Saturday, July 14, 2007

Moving beyond the initial debate...

The last of the original pseudonymous bloggers has a very well thought-out post regarding health care...not 'universal versus not universal', but an actual discussion of different methods of this case, we're talking state versus federal. Short version of Demosthenes' post: federal = better. Here's a sample:

Let's say that two states, right beside each other, pursue different paths. One goes universal. The other goes private (status quo). There is no real barriers to movement between states, so what happens? Everybody who needs the health care is going to go to the state with universal care, so their costs go up. Everybody who doesn't want to wait in line (that's overstated, but that'll be the perception) will move to the other state. Many of these will be un- or underemployed people who don't have corporate health care. The universal state has a larger base of people who need procedures, whereas the other state will end up with a lot of new, relatively affluent taxpayers.

Yes, a lot of corporations like universal health care. Corporations who don't want to pay for health care will like the idea of the government footing the bill. A lot of income taxes are going to be leaving the state and somebody has to foot the bill, though, so they're going to soak a bigger hit than they would in the other state. They'll have to, because they're covering both the people who would have been covered by their own plans, and those who wouldn't. Those corporations that would have benefited would stay (car manufacturers, for example), but those that employ a relatively number of expensive professionals would almost certainly be better off leaving. Considering the dwindling number of firms that provide anything like comprehensive health care, the latter probably outweigh the former.

A lot of doctors would have left, as well, chasing the bigger dollars the private insurers would be offering.

So, the universal health care state ends up in a tough bind. It has a larger number of people who want coverage, but the tax base has bailed because of the enormous freedom of movement. They can probably handle it if they're relatively prosperous, this wouldn't be apocalyptic, but what happens during a downturn?

That's when having it be state-led runs into gigantic problems. Yes, States can run a deficit, but not indefinitely; and they lack the sort of tools that the federal government enjoys to manipulate the economy in times of downturn. If things get too bad, too fast, for too long, they must cut something, and health care is a huge target. If they don't, sooner or later another party will come into power, and they will.

If you federalize the program, you're in much, much better shape. Moving from the U.S. to another country is much more difficult than switching states; the cost and hassle of doing so will almost certainly prevent people and firms from trying to leave the United States to chase a lower tax bill (or higher medical paycheque) at the expense of universal care. No emigration is likely, or at least it'll be low enough that you won't need to worry about it. In a downturn, the federal government doesn't necessarily need to hack up its budget; it can ride things out, and employ fiscal and monetary tools to ensure that, yes, eventually things will improve. Plus, if it's universal, it's far less likely that elected officials will be pressured into weakening the system, because nobody can hold the threat of emigration over their heads.
I'm glad that the debate among the left blogosphere is moving beyond the "how do we win this argument?" and on to "We're going to win this's time to start discussing details"...and it's not too surprising that Demosthenes has a pretty good grasp of the details...

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