Sunday, October 19, 2008

Mankiw is careless about health care

Greg Mankiw writes:

I don't see a good argument for [Obama's health care plan] favoring health insurance bought through an employer over health insurance bought as an individual. A level playing field makes more sense. David Cutler notes in his book Your Money or Your Life,

Health insurance is not something that is made better by tying it to
employment. As a result, essentially all economists believe that universal coverage should be done outside of employment.
I agree with David. Note that the Furman-McCain plan moves toward a level playing field. []

David Cutler's point about the benefits of decoupling insurance from employment is specifically in the context of universal coverage. The McCain plan will not move meaningfully towards universal coverage. Thus, its promotion of individual purchases can lead to adverse selection worsening substantially in employer-based plans as the healthiest people leave group plans for high-deductible plans. It is not a level playing field to worsen adverse selection. Thus, it is not kosher to quote Cutler's endorsement of universal coverage outside of employment as an endoresement of moving us away from universal coverage by reducing employer-based insurance.


donna said...

It's much more expensive to get individual coverage than a group plan. I think we have to move to universal care, how is the issue. Obama's plan gets us closer, McCain's does nothing for anyone, really. That's the difference.

Jonah B. Gelbach said...


v good point. nice post.