The health of a nation

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Just got off the McCain campaign's conference call on its health care agenda. No earth shaking news, but it was interesting listening to the campaign defending its choices.

The plan's heart is mostly in the right place: break the link between employment and health care, make the plan revenue neutral (ish), change Medicare reimbursement so that we pay for results rather than procedures.

The problem is, it's heavier on theory than practice. Every health care economist in the country wants to pay for health rather than treatments. The problem is, health is very hard to measure--as David Cutler told me, "Health care and education are the two fields where output is hardest to measure. It's not surprising that costs in those areas are increasing much faster than inflation." When output can't be measured, input will be.

Medical care, like education, is also dependent on inputs from the clients. You will have a frantic political battle from doctors against any proposal that makes their income dependent on how many of their diabetics really give up the corn chips.

Likewise, the campaign didn't really have a good answer to the pooling problem: what happens to people with expensive pre-existing conditions when they have to buy insurance on their own? That's one of your primary lobbies for universal health care; I doubt the McCain plan will satisfy them.

The senator is proposing one thing that I think is a terrible idea, pharmaceutical reimportation. Naturally, this is the part of his health care plan with the highest probability of passage.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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