Mankiw Scores One
By Arnold Kling
Almost all sweeping health reform proposals involve higher taxes on the rich to provide benefits for those farther down the economic ladder. The redistribution, rather than health reform, is sometimes the main objective.
To judge whether my conjecture is correct, ask your favorite pundit of the left the following: What health reform would you favor if the reform were required to be distribution-neutral? That is, you can change the rules of the health system but you cannot change the distribution of economic resources between rich and poor. My guess is that your favorite pundit would either object to the question or would answer by retreating to more modest reforms.
This is a good point, particularly when it comes to the proposals coming from the Democratic Presidential candidates. They do not want to rock the boat by reforming the health care system. Just as most people hate Congress but vote to re-elect their own representatives, most people think there is something wrong with our health care system but don’t want to see any changes to their own health plans. So real health care reform is a political loser. Instead, what is being marketed as health care reform is taxing the rich to pay for more benefits for the middle class (the poor already have Medicaid).
Grading the candidates of both parties on health care reform, John Goodman writes,
Most Radical: McCain by a long shot. He would completely replace our arbitrary, regressive, wasteful system of tax subsidies for private health insurance with a $2,500 refundable tax credit for everybody ($5,000 for couples). By contrast, the leading Democrats would not repeal a single existing subsidy; they just add new ones. (That is why their plans are so costly.)
In general, it is those of us on the right who are most willing to reform the health care system. We see it as creating too many incentives for people to undergo procedures with high costs and low benefits. We are the radicals on health care reform, and those on the Left are protecting the status quo.
If the Left’s idea is really income redistribution, it somehow seems appropriate to bring up this point made by David Leonhardt.
The Democratic presidential candidates, meanwhile, are promising to pay for their new programs in part by getting rid of some of Mr. Bush’s tax cuts. But those tax cuts are already scheduled to expire under current law. The official budget numbers have already taken their demise into account.
What is odd is that the biggest obstacles to redistribution are the Democrats’ favorite programs, Medicare and Social Security. Those programs are going to soak up all of the tax increases the Democrats can dream up, and then some. Having spent the last six years denying that there is a problem, they are going to spend Hillary Clinton’s first term watching these non-problems drain tens of billions of dollars from the Treasury, leaving them very little room to maneuver on redistributionary spending.