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Sunday, August 19, 2012

Beat the Drum repeatedly

Drum discusses health insurance via competitive bidding. I comment.

I agree with the general thrust of this post but absolutely see no point purpose or relevance of the following paragraph

Critics like to point to Medicare Advantage to show that competitive bidding has been a failure. But that's a mistake: although MA has indeed been a failure, costing taxpayers more than traditional Medicare, that's partly because it's based on some rather convoluted formulas that prevent us from getting a good idea of what competitive bidding could accomplish if it were designed right. But there's another reason it's a mistake to focus on MA: you don't need to.

Medicare Advantage didn't fall out of the sky or spring with fully convoluted formulas from the head of Zeus. It was designed by Congress. You mock those who note the advantages a simple carbon tax would have compared to really existing cap and trade proposals. Similarly you should be mocked for discussing the fantasy of a law which implements policy wonk designed competitive bidding.

The devil is in the details, but he has little elbow room, because he has to share the space with thousands of well paid lobbyists. There is no point discussing the effects of a policy whose details are "designed right." The deadly boring obscure but important details will be designed to please concentrated interests. This is a bug in the same way the second law of thermodynamics is a bug. Noting that a purely theoretical policy might work well is like designing a purely theoretical perpetual motion machine. It might be fun, but it has nothing to do with the real world.

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