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From John Goodman at NCPA:

We now know how many people have the problem most often cited as the reason for last years’ health overhaul legislation. Answer: 8,000

No, that’s not a misprint. Out of 310 million Americans, only 8,000 people have the problem given as the principal reason for spending almost $1 trillion, creating more than 150 regulatory agencies and causing perhaps 150 million or more people to change the coverage they now have.

It’s been like giving a party to which no one comes. The Medicare program chief actuary predicted last spring that 375,000 would sign up for the new risk pool insurance in 2010. But by the end of November, only 8,000 had done so. As Amy Goldstein reports in The Washington Post, this includes 75 in Virginia, 80 in New Hampshire, 97 in Maryland and a whopping 700 in North Carolina.

While a lot of people are surprised by these numbers, I am not. Here is why. Don’t you think it is a bit odd for the White House to send out an appeal to victims so they can identify themselves? That’s not normally how the political system works.

Read the rest. Goodman is actually optimistic about the political economy here. Since he argues that there are so few beneficiaries (and they are a scattered and non-unified group) while the cost is falling on a numerous and vocal majority that something will be done about this. I am usually a huge fan of what Goodman writes, but I think his political economy model is all wrong. It may have been accurate when Mancur Olsen was first describing these problems. But my mental model goes something like this. A few elites think health reform is a good idea. There is popular support for “doing something.” This is “something.” And despite the low number of beneficiaries and exploding costs, it is the symbolism that matters and beyond that, undoing this would be an admission by the elite planners that their planning is perhaps a bit off. And the planners cannot afford to publicly admit to their futility. I’ll be 7 feet tall when I see this happen. And in case you think doing stupid, costly things for symbolic purposes is out of the realm of reality, I offer you this.  For those too tired to click through, here is the key part:

“I do not believe that the minimum wage is an effective way to fight poverty. My support and endorsement of the letter comes from the symbolic nature of the minimum wage. It was the first piece of protective labor legislation passed at the national level in the United States . Over time its value has eroded relative to average hourly earnings, even though that hasn’t been doing so well itself due to the decline of durable manufacturing. In a world in which everything else is indexed- social security, some retiree pensions and we are constantly giving tax breaks to the rich, we need to make a symbolic statement about our concern for the people who are less well off than us.”

My mental model of the space program, light-rail and high-speed rail programs, urban renewal programs, and even much of the anti-poverty programs we see enacted is increasingly moving toward this one.

One Response to “Huge Hammer Crushes Tiny Tack”

  1. Rod says:

    Maybe it’s just me, but I always found the argument that there were vast numbers of people out there who could not get health insurance because of pre-existing conditions to be hollow, as I solved the problem for my employees by signing them up in Blue Cross’s “open enrollment” period, which got them insured in a snap. Blue Cross takes everybody, and they charge everyone a lot more than, say, Aetna would if you had an office full of young, healthy people. Indeed, Blue Cross gives one an idea of how costly insuring the pre-existing conditions would cost the public on socialized medicine.

    I’m on Medicare now, and if I want to, I can go to the doctor practically every day if I want to. My thanks go out to the millions of gainfully employed people who now pay any and all of my medical bills. Whoopee!

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