Sunday, November 30, 2008

A Case for Employer Mandates

The consensus on the political left seems to be that a single payer health care system is the best approach if you are designing a system from scratch. The alternative, building on the existing system to provide universal coverage, is generally seen as somewhat inferior from a policy point of view, but much more politically feasible because you can transition to it without forcing people to give up their existing coverage.

I was therefore interested to see a 1989 paper by Lawrence Summers, who is slated to head Obama's White House National Economic Council, that takes a somewhat different point of view. The paper discusses mandated benefits in general (it is not limited to health care), and makes the case that mandating benefits is more efficient than having the government provide the same benefits out of tax dollars. It also lists some downsides to the use of mandates. Summers' basic concern is to argue that economists should pay more attention to the differences between mandated benefits and benefits provided directly by the government, and therefore he doesn't deal with the question of when the benefits of mandates outweigh the drawbacks. It is interesting to see that there are arguments for mandates (as opposed to single payer) that don't depend on political considerations or transition costs. The complete paper (in PDF format) can be found here.

I suppose I should give a hat tip to Pjeman Yousefzadeh at, although his posting is stupid on many levels, one being that he misreads Summers' paper so badly that I suspect he didn't actually read it at all.


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