Wednesday, December 12, 2012

...but the government never does it cheaper, or so I've been told

"Here's a rule of thumb to consider for when government should take a role in providing a service: When it's cheaper. That doesn't mean cheaper merely in a narrow sense, such as cheaper at the cash register, or for some people rather than others. Government can always achieve that end simply by subsidizing things by fiat.... Rather, it means cheaper for the economy or society at large."

Of course, you'll hear a certain brand of "conservative" insist that the government can never do anything more efficiently than the private market. As always, when you hear this, you fix them with a cold stare and ask them how efficiently the private market electrified the rural U.S. Or, if they live in the DC area, you can ask them how efficiently the private market built the Greenway extension to the Dulles Toll Road.

"And that points us to the idiocy of an unaccountably popular proposal aired in connection with Washington's "fiscal cliff" cabaret: raising the eligibility age for Medicare.

There seems to be a consensus developing that raising this age to 66 or 67, from today's 65, would be a fairly painless way of demonstrating our commitment to fiscal responsibility. You're all living longer, so what's the big deal? — you'll have plenty of time to enjoy the fruits of Medicare, if you're a little more patient.

Best of all, the change would save the federal budget $5.7 billion in 2014 alone.

Calculations such as these typically are made to look good by considering only one side of the ledger, the side showing the cost to government accounts (often only the short-term cost). This is a handy trick that can be applied to almost any situation, the way the ShamWow can mop up any spill.

What's on the other side of the Medicare-age ledger? Plenty... Put it all together, as health economist Austin Frakt did, and you find that saving that $5.7 billion on the federal books would cost society as a whole $11.4 billion. To paraphrase Jerry Seinfeld, this is how you save money in the Bizarro world."

When government does things better than private enterprise -

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