Wednesday, June 17, 2009

David Leonhardt on Rationing

In the business section of today's New York Times, economics columnist David Leonhardt has the best short discussion of rationing I've ever seen.

I won't summarize Leonhardt's succinct article. Anyone who's read my postings under the heading of "rationing" has seen all the same views, but Leonhardt has compressed lucid thinking and well-selected facts into 1200 words.

Leonhardt gives a link to a 2006 study by Baiker and Chandra in the Journal of Labor Economics. The findings will be useful for President Obama and his team in making the case that not rationing is an ethically irresponsible approach to health care. As I said in yesterday's post, runaway healthcare costs are not just an economic problem, they undermine health itself via the connection between income, employment and health status.

Here's the abstract from the Baiker/Chandra article:
We estimate the effect of rising health insurance premiums on wages, employment, and the distribution of part-time and full-time work using variation in medical malpractice payments driven by the recent “medical malpractice crisis.” We estimate that a 10% increase in health insurance premiums reduces the aggregate probability of being employed by 1.2 percentage points, reduces hours worked by 2.4%, and increases the likelihood that a worker is employed only part time by 1.9 percentage points. For workers covered by employer provided health insurance, this increase in premiums results in an offsetting decrease in wages of 2.3%.
Let's hope that enough business and labor leaders read Leonhardt's piece. The anti-rationing demagogues are sharpening their sound bite spears. The reform debate needs strong voices from business and labor to tell it like it is!

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