In the comments HappyJuggler wrties,
Sigh. Mankiw’s point is simply that not everyone is going to be able to get “comprehensive health care”. Period.
I think the simple argument that “we can’t afford to provide comprehensive health care to everyone” is basically wrong. There is some upper limit to how much health care we can produce, but we are no where near it.
Greg paints a scenario in which it would be worth it to provide comprehensive health care to everyone and says, “see we still couldn’t do it.” My point is that his example is wrong. If it were worth it, as it could be with a 150K Dorian Gray Pill, then we would provide.
The entire nature of the global economy would change. Society would be fundamentally altered but that is because you have introduced a paradigm shifting technology.
The issue we face now, however, is that we don’t want to provide comprehensive health care to everyone. My take is that we don’t want to because its not worth it. Indeed, I agree with the Hanson/Kling argument that on net we are providing too much care as it is.
Now as it happens I think that most of this excess care is in medical professionals and equipment, rather than drugs. Drugs do pretty well which is part of the reason why the Dorian Gray Pill is more intuitive than the Dorian Gray Procedure.
Nonetheless, the question issue is not, that we can’t provide health care to everyone. It is that we are providing “too much” health care to some and “not enough” health care to others.
The latter point is subject to debate, but I think its pretty clear that if people faced the true marginal cost of health care most would buy less. Yet, I also think that if the system wasn’t screwed up by the current health care insurance system, restrictive licensing and onerous drug approval then there is a fraction of the population which would buy more health care.