26 Mar 2012

Krugman Lets the Cat Out of the Bag on Socialized Healthcare

Economics, Krugman 15 Comments

Like that guy in 1984 who liked Big Brother a little too much, I think the Party higher-ups may have to take care of Krugman for running his mouth a little too recklessly in his discussion of the Supreme Court and ObamaCare:

Well, ObamaRomneycare is basically a somewhat klutzy way of simulating single-payer. Instead of collecting enough revenue to pay for universal health insurance, it requires that those who can afford it buy the insurance directly, then provides aid — financed with taxes — to those who can’t. The end result is much the same as if the government collected taxes from those under the mandate and bought insurance for them.

I’m not going to bother looking up quotes, but I’m sure a bunch of “paranoid” people said this was effectively a federal takeover of health insurance. It wouldn’t even surprise me if Krugman made fun of them.

Anyway, Krugman also says:

Yes, the system is surely less efficient than single-payer, both because it’s more complex and because it introduces another layer of middlemen. That’s what happens when you have to make political compromises. But it is in no sense more interventionist, more tyrannical, than Medicare; it’s just a different way of achieving the same thing.

I have two comments:

(1) When Medicare was introduced, I bet a bunch of “paranoid” John Bircher types said it would lead to a slippery slope of a total federal takeover of health care. And I’m also sure that a bunch of reasonable people told them how crazy they were, that this was just a limited program to take care of elderly people that the free market had condemned to agony. Suuuuure, this limited program would one day be cited as a precedent for a total government takeover. This is the USA, not Soviet Russia!

(2) Since Krugman says there’s nothing in here that’s not in Medicare, we don’t need it, right? I mean, we have Medicare right now.

15 Responses to “Krugman Lets the Cat Out of the Bag on Socialized Healthcare”

  1. Keshav Srinivasan says:

    Bob, in this case Krugman is not making a new point at all. Check out this post from 2009:

  2. Daniel Kuehn says:

    He doesn’t seem to have let the cat out of the bag so much as gotten an important point completely wrong. The major difference between health reform and Medicare/single payer is, of course, that there’s still competition in the insurance market outside of old age care! That seems fairly critical to me! And Medicare was learning that lesson back in the 90s with Medicare Advantage (although I’m not sure how successful that’s been… I know a lot of people have doubts, I just don’t know the details).

    He’s right that it “simulates it” insofar as it gets the same coverage results through the back door. But it seems to me there are some centerpiece differences Krugman is leaving out.

    • David R. Henderson says:

      That’s one major difference but another one is financing. But there are so many regulations on insurance that the scope of competition is limited. And ironically, given the stated intentions of the advocates of Obamacare, insurers will compete not to handle the high-risk people because they can’t price accordingly.

      • Ken B says:

        If you interpret Krugman functionally, Bob’s observation looks better. With mandated coverage and extensive regulation the mandate is a less efficient step towards homogenization and central control, towards the excision of individual choice from healthcare. He’s talking goals and effects not mechanism.

  3. RPLong says:

    Krugman’s just a consequentialist. He decides what he believes and then argues in favor of it. He’s in favor of single-payer (I truly wish he had to use it). He thinks ObamaCare is as close to his preferred system as he can get in the year 2012, so he is in favor of upholding ObamaCare. Therefore, he creates a really dumb argument that boils down to crude consequentialism: If single-payer is constitutional, and ObamaCare is a bad attempt at single-payer, then ObamaCare is constitutional.

    This surely couldn’t have been the same sort of logic that won him a Nobel prize, right?

  4. Major_Freedom says:

    This is how tools of Fabian socialists serve their purpose.

    • Rick Hull says:

      I just looked up “Fabian” on wikipedia and found my way to the page on Fabian Society, which contained this gem:

      “They favoured a national minimum wage in order to stop British industries compensating for their inefficiency by lowering wages instead of investing in capital equipment”

      I’ll buy a beer for anyone who can explain why I smiled, or who can convince me I should not have.

  5. C. Rakish Spagaletto says:

    Bob, What do you think will be the economic consequences of ObamaCare, and do you think they intentionally designed it to worsen healthcare delivery so they can justify instituting single payer?

  6. Dyspeptic Middle Aged White Guy says:

    I really wish that freedom advocates would avoid using benign sounding phrases like “single payer” to describe what is better termed “government monopoly healthcare”. After all, the so called single payer healthcare system that PK and other elitist oligarchs prefer is actually payed for by millions of tax payers and is really monopoly control, not single payer. Using our own rhetoric rather than adopting that of our oponents clarifies the issue and puts the advocates for government monopoly health care on the defensive. This ends my condescending lecture for today. I will be available in my office for one hour after class should anyone need further ego deflation.

  7. Jonathan M.F. Catalan says:

    I do like Krugman’s point about inefficiency, though. If the purpose is the same, why add the extra middlemen? A purely socialized system of healthcare would be more cost-efficient, at least in the short-run, than the one we have now (en entangled web of middlemen, regulations, and bad incentives).

    • RPLong says:

      This line of reasoning bothers me a little. I worked as a professional health economist for a few years, and people seem dead-set on judging health care systems according to their “cost-efficacy.”

      But let me ask you this: If you’re lying on the operating table, do you want the most effective procedure, or do you want the most cost-effective procedure?

      I know you’re not a fan of socialized health care, but those who are tend to forget that cost-effectiveness in health care is a medical conflict of interest. Should a doctor be concerned about the solvency of the system when he/she is making therapeutic choices?

      The danger is real, and measurable in human lives.

      • Rick Hull says:

        > But let me ask you this: If you’re lying on the operating table, do you want the most effective procedure, or do you want the most cost-effective procedure?

        If you’re the one paying for it, often it may be the most cost-effective. I know I’ve compromised on quality in order to pay 10% for “good enough”.

        • RPLong says:

          Yes, but then it’s a choice, not a mandate. I favor health care choices, not health care mandates.

      • Ken B says:

        I want the most effective procedure and I want it for free. How is that different than with other scarce resources?

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