Mankiw's Sunday Article on the Public Option

It's probably clear that I give Greg Mankiw a decent amount of respect as a conservative economist. Usually his positions are stated by revealing the observed mathematical relationships and then explaining why he would value a particular outcome, less than letting a bias guide his interpretation of the numbers.

Thus, I'm actually kind of suprised how unimpressed I am with his Sunday article on the public option, and also surprised with to how much I've already responded.

A few comments, for example:

True, Medicare’s administrative costs are low, but it is easy to keep those costs contained when a system merely writes checks without expending the resources to control wasteful medical spending.

"Expending the resources to control wasteful spending" is a positive way to restate the stories we've all heard of insurance companies dropping coverage on a patient once the patient finally needs it for say, an injury or a cancer diagnosis.

Similarly, a monopsony — a buyer without competitors — can reduce the price it pays below the competitive level by reducing the quantity it demands. This lesson applies directly to the market for health care. If the government has a dominant role in buying the services of doctors and other health care providers, it can force prices down.

It is my hope that a publicly run insurance option would intend to cover everyone (say, through a mandate with subsidies) and that the whole point of having this option is such that it doesn't have a say in how much it demands, and it's demand would merely represent the demand of all the people covered under it.

It is no wonder that the American Medical Association opposes the public option.

Most recently I've heard that the AMA counts about 30% of doctors among its numbers.

That's about all that's new in there, as near as I can tell.

Unrelatedly, it's worth reading Dan Froomkin's last article with the Washington Post, summarizing his 5-year career as a columnist.