Wednesday, April 12, 2006

No Free Lunches in Healthcare

People engaged in policymaking are often tempted by wishful thinking. The political right likes to think that tax cuts generate so much growth that they are completely self-financing. The political left likes to think that "investing in people" generates returns so high that it pays for itself. Both of these outcomes are possible in theory, but they are rare in practice.

Warning people about purported free lunches is one reason God put economists on earth. So this paragraph in an article in today's NY Times caught my eye:
"One of the biggest fallacies is that keeping people healthy will save money, and that's why we should do it," said Dr. Mark R. Chassin of the Mount Sinai School of Medicine, who used to be New York State's health commissioner. "That is complete baloney."