Mandelson's understanding

Yes, we all know, Peter Mandelson is the power behind the throne, all policies are being run through him. Rather a pity he doesn't seem to understand the world.

A society that leaves individuals to cover the costs of healthcare or unemployment will spend less collectively.

He seems to have got very confused here between a public good and a public service.

They are absolutely not the same thing.

A public good is non-rivalrous and non-excludable. Think, say, basic scientific research. OK, (for technical reasons that I won't bore you with) the argument is that people can't make any money out of such things and thus we get to little of it. So we'll subsidise it.

Super.

With a public service the argument doesn't in fact hold. There is nothing at all that says that private financing of the health care system (as opposed to public health like vaccinations which are a public good) will lead to less spending collectively.

Rather the opposite in fact. Look at the US, which is just about the only major industrialised country with a large private involvement in health care. The sector is 14/15% of the entire economy. Here our own dear NHS is some 9% or so with another 1% privately provided. So 10% in total. So, umm, individuals covering the cost of their health care leads to an increase in collective spending, not a decrease.

Which, of course, is why the argument over single payer health care in the US is dominated by those arguing that it would be cheaper than the current private system.

I have to admit that I'm not all that worried about being ruled by The Mandy....but I do wish his pronouncements were rather more connected with the real world while he does so.