Friday, June 05, 2009

Mankiw on the public health insurance plan

With regard to the issue of whether it makes sense for the federal government to offer a public insurance plan for healthcare, Greg Mankiw makes a really good point, if he's right. He says there's currently nothing that prevents the formation of a nonprofit insurance company. He argues that such a nonprofit would accomplish the same goal (of keeping costs low by eliminating the need to profit) as a public insurance plan. I think this is true in theory, but in practice I imagine it'd be hard to get such a nonprofit off the ground since it would not have the size/volume at startup that it would need to negotiate favorable contracts with providers.

Update 6/5/09 6:30 pm: Ezra Klein weighs in via Twitter:

1 comment:

Scooter said...

I think I’m with you. I don’t know how one would get that non-profit started without a bunch of gov’t funding. Of course, once the gov’t funds, its tentacles are difficult if not impossible to dislodge and then we’re right back to the public/gov’t insurance that is unfairly competing with the gov’t money against private companies.

Of course, there are legions of non-profit health related institutions out there. Doesn’t every major city have a Catholic hospital. I’m not suggesting a religious backer for the non-profit insurance company but maybe they could serve as a business model.