Changing Gears

Now healthcare. The CBO is testifying before Congress tomorrow on long-term budget predictions. Here is an article in WSJ where Peter Orszag says:

The fiscal gap does not arise, as many believe, primarily from the coming retirement of the baby boomers. Rather, the rate at which health-care costs grow will be the primary determinant of the nation's long-term budget picture.

And then:

Moving the nation toward a more efficient health system inevitably will be a process in which policy steps are tried, evaluated and maybe reconsidered. Beginning that arduous process now is essential to securing the nation's long-term economic future.

Arnold Kling at EconLog comments:

I agree. However, I think this makes government a poor candidate for leading health care reform. The government is not very good at trial-and-error learning. Politically, the survival of a system is likely to be related inversely to its effectiveness. If a system does not cost much and yet it pressures doctors to change their behavior, they will lobby to kill it. On the other hand, in the UK, a new incentive system generates large pay increases for doctors with little change in behavior. In that case, doctors will lobby to keep it.

With markets, "trial and error" works, because error gets killed off. With politics, error often survives.

I love the last line.

My fellow bloggers need to increase their productivity. Even I’m getting tired of the libertarian rants.