Revealing to all the world the contempt for the American people that Washington insiders possess might garner for Prof. Gruber a future Medal of Freedom.
Perhaps by a president elected by the Irony Party.
What Gruber is unlikely to get, however, is a Nobel Prize for Economics.
Benjamin Zycher, writing at The Hill, questions Gruber’s astuteness as an economist. The MIT professor surely has the wit to sucker those representing American taxpayers out of six million bucks for his consulting, but, otherwise, reveals some blind spots about where incentives should be figured in.
“Economists may disagree about many things,” writes Zycher, “but absent among them is the central role of incentives as determinants of behavior,” a principle that “applies fully to government.”
To reward one constituency at the expense of others, health care bureaucrats will quickly come to regard limits to spending as a kind of “savings.”
From this type of rationing, Zycher suggests, there will be “a reduction in the flow of research and development investments in new and improved medical technologies, yielding fewer new medicines, devices and equipment.”
This means that the most negative effects will be seen down the road. While the easier-to-publicize positive effects of more people covered by insurance can be pointed to right now, as a “benefit.”
However, even that upfront goody isn’t what we might pretend it is. “Gruber seems actually to believe that an expansion of insurance ‘coverage’ is the same as an expansion of actual healthcare,” Zycher notes, with apt incredulity.
By ignoring negative effects of his convoluted program, and concentrating on a few dubious upfront benefits, Gruber proves himself more con artist than economist.
This is Common Sense. I’m Paul Jacob.
5 replies on “Rewarding Gruber”
“When I use a word,” Humpty Gruber said, in rather a scornful tone, “it means just what I choose it to mean — neither more nor less.”
“The question is,” said Alice, “whether you can make words mean so many different things.”
“The question is,” said Humpty Gruber, “which is to be master — that’s all.”
Zycher is sadly correct, the issue is Bastiat’s “unseen”, impossible to quantify but definitely predictable, result.
There can be no question, in the long run, the quality of available medical care and services in the future must be diminished.
The development of the problem pointed out by Zycher — and the ultimate result — was and remains totally foreseeable.
It all started with the worldwide benefits accruing from the previous level of freedom in US medical market for goods, services and pharmaceuticals. It was their and their “excessive” pricing which motivated and financed the private research.
The destruction of the system was a result of cost shifting.
Lesser developed countries and their populations could not afford “modern medicine” (but definitely have benefited from its advances and increasing efficiencies).
The industrialized and “rich” socialized medicine jurisdictions adopted a marginal cost model, which would pay production costs but less than full costs, including research. The suppliers, noting any margin is better than no margin, capitulated.
In that manner the cost of private research was shifted to the US market, which remained relatively “free”, and was in an economy seeming able to stand the cost.
As the government “paid” more and more of the US healthcare bill, complaints arose regarding the “excessive” cost incurred in the US system, especially in compared to those incurred by the socialized cost shifters. For example, the Canadian drug price pharmacy price differential became an issue. It was never pointed out, as it would have been politically, statist and progressive incorrect to do so, that the higher US price symptom was an caused by the Canadian government’s market manipulation, artificially lowering the Canadian costs and effective taxing US citizens to pay for Canadian citizens benefits. Rather it was contended, via popular political fable, the difference is caused by the evil and avariciousness of the predatory for-profit drug companies, profiteering on the misery of others and American’s in particular. (Note Professor Gruber’s estimation of the intelligence of the American general populace, and expressed belief for elitists such as himself that the end justifies the means.)
Among the “savings” anticipated in this advent of the US socialization of medicine is the elimination of the price differentials between the US , Europe, Canada, etc. The US will simply market manipulate, and refuse to pay more than the others.
As a result research will shortly be limited by the reduced revenues, and evolve to limited projects pre-approved, financed and controlled by the governmental and regulatory agencies. Research will be via grants and contracts only, generally to the non-profits and universities. Grants and contracts to for-profits will be disfavored, probably eliminated by the perverse economic policies of “progressive” politics, or become so onerous in their restrictions to be commercially unacceptable.
Bastiat and Mises argue and teach innovation and true advancement are not compatible with central planning.
Just looking to the recent past for an easy example, there would never be a centrally planned “need” for the iPhone6. If the cell phone market was centrally planned commencing immediately after the introduction of the first iPhone, that would have been the technology which the central planners would have selected as the apex, and still be producing. The Android and Microsoft receiver and operating systems would have never been developed, as such would have been deemed wasteful and duplicative by the planners.
Such will be future fate of medicine, and no one will ever fully understand, or account for, the retardation or loss of humankind’s otherwise more rapid advancement.
Great article and excellent commentary JFB. You always add a lot to the economics and history of an issue. I loved the analogy of where we would be with central planning on fons.
And Drik, I had to chuckle as the other day while watching Gruber talk (on TV) I too thought of Alice in Wonderland. Probably one of the most profound things Carroll wrote, among other good observations.
All of this ignores the very simple reality that there is no FREE MARKET in medicine.
Does anybody think neurosurgeons would be able to charge $50k for 4 hours surgery in a “free market” where people bore their own costs but where insurance companies and most especially the government inflate and prop up the prices?
The answer is no and medicine is so far removed from any notion of free market that it is really impossible to mention them in the same sentence.
Many places NOT IN THE USA are becoming medical travel destinations in a great example of what the free market COULD bring to the discussion.
Regardless of Gruber’s flawed economics, he won’t get a medal because he supported the law and the fraud in selling it to the public. But the Democrats who voted for Obamacare are entirely responsible for the fraud as they wrote the bill, and told the lies.
Gruber’s $prize comes from his making a computer model that politicians used in constructing Obamacare and modeling the effects in a way that supported their objectives. He got in bed with a group that wanted to tax the middle class and get further control over the medical industry, for his cut. To his credit, at least he was honest enough to state the truth in public, even though that truth, at best, was essentially “I believe lying to the public to get this bill passed is good.” At worst he’s lying that passing the bill is good for the country, but prefers the money.