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Disappointing follow-up.

Article Excerpt
CODE RED: An Economist Explains How to Revive the Healthcare System Without Destroying It

By David Dranove

281 pages; Princeton University Press, 2008

In 2000, Northwestern University health economist David Dranove published The Economic Evolution of American Health Care. It was an important book whose greatest flaw was that it came out a few years too late. In the book, Dranove showed that managed care is working. It put insurers in a position to limit what their beneficiaries could buy without, as many economists and others had feared, noticeably reducing the quality of care. The book made a persuasive case that the main effect of managed care was to increase real wages substantially by reining in health care spending.

Given the previous book's quality, I was eager to read Dranove's latest, Code Red. I'm disappointed to report that it is a bit of a mishmash. He mixes strong arguments and good policy proposals with bad arguments and bad proposals.

MANDATES In the new book, Dranove argues for government intervention to assure that almost everyone is covered by health insurance. He advocates requiring everyone with income of at least twice the poverty level to buy health insurance or pay a tax. He justifies that mandate by arguing that "anyone without health insurance is a freeloader in the making." Yet Dranove never mentions one of the main government interventions that leads to freeloading: the Emergency Medical Treatment and Active Labor Act. The act requires hospitals to treat emergency cases even if the patient cannot pay.

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Although he favors eliminating some mandates for specific coverages, Dranove "would require...

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