McArdle on Healthcare Reform

Megan McArdle, in response to a post by Matthew Yglesias, has a solid post on the limits to what can be realized in terms of savings by healthcare reform. I commend it to your attention.

I don’t agree completely with Megan’s position on healthcare reform, the specifics of my differences being that I do believe that we could get some short term savings in administration costs by going to a single-payer system and that I’ve concluded that we need to focus much, much more of our attention on how we manage the supply part of the healthcare equation if we’re going to prevent a meltdown of the present system in the foreseeable future.

A few notes on Megan’s post. First, Megan is underestimating government’s role in the healthcare system. It isn’t just Medicare, Medicaid, and the VA. You need to include the employer-paid portion of the healthcare plans of government workers into the mix as well. By my calculation that pushes government at all levels’s total share of the healthcare dollar to well over 50%.

Second, the reform being pitched right now by most Democrats is going to a single-payer system. Neither Canada nor France has a single-payer system so comparing the costs and benefits of our converting to such a system based on the Canadian or French experience is misleading.

Like it or not some kind of reform is in our future. What we’re doing now is fiscally untenable. So it behooves all of use to start thinking seriously about where we want to go and how we’re going to get there. That, ultimately, is the point of Megan’s post.

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Dave Schuler
About Dave Schuler
Over the years Dave Schuler has worked as a martial arts instructor, a handyman, a musician, a cook, and a translator. He's owned his own company for the last thirty years and has a post-graduate degree in his field. He comes from a family of politicians, teachers, and vaudeville entertainers. All-in-all a pretty good preparation for blogging. He has contributed to OTB since November 2006 but mostly writes at his own blog, The Glittering Eye, which he started in March 2004.