Mankiw on Obama's health care reform

My colleague Olga Gorbachev draws my attention to an interesting piece written for the New York Times by Greg Mankiw (yes, THAT Mankiw). After an assessment of the supply side ideas that plagued economic thinking during the Reagan Era (my personal favourites are the crazy and fascinating ones put forward by George Gilder), Mankiw argues that Obama's health care reform is going to reverse some of the achievements of that economic doctrine.

If progressive taxes pay for the health system and federal health subsidies are smaller for families with higher incomes, the reform is effectively imposing a higher marginal tax rate on middle classes. Earning more means higher health costs for families. And that may disincentivise working harder. Mankiw does not critice the reform itself, but just want to make the point that the hardworking ethics that characterize the US (as opposed to the allegedly laziness of the Europeans) may be in danger. Of course, the trade-off is not that simple. Better health care also means a healthier population and more productive too. There are all sorts of positive externalities from an improved health system that Mankiw does not seem to factor in.