Reality vs. Economic Correctness

(I'm so fickle -- my last post said that I wasn't going to bother with libertarians on this blog anymore, and the very next post, I'm blogging on a Tyler Cowen post. Oh well. Tyler Cowen is one of the less ideological ones...)

Oh, Tyler Cowen. You can't tear up reality because it doesn't fit your theory.

[W]e don't have a good explanation of why private insurance markets do not function better. But since single-payer national health insurance violates every economic law known to mankind, I am again unsure how I could leap on the Democratic bandwagon.

Kevin Drum does a pretty good job of pointing out the absurdity of this line of thinking.

But every developed country except the United States has a national health insurance plan, right? And they mostly seem to work pretty well, don't they?

So either they don't violate every economic law known to mankind, or else economists are doing a pretty dismal job of adducing economic laws. Which is it?

Tyler countered that Kevin left out the term "single-payer" in his critique. But how is this relevant? If you read the context of Tyler's post (titled "Could I ever become a Democrat") it is clear that he is not ruminating on the pros and cons of different national healthcare alternatives, but making a sweeping pronouncement on the viability of all such proposals according to the supposed economic laws. Here is the bulk of his second post.

Canada, North Korea, and Cuba have single-payer governmental systems. If you know of others (I believe there are some), please leave them in the comments. The successes, or supposed successes, of most West European systems do not constitute evidence that a single payer system is a good idea. This is one of the most commonly overlooked points in the debate over health care.

How is he defining single-payer here? If he is taking it to mean that the government pays every dollar of every procedure related to health, then Canada is not single payer. But if he's taking 'single payer' to mean, as it is generally meant in these discussions, that the government pays for all basic and essential health services, then almost all industrialized countries are single payer -- from France to Canada to Japan to the Scandanvanian countries to Taiwan.

The term "single-payer" is used to distinguish countries from "multi-payer" countries where the costs of healthcare is split between private and public means, like the mangled mess of Medicare, Medicaid, employer provided insurance, HMOs etc. that exists in the United States. The stillborn Clinton healthcare proposals would have extended the coverage provided by the government so that all citizens are covered, but retained the multipayer aspect, much like it is in Germany right now. But you'd have a hard time finding other examples of multi-payer universal healthcare systems because the layers of bureaucracy added by having different providers makes them very inefficient.

In all single-payer countries, you still have the option to get procedures that are not covered or deemed necessary by either paying for them out of pocket or getting top-up insurance. And in some single-payer countries, they do charge at some level for some procedures, chiefly to discourage over-consumption. To my mind those extras and adjustments does not change the underlying single-payer nature of the care. To argue that it does is to make the term 'single-payer' pretty meaningless.

There is another way in which the term "single-payer" is used to distinguish systems in which the government simply pay (like in Canada) and one where they have more control over the healthcare delivery (such as England, with the NHS). But I doubt this is what Tyler means because, under this definition, North Korea and Cuba would not be "single-payer" systems. In fact, though there is some confusion over what the term "single-payer" really means, Tyler's statements make very little sense with any of them. In fact, the only way I really understand Tyler's response is as the familiar libertarian cheapshot of lumping a proposal they don't approve of with a few communist regimes.