Thursday, February 26, 2009

An Economic "Superhero" and Healthcare

If economics had superheroes, Joseph Stiglitz would definitely qualify. Why? For the field as a whole, he won the Nobel Prize for economics in 2001. For me, I can’t say that I was dreaming of being “just like Professor Stiglitz as young boy”—I mean, what kind of six year old would know about economics heroes rather than cartoon superheroes. However, I honestly can say that one of his papers that was published when I was six was a primary inspiration for my doctoral thesis that I began writing 17 years later.

So, why mention Professor Stiglitz today? I was listening to the podcast of yesterday’s Democracy Now, and I heard him say that he had “reluctantly” reached the conclusion that a single payer system might be the “only alternative”. He noted that private health care insurers had demonstrated an inability to do things efficiently—i.e produce health insurance products at a minmum cost. In earlier entries I have alluded to some of the potential advantages of a single payer system or at least having only a single policy that could be offered by multiple insurers. I have been hesitant to say tha a single payer system is the only solution. However, I was amazed to hear one of my professional “heroes” say that a single payer system might be the way to go—most economists nearly always think of markets as providing the best answers.

So, should we believe Professor Stiglitz, or am I just beaming because I share the view of my professional hero? I think that we should listen to Professor Stiglitz—and so should the country’s leadership. In his paper that innspired my thesis, he asked, “What happens if a person who wants to be insured knows more about her risk than the insurer does?” So, Professor Stiglitz has been thinking about insurance, risks, changes in risks, and varying information about risks for a long time. Given 35 year of thinking and a novelty of ideas that won him the Nobel Prize, I think his ideas are worth considering. We should think about whether to go with President’s agenda that may only lead to small changes that do not necessarily do all that is hoped or or whether to ask our leaders for a more visionary change in policy.

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