Alan Blinder Gets an F in Healthcare 101

Cartoon by Jim Gibson

On November 2, 2012 I wrote a post titled “Alan Blinder gets an F in Econ 101”. At that time I took issue with his contention that a government deficit of 8.5% of GDP was not a significant economic stimulus. Now Blinder is writing in the Wall Street Journal again about Obama Care (“Despite a Botched Rollout, the Health-Care Law is Worth it”, WSJ, November 12, 2013, page A17.) I have no problem with people making their views known even when their views depart from mine. :-)  But I do take offense when a writer makes a conjecture and comes to a conclusion without any real explanation. It makes one seriously wonder if he is acting as an economist and analyst or is just showing support for his party.

Blinder’s article reads like a condemnation of Obama care but viola near the end he concludes with “America cannot be a humane society if we leave 15% of our population uninsured. America cannot be an efficient society if we spend 50% to 100% more of our incomes on healthcare than other countries." The bottom line is that Blinder says that Obamacare is going to make the US more humane and more efficient. So I hunted and hunted through his 16 paragraph article and I could not find one bit of discussion, analysis, or evidence that would support such a conclusion. For starters the terms “humane” and “efficient” are never defined or discussed in any way.

First consider his condemnation part. These are quotes from his November 12, 2013 article that reflect what he believes,

• The botched rollout of ACA has been an unmitigated disaster. Choose your favorite adjective: horrible, embarrassing, inexcusable.
• …virtually no one understands how the new law works….
• Thus tech “glitches” make the law’s critics look better and make the administration look like the gang that couldn’t shoot straight.
• Becoming a national laughingstock is worse than getting off to a bad start. It undermines trust in health-care reform and more generally in the government’s ability to solve problems.
• “If you like your (Health Insurance) plan you can keep it.” Well, it turns out that maybe you can’t.

At this point in the article I was ready to stop reading because it sounded like Blinder had become a card-carrying member of the Tea Party . But then Blinder makes three allegations:

• But even with all the delays, most of the uninsured will get covered.
• Millions of people under the age of 26 are already benefiting by being kept on their parent’s policies.
•  He worries that cost containment might be delayed now but then concluded “But there is at least some reason to think that the “affordable care” part of the act may be working already. The rate of inflation of medical care costs has tumbled in recent years.

At this point I was seeing what Blinder really wanted to say to strongly support Obamacare. But then he adds two more points of concern or worry on his part (and I am assuming that he was not being held hostage by Sara Palin when he wrote them):

•             If many low risk people stay out of the pool, we have a problem: The insured pool will be less healthy than the total population
•             So pure self-interest will push firms to drop coverage.

At this point I felt more disoriented than my last night out with JD. Is Alan Blinder against, for, or against Obamacare? Luckily he had not gone beyond his generous article word count when he popped his belief that despite all that other stuff – we need Obamacare to become a humane and efficient country. Thankfully a conclusion. Recall that President Truman always wanted a one-armed economist. I don’t think he would have liked Alan Blinder – who seems more like a multi-headed hydra.

Okay so he flip flops. Who doesn’t? So let’s move on to bigger potatoes. Standing back from the whole article, does Blinder prove or support his conclusions? Let me work on that for the remainder of this piece. So please WAKE UP.

First, he doesn’t make use of one of his key points and that has to do with the influence of the botched rollout on the support and faith people have for government. He said a lot of really nasty things about the rollout. But let’s face it – if they were so negligent in the rollout, are we really so confident that they are going to be able to manage such a new and complicated healthcare program? Can they really educate prospective clients by using people who have not been properly screened for that purpose? Can they really insure that people don’t scam the system and add unnecessarily to the costs? Can they really protect the confidentiality of all that information that goes to so many different government organizations?    

Second, if his two worries are true and low risk people and many firms do not sign up for the program, will we be able to afford it? He says that healthcare costs are already falling but naively attributes that to Obamacare. That is silly. Economists know there are many reasons besides Obamacare for the decline in healthcare costs – including the recession and slow economic growth. A main reason why Obamacare might reduce prices is because they stick it to doctors and other healthcare providers. This is not a political winner and will not likely happen when the plan fully unfolds.  Adding 30-50 million people to healthcare is not going to reduce its costs. Why can’t Blinder spend a paragraph seriously defending these cost reductions?

This thing is getting too long so I better take a nap. Let me end with humane and efficient. Compare the US to many countries and you will conclude that this is a pretty humane and efficient place. Many people do not want insurance and do not want to be coerced into buying it. And while some people will stop going to emergency rooms they will soon find a system wherein they will spend as much or more  time waiting for a private doctor in a nice clean waiting room. Surely as the US healthcare system becomes more like healthcare systems of other countries (ie we can’t afford it) all of us who cannot afford Cadillac plans will find the quality of our care greatly reduced. I seriously doubt the US will make it on the cover of USA today for Obamacare’s great humanitarian contribution.

Now consider efficiency and Obamacare. When did you ever learn that a law composed of thousands and thousands of pages of new regulations that seem to be changing haphazardly over time would lead to the average health practitioner getting more done at a lower cost? Is it possible that there are reasons, perhaps unique to the US, that will keep our healthcare costs as a large percentage of national income even after we impose Obamacare? We in the USA spend more of our income than any other country on American football and JD. We also do most of the drug and device long-term research and development. America is unique in many ways. Maybe we will always spend a large share of our income on healthcare?

But Blinder would rather draw conclusions out of a hat. He can do better than that and we deserve better than that. So I give him another F with the hopes that he will learn from this grade and be more careful with his words in the future.

Note to reader – Alan Blinder is a truly important and gifted economist. I am pretty much a grain of sand on his proverbial beach. As you know I like to sometimes take a humorous approach to some pretty dry issues. I have no personal issue with professor Blinder but I sure do take issue when I think important people take us for granted. High income and status has no monopoly on truth. Larry spouts...