may be working, though.) But Roy’s supposed evidence for the cost control of “market oriented systems” left me confused: Copy Switzerland, because its “results are remarkable.”

Huh?

The last time I checked, Switzerland was way up there on the health care expenditure charts. Nowhere close to the US but above most everyone else. In fact, Switzerland, with its ‘more private than most countries’ health care system fits a pattern. Empirically, tight government control systems (like the UK’s) are cheapest—not a result that fits neatly into Roy’s belief system. Continue reading

Ted Cruz got Obamacare right—massive transfers from the healthy; His contempt shows Republicans’ health care bind

Last week’s CPAC conference’s discussion of health care was dominated by (yet more) calls for Obamacare’s repeal, along with preeminent mocker, Sarah Palin’s memorable I do not like this Uncle Sam. I do not like his health care scam.” More measured Republicans worried that CPAC offered no constructive health care suggestions and ignored the new Republican alternative to Obamacare.

No one seems to have noticed that Ted Cruz fairly accurately characterized Obamacare as “a massive wealth transfer from young healthy people to everyone else.”  That’s a pity. That sentence and Cruz’s contempt for such transfers are revealing. They show that Republican rhetoric conflicts with the economics of health insurance, in particular with the fact that only government interfering in the market can solve our health insurance problems. Republicans can only produce good health care policy when they build it on a base of reality.

Here is the economic reality that Cruz misses: health insurance consists of transfers from the healthy to the sick. It’s just like fire insurance. Everyone pays premiums. Those who have fires get massive transfers of wealth, paid for by those who don’t have fires. All insurance is about transfers from the lucky to the unlucky.

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