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Tuesday, November 6, 2007

Mankiw Confused about Health Care

Mankiw's new post is about his views on Health Care Reform..........................

I take issue with his following statement (he answers some questions from somebody):

Q: Do you think the pundits of the left are similarly confused?

A: Some are, but others have an altogether different motive. Observing dissatisfaction with the U.S. healthcare system, they are using reform as a Trojan Horse to push for more redistribution of income. Almost all sweeping health reform proposals involve higher taxes on the rich to provide benefits for those farther down the economic ladder. The redistribution, rather than health reform, is sometimes the main objective.

To judge whether my conjecture is correct, ask your favorite pundit of the left the following: What health reform would you favor if the reform were required to be distribution-neutral? That is, you can change the rules of the health system but you cannot change the distribution of economic resources between rich and poor. My guess is that your favorite pundit would either object to the question or answer by retreating to more modest reforms. If so, this suggests that calls for sweeping reform are mainly motivated by the desire for increased redistribution.

I think Mankiw grossly mis-characterizes some peoples' motivations for Health Care. It is true that many that want sweeping reform would call on a larger burden to be shared by the wealthy. And yes, that would by definition result in a redistribution away from the rich toward the poor. But that does NOT mean that that is the reason unto itself. It simply makes sense. Rich people can pay for health care far easier than can the poor. Health care is not like buying beer - most everyone needs decent health care to live a decent life nowadays. One can do without beer. If there was a debate about "Beer Care" and someone suggested taxing the rich to ensure that everyone had adequate amounts of beer available on a weekly basis, I can see many people not being for paying for that by taking an inordinate amount of wealth from the rich. But since we are talking about Health Care, and Health Care is a vital necessity to some, I can see how it could makes sense to make those that can pay the most with the least negative consequences do so.

So, Mankiw has the cause and effect all wrong. He thinks people want Health Care Reform in order to cause a more progressive distribution. In fact, people want to use a more progressive distribution to pay for Health Care Reform by taking money from those who can do with out a marginal amount the easiest.

I don't necessarily agree with all Health Care reforms put form by those on the left, but I think I understand their points of view better than Mankiw does. I personally can see how it could be considered ok to 'force' those whom society / God or whomever had blessed with a rich and healthy life to help pay for those less fortunate souls that were not blessed that way. Is that a bit anti-market? Sure is. Is it efficient in the narrow-minded text book sense - probably not. But to suggest that people that legitimately care about the health of US citizens are only doing so for redistribution motives, is, I think, out-of-touch.

Mankiw is not the devil. But he is certainly one-track-minded on this point.

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