Greg Mankiw: Blah blah blah health care blah blah blah market best.
Paul Krugman: Meoooww.
Greg Mankiw: Meeeeeoooooowwwwwww.
Ok, ok, that's not actually what they said. But it wasn't far off.
Here's what actually transpired:
If the government has a dominant role in buying the services of doctors and other health care providers, it can force prices down. Once the government is virtually the only game in town, health care providers will have little choice but to take whatever they can get. It is no wonder that the American Medical Association opposes the public option.
To be sure, squeezing suppliers would have unpleasant side effects. Over time, society would end up with fewer doctors and other health care workers. The reduced quantity of services would somehow need to be rationed among competing demands. Such rationing is unlikely to work well.
FAIRNESS is in the eye of the beholder, but nothing about a government-run health care system strikes me as fair. Squeezing providers would save the rest of us money, but so would a special tax levied only on health care workers, and that is manifestly inequitable.
In the end, it would be a mistake to expect too much from health insurance reform. A competitive system of private insurers, lightly regulated to ensure that the market works well, would offer Americans the best health care at the best prices.
Um, economists have known for 45 years — ever since Kenneth Arrow’s seminal paper — that the standard competitive market model just doesn’t work for health care: adverse selection and moral hazard are so central to the enterprise that nobody, nobody expects free-market principles to be enough. To act all wide-eyed and innocent about these problems at this late date is either remarkably ignorant or simply disingenuous.
And Mankiw's final word:
On the issue of tone, I again think I understand Paul's point of view. He likely believes that civility is overrated. He seems to think that in the blogosphere, and perhaps in the public debate more generally, you score points simply by insulting your intellectual adversaries. Sadly, I am afraid he may be right.
Right-o. My personal view on Krugman is: great economist, excellent writer, kind of a douche. His commentary during last year's Democratic primaries, when he blindly supported everything Hillary did and said, really got my goat. My personal view on Mankiw is: anyone who thinks the market can provide healthcare adequately in an advanced economy can't possibly be thinking right and being honest at the same time. The healthcare system in America is so broken, it's actually quite funny.
Anyway, here's good ol' Nate Silver adjudicating the dispute.