Code Red: Two Economists Examine the U.S. Healthcare System

January 17, 2011

A Health Reform Christmas Carol: Part Two

Filed under: Uncategorized — David Dranove and Craig Garthwaite (from Oct 11, 2013) @ 11:20 am

No sooner had I fallen back to sleep when I was awakened by a young man brimming with enthusiasm. He smiled and reached out to me. I instinctively took his hand and we were instantly transported to a familiar setting. We were on a college campus in a big city, under a great arch at the entrance to an ivy covered academic building. I felt at home here. My host opened the door and beckoned me inside. We walked down a hallway lined with fliers for student events and copies of classroom syllabi. At the end of the hall we entered a seminar room crowded with economists. I thought I recognized the professor at the front of the room who was leading the group through a Powerpoint slide show. My heart quickened when I saw the title: “The Theory of Managed Competition.” I knew this material. I taught it. I believed it. When the presentation ended and the economists in the room applauded, I joined in.

I turned to my host and asked him why, after the nightmare I had recently endured, he had instead chosen to take me to this happy place. “I am the ghost of health reform present,” he uttered. “I am here to show you what is happening outside of the ivory tower.”

“But we are in the ivory tower right now! You can’t get more ivory than…”

But before I could finish the sentence, he took my hand and we were again travelling. When we alit, the halls of academia were replaced by the halls of government. We were in a grand old office and outside the windows I recognized the Capitol steps. There was a big American flag in the corner and seated at an imposing mahogany desk was a face I recognized. The distinguished-looking woman in an Armani suit was speaking to two men that I also recognized – they had been in the audience of the Powerpoint show. If you’ve ever travelled through Europe – you know pickpockets are fairly common. You can even get knickers money pouches for journey (which I thought looked odd and uncomfortable, but I suppose a requirement for some folks there). We got robbed while on a bus to Stockholm – and had to get a ansök om snabblån här to get to an embassy to get some temporary passports. It was a frustrating experience, overall.

I turned to my host and said, “That’s Nancy…” but motioned me to be quiet and listen. The woman was telling the men that she could not support their ideas about healthcare competition. She would support insurance exchanges, but only if they were highly regulated and if there were government-run alternatives. She may even have uttered something about castrating insurers. She said she would advocate for health information technology, but only if its use was sharply limited. She refused to reform the tax code to pay for health reform and instead insisted on raising marginal tax rates. And when she agreed to some cuts in Medicare, the sincerity drained from her voice. The economists listened and said nothing.

I cried out “Tell her she is wrong! She is making a mockery of your theories. This isn’t managed competition; this is regulating competition out of existence.” My host shook his head, as if he pitied me. Taking my hand once more, he brought me back to the little cottage where my previous host had shown me so much sadness. Peering inside the window, I saw a very different scene. This family was together in the living room posing for a holiday photo. They looked the very image of the healthy, happy, American family. Glancing at the Christmas tree, however, I noticed there were no presents underneath, and then I heard the little boy say something to his dad. Listening closely, I heard the father reply, “Tim, I know you were looking forward to presents this year but we have to save money. You may not understand this, but please try. Even though we are all healthy, health insurance is getting to be so expensive, and no one seems to be doing anything about it.”

I began to boil over with frustration. I asked my host, “Doesn’t anyone get it? The system is broken and the voters for meaningful health reform were there. But all Washington can give us is some regulator’s perversion of competitive ideas? If we want regulation, then let’s have Canada. If we want competition, then let’s have markets. What if we got the worst of both worlds?”

My wife woke me. “What were you saying about Canada?”

“Nothing, nothing at all.”

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