Thread by @jeffreypclemens

At @MargRev, Tyler Cowen reflects on a survey of health economics written up by @afrakt.

Austin's summary of the survey, which was conducted by @KosaliSimon, @cawley_john, and Mike Morrisey:

"If health economists were in charge of the health system, not a lot would change."
1/n

https://twitter.com/MargRev/status/1231461065642242048

If true, Tyler asks, what to conclude?

Is it "That radical reforms, as suggested by... [some] ... presidential candidates, are undesirable and unneeded? That [those] who endorse single payer are way overreaching? Or that these health economists are... major wusses?"
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This thread provides some thoughts on why health economists might appear bolted to the status quo when answering questions about incremental reform, and how this relates to deeper issues in conversations about major health reform.
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1) We know that health system shake-ups are costly. This comes in part from long-running research on "plan switching costs," "doctor switching costs," etc.

Also, the ACA exchanges disappointed.

This makes shuffling things around incrementally look like a bad idea.
4/n

2) The U.S. system is replete with interactions across players through cross-subsidy schemes, multi-market contact, etc., making incremental reforms difficult to evaluate.

When asked about incremental reforms, it's easy to come up with "cons" and revert to the status quo.
5/n

So why not come out swinging for broad overhauls? Again there are shake-up costs as well as a mix of permanent costs and benefits. There may be some fear of making pronouncements that might end up looking spectacularly wrong or that might align with the "wrong" candidate.
6/n

My current thinking on health reform emphasizes the following sources of costs and benefits:
1) Transition costs
2) Distributional goals
3) Long-run efficiencies.
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My views on these first-order issues are as follows:
1) Transition costs are substantial
2) I prefer that some form of basic insurance benefit be provided or highly subsidized for all (tax-financed)
3) Efficiency is best achieved through some form of managed competition
8/n

These views lead me to support opening Medicare Advantage plans to the non-elderly on an income- subsidized basis.

Perhaps this would fit under the banner of "Medicare Part C for all who want it."
9/n

Why this approach?
1) Subsidies can be set and adjusted to achieve distributional goals
2) The plans and market places already exist, which can mitigate transition costs
3) The plans already engage in managed competition for Medicare beneficiaries.
10/n

Why do I prefer managed competition to "single payer"?

I worry that single payer advocates:
1) Under-appreciate the value of competition across plans
2) Overstate gains from scale
3) Under-appreciate the importance of regional variations in both supply and demand factors
11/n

On 1, traditional Medicare's payment models have not been beacons of dynamic, quality-enhancing reform. Competition can be vital for combating sclerosis in the management of whatever system we have.
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On 2, the universal coverage systems to which single payer advocates point are often much smaller in scope than you might think. The population in Canadian provinces, for example, maxes out at Ontario's 13M. This scale is similar to many European countries.
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On 3, population needs and hence optimal system design can vary across space. Even the British National Health Service, for example, is managing a geographic market the size of Louisiana. A single payer attempting to manage care across the sprawling U.S. would be strained.
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Views on the importance of specific efficiency concerns may differ. Value judgments may, of course, differ far more.

Please feel free to retweet and share your views!
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