POLITICS/POLICY: Shock-Horror–I almost agree with Arnold Kling

Arnold Kling responds to Moulitas’ (DailyKos) overture to the Libertarians in a piece called Dear Libertarian Democrats… The only slight flaw in all this is that there aren’t very many libertarians, but then again we don’t need too many Republican voters to change sides!

Kling proposes running school choice in a few states and single payer health care in a few states. The only flaw here is in thinking that they’re much different. After all single payer health care in the usual American sense means putting all the money in one social insurance pool and allowing people to choose which doctors and hospitals they go to. As far as I can see school choice in Kling’s version is the same: creating one pool of all K-12 education dollars and letting kids/parents choose the schools they want to go to. In both cases everyone needs to be in the same pool, and the money follows the choice of the individual. I don’t understand how the libertarians can decry one as evil socialism while being OK with the other, unless they really favor repealing universal compulsory education. But maybe they do!

As for the health experiment, it probably depends where they run single payer. But the likelihood is that a really effective single payer plan run across state lines would be a wash. It would attract old school industry (autos) who would get rid of their “obligations” on the state, but it would also attract entrepreneurs suffering from job lock. It might lose jobs from employers with younger than average workforce, but theoretically it’ll be a wash. While single payer may not be the best option for financing health care delivery, and while a universal voucher scheme like educational choice may work too, a compulsory universal single insurance pool is by far the best option.



7 replies »

  1. Instructively, the political money from the teacher’s union to block school choice, doesn’t even come close to the $100 million spent by the special interests to keep our health care system in its current, inefficient and highly profitable state. So school vouchers have a chance (which I support) and universal health care has an uphill battle. Not because it isn’t right, but because of our corrupt political system driven by those interests that know how to game it.
    Get the political money out of our electoral system and we’ll have universal health care virtually overnight, because it is the right thing to do.

  2. Matthew,
    Thanks for the clarification. Personally, I have always supported vouchers but think they should be limited to the inner cities and districts where schools are perceived to be failing and leave the majority of districts alone where the public is basically satisfied with the product.
    In my NJ example, that would mean limiting vouchers to the 31 special needs districts (known here as Abbott districts after a landmark court case). If the advocates for minorities who support choice in the cities with failing schools really want this, their challenge is to convince politicians that their votes cannot be taken for granted, especially among African Americans who typically give 90% of their votes to Democrats. Even if they can’t bring themselves to vote for Republicans occasionally, they could threaten to withhold their votes from politicians who staunchly oppose choice because they don’t want to offend the teachers unions.
    On healthcare, there do seem to be some positive trends including a strengthening pricing transparency movement, more companies pursuing wellness programs, a slowing increase in prescription drug costs due to the generics boom, Wal-Mart’s pricing initiative (matched by Target), and, based on the work of the Citizens Healthcare Task Force, what looks like an emerging consensus around restructuring end of life care away from futile and costly interventions and toward hospice care and palliation. The real reform debate, however, will probably have to wait until the 2008 presidential election to shift into high gear.

  3. Barry. OK you’re asking me to explain something I don’t really understand and dont necessarily support but I think that the answer is that (theoretically & leaving out the special needs kids for now) lots of better schools will flood the inner cities to get the $12000 a year voucher, such that the next year, the voucher will go down in value (assuming the current system delivers worse education at a higher cost). The state will set the voucher level at average cost for the district which should see better schools in the urban areas where the potential returns are better (and where the current system is failing).
    But the concept is that the state gets out of education provision and steps back merely into funding it. And every kid gets an appropriate voucher. Which is in itself a segment of a global budget for education. Health care is not like that–there’s no universality and no global budget, until we get to Medicare (and even then as you’ll point out, the global budget is bogus). But if it was, I’d happily let the libertarians futz around with school choice.
    But as you say it’s a political non-starter while we have unionized public verus non-unionized parochial schools in opposition.

  4. Matthew — I’m sorry, but I still need a little help here. Suppose, for example, that the average annual cost of educating a student in NJ is $12,000. The range varies from as little as $5,000 for an elementary school kid in one of the rural counties in the southern part of the state to over $100,000 for a child with severe disabilities in the more urban northern counties. How does the parent of the high cost kid get his child the services he or she needs with a $12,000 voucher, and what happens to the extra money left over from educating the low cost child?
    As I indicated before, most parents in the suburban districts are basically satisfied with their public schools and don’t want or support school choice. The biggest potential for value added is in the poor, inner city districts as well as a few very low income suburbs. We have 31 such districts in NJ (out of over 600) that are designated special needs districts by the state, and they get extra financial help from the state for education.
    Since the politically powerful teachers unions strongly oppose vouchers and school choice and the large majority of inner city African Americans and Hispanics who want and support choice vote overwhelmingly for Democrats at election time, politicians will always side with the unions in this battle.
    With single payer health insurance, by contrast, broad based taxes would raise the money to provide healthcare for the population. Those that needed no healthcare would get none, and those who needed a lot would get a lot. Or, if it’s a Medicare Advantage model, it would not be hard to set the value of a voucher regionally to allow people to buy a targeted level of coverage from a private insurer. There is also widespread dissatisfaction with the current healthcare system. Costs are perceived to be too high and financially unsustainable. That is not the case with elementary and secondary education, for the most part.

  5. Hmmm. Wouldn’t school choice mean that the government gives each kid a per head voucher to be spent in the private system? Isn’t that just an invidivdual share of a global budget? I still don’t see the difference. There is only one payer (in my and I think Kling’s school choice system) and they set one “price/cost”.
    I think they’re more similar than you think. The problem in US health care is the lack of one social “insurance pool” or budget. How you organize the spending of the money is the secondary (and more interesting) problem.
    And your NJ taxes may be higher percentage wise, but surely not as absolutely high as 1.1% of property values in California!!

  6. Matthew,
    I think there are, in fact, quite significant differences between school choice and single payer healthcare. School choice is intended to improve results at the same or lower cost by injecting competition against the public school monopoly. Single payer healthcare is intended to reduce and/or stabilize costs by having a government monopoly dictate and control prices.
    With respect to school choice, there are a number of interesting issues worth considering using my home state of New Jersey as an example.
    1. With over 600 school districts in our relatively small (in land area) state, quality and costs vary widely.
    2. There are large differences in teachers’ salaries and benefits (largest single cost item) between the northern counties closest to New York City and the relatively rural southern counties.
    3. Fast growing districts tend to have lower per pupil costs just because they have a higher percentage of relatively junior teachers. Remember that teachers are compensated based mainly on seniority and how much post undergraduate education they have.
    4. Property taxes (highest in the nation) finance over 50% of education costs statewide ranging from 90% in the wealthiest districts down to 10% or so in the inner cities.
    5. Students are limited in how far they can physically travel to school by the length of (unproductive) time they are willing to (or should) spend riding a bus.
    6. The cost of special education can vary from $20,000 to $100,000 per child plus transportation depending on the severity of the handicap or disability.
    7. Outside of the inner cities, most parents are satisfied with their schools and don’t want choice.
    8. The politically powerful teachers unions, of course, staunchly oppose choice because they see it as a threat to their livelihood and monopoly power.
    My conclusion is that school choice makes the most sense in the inner cities where the system is largely a failure, and poor and minority constituencies are in favor of the concept. The most viable alternative in those areas is Catholic schools, and they only have limited capacity to take on additional students.
    As for single payer healthcare, we already have experience with Medicare. While some people think it works great and would like to see it replicated nationwide, there are, in fact, plenty of problems with it ranging from no out of pocket maximum exposure which necessitates buying Medigap insurance at fairly high cost to an inability to control its costs despite relatively low reimbursement rates to insuring that there are enough doctors willing to accept its rates.
    Germany, which recently raised its healthcare payroll tax to 14.7% (employee plus employer share) provides some insight into how much a similar system might cost U.S. middle class taxpayers, and Germany can’t control its costs either.