Healthcare Reform on the Supply Side

Since the beginning of the Great Healthcare Debate of 2009 and 2010 just over a year ago, I’ve felt that Democrats and Republicans have both been missing a very important point. Mr. Obama and the members of his party in Congress have offered proposals aimed at dramatically expanding access to health insurance and offering coverage to tens of millions of the uninsured. Republicans counter that such plans will only worsen the problem of rampant medical inflation as price signals are further distorted in the market for healthcare and more people demand services that are already scarce. Their counterproposals, a number of which have been adopted in one form or another into the legislation that will presumably be reconsidered sometime soon, have mostly consisted of attempts to rein in costs through a combination of malpractice reform, decreased regulation of insurers, and incentives for people to save for their own healthcare expenses, thereby discouraging unnecessary spending by making consumers more aware of the true cost of their own decisions.

But both of these approaches only deal with half of the problem. Just as the Federal Reserve found itself trying to fight a supply-side problem with demand-side weapons during the era of stagflation in the 1970’s and 1980’s, Congress today finds itself attempting to resolve the healthcare issue halfway, by making changes that will only affect the nature of demand for healthcare and not its supply. It’s probably true that efforts to expand coverage will lead to more people wanting more services, but the critics offer no workable alternative.

Unlike most markets, where sustained increases in demand lead to more sellers supplying consumers with what they want, the market for healthcare is fundamentally unable to expand in such a way. Drug companies can produce more drugs, device makers can make more devices, but the amount of healthcare that can be supplied at any given time is still constrained by the number of doctors, and the number of doctors is constrained by the number of medical schools.

There’s no question that more and more people are trying to get into medical school, but getting in is becoming increasingly difficult, even for qualified candidates. President Obama has actually discussed the idea of offering better funding for medical students so that they aren’t rewarded for their toils with crushing debt upon graduation, but this doesn’t really address the root of the problem. So what if more people can pay for medical school? What if there aren’t enough medical schools?

Fortunately, the tide may be turning. An article published early last week in the New York Times discusses the fact that new medical schools all over the country are beginning the process of accreditation. It notes that there are currently 131 schools in the United States, and that only one new one opened during the 1980’s and 1990’s. In contrast, there are around two dozen that are currently close to opening, such as those affiliated with Quinnipiac and Hofstra Universities.

The article takes the contrarian view that this might not actually be as good a thing as it sounds. Not only will we not see a dramatic increase in the number of physicians anytime soon, but there is no guarantee that these doctors will end up in the rural and impoverished areas where they are so desperately needed, or that they won’t just create demand for their own services, thereby worsening the problem of access.

But in economics, there’s no such thing as a free lunch, and I for one would much rather pay for my lunch than go hungry. The system by which healthcare is provided and paid for in the United States is highly dysfunctional, but there is a limit to what demand management policies can accomplish. Without more doctors and nurses, our quandary will only get worse.

"A Night of Social Commentary With Christopher Hitchens"

I recently had the good fortune to meet and have dinner with Christopher Hitchens, the English-American secularist and self-styled polemicist who has written prolifically on everything from Islamic extremism to Mother Theresa to his own self-inflicted waterboarding. Aside from noticing his works while browsing the religion section of my local Borders, I first discovered Hitchens when watching an online documentary called “The Four Horsemen,” the title of which refers to four giants of the modern atheist movement: Oxford biologist Richard Dawkins, author Sam Harris, Hitchens, and Tufts University philosophy professor Dan Dennett, who I believe to be one of the greatest intellectuals of our day.

What was remarkable about the dialogue was that it revealed the genuine disagreement that exists among atheists about the role of their belief system in contemporary society and the approach that they ought to adopt when dealing with the religious. Dawkins, in his typically acerbic style, argues for the utter dissolution of all forms of religion, and denies that spirituality qua spirituality has ever been a force for good in the world. Rather, he claims that any apparent good done in the name of religion has actually been motivated by secularism, and only adopts the mantle of religion to protect itself from a largely orthodox zeitgeist. Hitchens, with some exceptions, generally agrees with this view. The most interesting argument made in the film, and one that he elaborates on further in his 2006 book Breaking the Spell, is Dan Dennett’s claim that moderate religion not only has the potential to be beneficial, but may even be necessary if we are to rid the world of religious extremism. More on this in a moment.

It was only a few weeks after I had watched “The Four Horsemen” that I found out that my college would be hosting Hitchens for “a night of social commentary,” and I was fortunate enough to be included in a group of about ten students invited to have dinner with him before his presentation. In real life, Hitchens is exactly what he appears to be in televised interviews or YouTube videos: sarcastically witty, profoundly knowledgeable, and completely at home in the realm of rhetoric. He has an uncanny ability to immediately appreciate the flaws in any argument, and his facility with language is dazzling; his most intellectually complex statements are tossed around like casual bromides, and even those reactions that seem impulsive and instinctive come out sounding polished and organic. It also helps that he has a British accent.

His talk dealt with “threats to free expression,” examples of which included the fatwa pronounced on author Salman Rushdie by the Ayatollah Khomenei of Iran after the publication of Rushdie’s controversial book “The Satanic Verses,” and the furor that erupted in 2005 over a Danish cartoonist’s depiction of the prophet Muhammad. To Hitchens, the evil of religious censorship is only part of the problem. The true horror is the relative ease with which others capitulate in the face of extremist anger. He decried not only the Ayatollah and all those who called for the killing of Rushdie in the aftermath of the fatwa, but also every bookstore that refused to sell the book and every library that refused to keep it on its shelves. In discussing the Danish Muhammad cartoon, Hitchens criticized CNN for not airing any actual image of the item that was causing so much controversy. He further claimed that he asked the producers of a CNN program on which he appeared to discuss the matter whether they were displaying such sensitivity because they were afraid. The answer, allegedly, was yes.

During the question-and-answer period that followed the talk, Hitchens was no less incisive, at one point replying to a student by wondering aloud why she wasn’t “able to make an actual question out of that.” I asked him if he could ever conceive of a situation in which censorship of any kind might be justified. He explained that, in principle, national security may at times require it, but that in most circumstances nobody is “good enough” to deserve the title of censor.

At the dinner before the talk, Hitchens got into a spirited back-and-forth with a student regarding his support for the Iraq War. He expertly rebutted the criticisms of his position, concluding the debate by adding that “if you try to say anything else at this point, you will only convict yourself of not knowing what you’re talking about” (my paraphrase).

It was at that point that I decided to steer the conversation away from foreign affairs by asking whether he agreed with the view that Dan Dennett expresses in “The Four Horsemen” that moderate religion is essential to eradicating extremism, and that atheists have not and cannot in principle make any dent in the problem because their views are dismissed from the outset by the dogmatists they hope to persuade. According to this thinking, reform can only be realized if it is spearheaded by moderates within a religious tradition who are willing to engage their more orthodox brethren in a dialogue about their respective theological positions.

Hitchens scoffed at the notion and told me it was absurd to believe that extremists are only angry because people like him are making them angry. I told him this wasn’t what I meant at all. What I was asking was whether he thought it prudent to criticize moderate religion when it might hold the elusive key to ending fundamentalism – a goal that Dennett and I believe might be beyond the ability of atheists to accomplish. He conceded that in certain parts of Africa, Christian organizations have been more effective than secular ones at getting ideological reactionaries to agree to stop practicing female genital mutilation.

Did I actually win an argument against Christopher Hitchens? Probably not, but considering what happened to everyone else who tried to challenge him, I’m happy to chalk up a draw as a victory.

Moderate Conservatism Goes Mainstream

Over the course of the first year of the Obama Administration - and some would argue, because of it - moderate Republicanism has all but ceased to exist. Dealmakers like Olympia Snowe are looked upon by the party establishment as defectors willing to cooperate with the evil socialist agenda of the White House. Center-right Senate candidates are being overtaken in public opinion polls by staunch conservatives like Marco Rubio and Rand Paul. Sarah Palin has assumed a new role as the face of the populist Tea Party movement. Her former running mate, an erstwhile champion of true bipartisanship, may very well lose his long-held Arizona Senate seat this November. And not because he's a Republican, but because he isn't Republican enough.

The GOP seems to be concluding exactly the opposite of what they had hoped Obama would: moving to the center is not the answer. Becoming more radical is.

It's hard to see how this could possibly be a good thing for America. During the 1990's, the nation experienced a time of unprecedented peace and prosperity, largely as a result of divided government. Bill Clinton was forced to abandon some of his more ambitious liberal goals with the election of a Republican Congress in 1994, but so too were the Republicans compelled to lay aside their more ideologically-driven aspirations. Clinton vetoed welfare reform several times before signing a version he approved of, and deals were struck that, while far from perfect, represented true sacrifice in the name of bipartisanship. The "Don't Ask Don't Tell" policy, which is rightly being put on a path to repeal, was arguably a significant accomplishment in its day.

Paul Krugman observed recently in his New York Times column that the Republican opposition seems to find political potential in making the country literally ungovernable. This is indeed a disturbing trend, but my hope is that the defenders of centrism among those on the right may yet prevail.

I was particularly encouraged by two columns out today, one in the Washington Post by George Will, in which he argues that Palin is not qualified to be President and that the GOP should turn to more reasonable alternatives; and the other in the Wall Street Journal by Karl Rove, who urges the Tea Party to disown its radical fringe and divorce itself from 9/11 denialism and charges that Obama was not born in the United States. Both convinced me that something profound is happening: moderate conservatism is finally returning to the mainstream. Conservative commentators are no longer just taking shots at Obama, but are finally trying to reverse the slide of their party to the far right by pointing out the very real virtues of centrism.

Either that, or they're just following Olympia Snowe in cooperating with the enemy.

"Fear the Boom and Bust"

I originally found this little gem on Greg Mankiw's blog. It appears that it's the only piece that Econstories.tv has produced thus far, but I expect that many great things are yet to come.

Pelosi and Partisanship

“We’ll go through the gate. If the gate’s closed, we’ll go over the fence. If the fence is too high, we’ll pole-vault in. If that doesn’t work, we’ll parachute in. But we’re going to get health care reform passed for the American people, for their own personal health and economic security, and for the important role that it will play in reducing the deficit.”

- Nancy Pelosi, on a proposal to pass comprehensive healthcare reform as a series of separate bills