UTOPIAN HEALTHCARE….Tyler Cowen, after calling a desire for national healthcare “political irrationality,” says private insurance is still our best bet:

The goal is to get (virtually) everyone insured and keep them insured for as long as possible, and yes I know that eventually means health care at 20 percent of gdp and lots of people getting screwed out of just claims for reimbursement. It is simply the best we can do, and for that reason I don’t want to tax private health plans.

The ambitious long-run program should be to restructure the insurance industry –through a judicious mix of regulation and deregulation — to encourage competition across service quality rather than competition across cost-shifting. Frankly I have no idea how to do that but no one has ever convinced me it is impossible or utopian.

I don’t even know how you can respond to something like this. It’s the best we can do? Even though the world is full of countries that demonstrably do much better than this? We should encourage insurance companies to compete on service quality? In an industry more structurally resistant to this than nearly any other industry I can think of? The amount of government regulation this would take would make national healthcare seem like a libertarian dream. Finally, “I have no idea how to do that,” from a scary smart guy who surely knows every conceivable proposal for accomplishing this? What does that tell you?

I apologize for the snark. I know it’s annoying. But color me confused. If we snapped our fingers and covered every person in the country today with Medicare, it would cost us way less than 20% of GDP. We might get there eventually, but that will happen regardless of who funds healthcare in the United States. And along the way nobody would be getting screwed out of just claims for reimbursement.

The usual complaint about national healthcare from conservatives and libertarians is that it would stifle innovation. But would it? There are plenty of therapies today that are used almost exclusively by the elderly and are therefore funded almost exclusively by Medicare. They seem to be doing fine. The VA system, which is more centralized than even Medicare, is a gem. What’s more, surely designing a government program that’s friendly to innovation is less challenging than the Herculean task of somehow forcing the private insurance industry to cover everyone and cover them fairly. I know which challenge I’d rather take on.

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