Wednesday, November 18, 2009

Group of Economists Endorse Health Care Legislation

A group of economists have sent a letter to President Obama endorsing key elements of health-care legislation approved by the Senate Finance Committee. The endorsement specifically references and supports an excise tax on high-value insurance plans and a commission to promote Medicare’s solvency.

They write that four elements of the legislation are critical:

1. deficit neutrality

2. an excise tax on high cost insurance

3. an independent Medicare commission

4. delivery system reforms

Included among the 23 signers of the letter are:

Alan Blinder

Kenneth Arrow

Alan Auerbach

Brad DeLong

David Meltzer

It is simply stunnig that in this day and age such a group of economists thinks in terms of national market aggregation as the level for solving scarcity problems, and quite simply ignores the extreme benefits and efficencies that would occur if the entire health system were left to the same system that brings us falling prices and always improving qulity in flat screen televisons, cell phones, and computers, namely the free market.

If you really want to solve the health care problem make health care providers of all types work under the same rules, regulations and tax benefits that the People's Republic of Silicon Valley operates under, i.e. no rules, regulations or tax benefits.

The economists full letter is here.


  1. It is particularly sad to see Kenneth Arrow's name on that list. As I recall he has done some good work in the past.

    These people must be anxious about their government funding.

  2. Go read George Akerlof, "The Market for 'Lemons'"...

    And get a less stupid class of other commenters as well...

  3. Brad
    Prof Akerlof and his merry band of numerologists from MIT remind me of that old saying: If the only tool in your toolbox is a hammer, all your problems look like nails. In Prof Alerlof's case his primary tool being mathematics he perceives his economic problems to be equations to be solved, a sadly myopic view.

    So he discovers that the market "equations" are unbalanced (or asymmetric) and believes he has discovered the cause of all business cycles. So now all we need to do is use government to "balance" these unbalanced transactions. Ironically his myopic view prevents him from seeing that these unbalanced transactions are often caused by government force used to pay off special interest groups. If government was removed from the transactions he would see that asymmetry actually drives the transaction to the benefit of both parties.

    Brad - I can see you could use a basic understanding of economics and so I refer you to what may appear as a very simple presentation. Don't let appearances fool you. There is much truth here: