Melanie Guldi on the Health Care Crisis

Wednesday, September 30, 2009 - 12:00

Questioning Authority recently asked Melanie Guldi, assistant professor of economics, for her insight into the current debate over health care reform. She is currently teaching a seminar in public finance, exploring how economic analysis can help inform policy debate on a variety of topics including health care. Here’s what she had to say.

QA: What is the biggest obstacle to getting a bipartisan plan through Congress?

MG: As Nobel Laureate George Stigler has shown, participants in a political process will use whatever power they have to influence the outcome of this process in a way that is beneficial to their particular interests. This creates problems in getting bipartisan plans through Congress and I expect that health care reform is no exception.

QA: Should a reform plan include a requirement that everyone obtain health care insurance, or is that too onerous a burden to impose?

MG: In Massachusetts, all individuals are currently required to carry health insurance or face a penalty. The penalty is not large relative to the annual cost of health insurance and therefore is not a binding constraint. If the constraint is not binding, then I would not view this requirement as onerous.

QA: Will Congress pass a significant plan this year?

MG: I do not have a crystal ball. That said, I think the odds of a plan passing this year are fairly slim. One reason (as I addressed in the earlier question) is that individuals push the agenda that will most benefit their private interests. With individuals pushing opposing agendas, it is unlikely that one plan will garner the required support to pass. Additionally, if another issue is deemed more important, debate on that issue could push a potentially feasible health care reform plan off the table. For example, when health reform last hit the national stage in 1993 during the Clinton administration, the North American Free Trade Agreement (NAFTA) became the hot button topic and preempted debate on health care reform.

QA: What model of health care reform do you favor?

MG: I do not have a favored model because just like everything in economics, it depends. In this case, I think it largely depends on whether an individual is satisfied with their current health care arrangement. For example, an individual currently without health insurance may feel a public health care system will allow them access to health care as currently purveyed but may not want to alter their current choices to pay into a national health insurance system. On the other hand, an individual currently with health care may feel everyone should have access to health care but at the same time may be concerned that services which are currently available will decline in quality and that it may take longer to get an appointment to see a provider. Either way, there are trade-offs to be made.

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