18 April 2010

"Spreading the Wealth via Heathcare Reform"

Greg Mankiw's Blog | Spreading the Wealth via Heathcare Reform

I have long said that one of the prime motives for healthcare reform had nothing to do with health per se but rather was a desire by those on the left for greater redistribution of income. The Tax Foundation has now put some numbers to that proposition for the recently passed bill. Roughly speaking, the top 1 percent of the population pays an additional $50,000 in taxes because of this legislation, and each of the bottom 50 percent gets about $1000 in benefits. Click here for the more complete description.
I have no idea if The Tax Foundations numbers hold up, but I agree with Mankiw that redistribution is the goal of Obamacare.

My problems are three fold, as I believe I have mentioned before.

(1) This is an extremely inefficient way to accomplish redistribution. The deadweight loss from channeling this through our byzantine health care system is beyond absurd.

(2) Doing redistribution this way is comically low precision. We're not transferring money from the rich to the poor, we're transferring it from the young, healthy and relatively poor to the old, infirm, and relatively rich. But the rich vote selfishly and the young don't.

(3) I don't like it when people piss on my leg and tell me it's raining. If you want to take money from some people and give it to some poorer people, go ahead. I'm not gung ho about it, but I accept that that happens in a modern democracy.  Just be honest about it. Don't give me some song and dance about this being about health the same way you give me the song and dance about social security being about retirement savings. Stop trying to pull the wool over my eyes.

1 comment:

  1. I think a better health care system -- as long as we are going to accede to income redistribution -- would be to just give people some health care money each year, let them spend it on their own health care, and let them keep what's left at the end of the year. Now at least they have some skin in the game, and free market incentives are back.

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