Steve Levitt responds to Yours Truly. The response includes a pun. Levitt writes:
Smith could not have known, based on what’s in Think Like a Freak, that we actually do have a model for the NHS. And, indeed, I proposed the model to Cameron’s team after he left the meeting.This is a pun, because I meant "model" as in "theory", while Levitt here uses "model" to mean "policy plan".
Levitt goes on to detail his plan, which I personally like very much. It goes like this:
On January 1 of each year, the British government would mail a check for 1,000 pounds to every British resident. They can do whatever they want with that money, but if they are being prudent, they might want to set it aside to cover out-of-pocket health care costs. In my system, individuals are now required to pay out-of-pocket for 100 percent of their health care costs up to 2,000 pounds, and 50 percent of the costs between 2,000 pounds and 8,000 pounds. The government pays for all expenses over 8,000 pounds in a year.
From a citizen’s perspective, the best-case scenario is that they use no health care, so they end up 1,000 pounds to the positive. Well over half of U.K. residents will end up spending less than 1,000 pounds on health care in a given year. The worst case for an individual is that he/she ends up consuming more than 8,000 pounds of health care, so that he/she ends up 4,000 pounds in the red (he/she spends 5,000 pounds on health care, but this is offset by the 1,000 gift at the beginning of the year).If you asked me, off the top of my head, to come up with the optimal health care system, I would come up with something a bit like this. I would probably modify it to have government cover only certain things above the deductible (no plastic surgery, for instance), and I'd probably ditch the 1000-pound check. But it makes sense to have a deductible.
So I like Levitt's "model" for the NHS, and I think we should consider trying it in the U.S.
But I think that my griping in my earlier post was still on the mark. Why does Levitt propose to have the British government pay for people's health expenses above 8000 pounds? Isn't that like having the government pay for your car, but only if you buy a Maserati? Levitt's plan doesn't answer the question he posed to Cameron in their ill-fated meeting.
And some "free market priesthood" is still in evidence in Levitt's post:
But it doesn’t take a whole lot of smarts or a whole lot of blind faith in markets to recognize that when you don’t charge people for things (including health care), they will consume too much of it. I guarantee you that if Americans had to pay out of their own pockets the crazy prices that hospitals charge for services, a much smaller share of U.S. GDP would go to health care. And, of course, the same would be true in the U.K.But Americans pay a lot more out of pocket for any given health care procedure than do British people. We have much bigger copayments than they do. And yet we spend more on health care, not just overall, but for equivalent procedures. That fact does not seem to fit with Levitt's worldview. Perhaps a more complicated model - as in, theory - is warranted here.