Health Care Fallacy #1
Tyler Cowen has three health care fallacies and the first one is something I’ve mentioned before (and tooke quite a bit of heat for),
Today’s report is this:
The financial outlook for Medicare and Social Security has significantly worsened, as the bad economy and mounting job losses have pushed both programs years closer to insolvency, according to a grim report issued Tuesday by the Obama administration.
Maybe you once argued that “Social Security is fine,” but dollars are fungible and the budget must be judged as a whole. The consumption tax is coming, I am sorry to say.
In other words, we can’t simply ignore Social Security in trying to get a handle on the long term fiscal imbalances facing the country. While in isolation Social Security might be “fine” and need only some minor adjustments, the entire budget is looking rather bleak. So, taking Social Security off the table might make the problem intractable.
I also like this part as well,
I’m seeing nascent signs of a new (but actually old) fallacy, namely that since health care costs can (will?) crush the budget, we don’t have to worry so much about other expenditures. The mental story runs something like this: “if we don’t cure health care cost inflation, it doesn’t matter; if we do cure health care cost inflation, we can afford it.” That’s exactly the kind of false mental framing that behavioral economics identifies as irrational in other settings.