12 Mar 2014

ObamaCare Going to Crash the System Sooner Than Most Think

Health Legislation 70 Comments

Naturally in my circle of colleagues and acquaintances, there are a lot of critics of ObamaCare who object to it not just on principled grounds, but also predict that it will “wreck” U.S. health care delivery. However, what I realized just the other day is that when I consider the people who actually work in the health care sector–including medical doctors but also researchers, lawyers, and administrative assistants–they tell me it’s going to blow up pretty quickly.

Specifically, nobody sees how doctors and hospitals can continue to operate in the coming years, with the amount of regulations and pay structure that are being foisted on them. My point is that the actual people in the trenches are far more pessimistic than the academic economists (like me) who don’t work day to day in the health care sector and who consequently are looking at the issue in terms of big-picture ideas rather than specific dollar amounts.

As Joe Salerno explains here, the federal government might hide the true nightmare by just forcing the taxpayers to eat the losses. But how long will that work? To reiterate, the reports I’m hearing (completely anecdotally of course) from actual doctors and people who are familiar with hospital billing are that this thing is going to be a bloodbath.

Last thing, check out this discussion from one of the leading ObamaCare wonks, MIT’s Jonathan Gruber: “The advocates who say [ObamaCare] is working great are saying too much. And the opponents who say it’s working terribly are saying too much. We simply do not know how its working yet,” Gruber said, adding that details would start to emerge over the next several months…”We just need to be patient and let it work out. And you know what, if it turns out to be bad, I have every faith in the American system that they’ll get rid of it.”

The only adequate response to Gruber’s claim:


70 Responses to “ObamaCare Going to Crash the System Sooner Than Most Think”

  1. Abigail Nussey says:

    Yes, Gruber. Because all those other badly designed programs throughout the history of the US have been so easily and readily repealed. Certainly every program we currently have that’s older than a decade or so has proved its sustainability and effectiveness, because it wasn’t repealed. Right, Gruber?

    • Tel says:

      I believe that citizens of the USA are once more allowed to own gold.

      No harm done, no foul, huh?

  2. Warren says:

    I’d love to hear some of these anecdotes.

  3. integral says:

    Wouldn’t the people who work in health care also be quite susceptible to overreaction of the type “Bah, even more crap to wade through to do my job, why do I even bother anymore?”

    • Andrew' says:

      Why is it overreaction?

      • andrew' says:

        A guy spends 2 decades learning not to cut your penis nerve. How much paperwork do you want him to do?

  4. Bitter Clinger says:

    If you like your insurance you can keep it…LIE
    If you like your doctor you can keep him…LIE
    I will save the average family $2,400 per year… LIE
    So now you believe, “And that’s why I’ve pledged that I will not sign health insurance reform — as badly as I think it’s necessary, I won’t sign it if that reform adds even one dime to our deficit over the next decade. And I mean what I say.”
    You guys make me laugh, you brighten my day.

  5. Bob Roddis says:

    Employing the insights of praxeology and Austrian Economics, I predict we will soon learn that no advocate of ObamaCare understands economic calculation or the pricing process.

    • Anonymous says:

      RIGHT ON!!

    • Yancey Ward says:

      You will also eventually learn that there were no advocates of Obamacare.

  6. Ken B says:

    If market forces did in slavery then they’ll do in Obamacare.

    • Richie says:


    • Major_Freedom says:

      Only if Obamacare were the only non-market activity in the country would that be an honest and informed attempt at a burn.

      Oh wait…

    • Hank says:

      If only we could do an experiment.

    • RPLong says:

      I believe that market forces will do in Obamacare. That’s not the problem; the problem is what the aftermath will look like.

      If you accept the conventional wisdom that the collapse of the USSR was inevitable for economic reasons (and I do), then it’s in everyone’s best interest to try to work it so that the aftermath looks more like East Germany and less like Belarus.

      • Transformer says:

        Isn’t there a school of thought that says that ACA has been designed to fail so it can be replaced with a true single payer system (and nationalized hospitals) ?

        • RPLong says:

          Under my set of assumptions – primarily, under the assumption that governments are basically incompetent – that simply isn’t possible. The ACA is doomed to fail, but not by design.

          If the gov’t could create flagrantly bad legislation so that it could fail quickly and be replaced by something better, then that implies that the gov’t could have just gotten it right the first time. I don’t believe the latter, so thus I don’t believe the former, either.

          • Matt M (Dude Where's My Freedom) says:

            Well it’s not about getting it “right” the first time.

            In this case, what’s coming the SECOND time is single-payer, completely socialized medicine. Which won’t “work” either, (if work is to mean that the quality of health care goes up AND the quantity available goes up AND the price goes down all at the same time).

            But it’s not as if they weren’t able to think of that the first time, it’s just that the political environment made it untenable. Obamacare is being sold as a “compromise” between the completely free and unregulated market we had before, and government control over medicine. So when it fails, they can claim “Well the market just doesn’t work so we have to do single payer now” and more people will more easily buy it.

            • RPLong says:

              Can you explain to me why this would work better than perpetual, annual Medicare expansions?

              My problem is that it is way too complicated to warrant even trying, no matter what the political environment might be. Any entity that could sustain that charade for a decade or longer while deliberately obliterating US health care delivery mechanisms in a way that is painful but not completely destructive.

              What it would require is genius on par with Einstein combined with evil on par with Hitler, by many people, all of whom loyal to the cause and not trying to game the process for their own personal gain (which calls into question the extent of their commitment to evil), not for a little while, but for decades.

              It’s too incredible to be true.

      • Major_Freedom says:

        Since fascism and communism are both based on collectivism and denial of individual liberty, I would say one system is not objectively better than the other. It would depend on which group you as an individual are identified as belong to: inside our outside the collectivist ideal being imposed.

        • RPLong says:

          I think you may have misunderstood my argument. I apologize for being unclear. I’m not comparing communist East Germany to Belarus, I’m comparing post-Berlin-Wall “east” Germany to post-Soviet Belarus.

          • Major_Freedom says:

            Sorry about that.

    • Andrew' says:

      Market forces did do in slavery.

      You think a war against less than half of one country on the planet did it?


      • Andrew' says:

        “Centralized government was such a force for freedom because they invaded their own country to end slavery!”

        That’s bizarre for people to hold that thought while observing The Feds busting their medical marijuana joints.

        That’s almost as odd a view as some foreign country thinking “if we don’t end slavery, the Northern United States will invade go around the world invading us and every other country with slavery!”

        The notion North invaded the Southern United States because they wanted to end slavery is bizarre.

        The North left slavery in places as close as Puerto Rico and Cuba.

        The war between the states was caused by the South seceding.

        How does one not scroll down the abolition of slavery timeline…

        And think that anything other than a historical march to economic liberalization is what has been stamping out slavery?

        What, the gulags abolished slavery? War abolished slavery?

        “Despite its cheapness, the camp economy suffered from serious flaws. For one, actual productivity almost never matched estimates, because the estimates were far too optimistic. In addition, scarcity of machinery and tools plagued the camps, and the tools that the camps did have quickly broke. The Eastern Siberian Trust of the Chief Administration of Camps for Highway Construction destroyed ninety-four trucks in just three years.[46] But the greatest problem was simple – forced labor is by nature less efficient than free labor. In fact, prisoners in the Gulag were, on average, half as productive as free laborers in the USSR at the time,[46] which may be explained by malnutrition”

        Bob, have you been updating Wikipedia entries in random topics?

        Modern liberalism abolished slavery?
        I thought it was funny how the league of nations went out on a limb in 1924 with something called “Temporary Slavery Commission”
        Waytago guys! Keep up the good work!

        • Andrew' says:

          Oh wait, slavery was ended by the United Nations.

          “1948: UN Article 4 of the Declaration of Human Rights bans slavery globally”

          See the basic problem?

          • joe says:

            banning slavery is not ending it. Murder has been banned for quite a while (at least since Moses read the 10 commandments to his followers) yet we still have serial killers. Guess we might as well give up fighting murder. People are going to do it anyway.

    • Rick Hull says:


      > I would save the Union.

      > My paramount object in this struggle is to save the Union, and it is not to save or destroy slaver.

      > If I could save the Union without freeing any slave, I would do it; and if I could save it by freeing all the slaves I would do it; and if I could save it by freeing some and leaving others alone, I would also do that.

      Source: facebook, unverified

  7. Transformer says:

    Salerno says:

    “Insurers pay for claims up to $45,000, while the Federal government picks up 80% of the costs exceeding $45,000 up to a maximum of $250,000”:

    That’s scary. I imagine that $45000 is not a particularly high amount for medical treatment these days. You don’t think that healthcare providers and insurers might conspire to make sure that average costs of healthcare increase because they will both benefit at the tax payers expense from this , do you ?

  8. Hank says:

    You got me watching a bunch of Austin Powers clips after that. Shagadelic, baby!

  9. Major_Freedom says:

    Every socialist plan goes like this.

    Lots of promises and optimism at first.

    Lots of dismissing all criticisms as nothing but ideological posturing at first.

    Lots of data and statistics to “support” the plan at first.

    Then reality hits.

    Then the supporters reveal the foundation all along: faith.

    • Gamble says:

      Faith in what?
      Many people claim their statist actions are guided by the hand of God, therefor a certain amount of faith is required when building the grand central station called government. I contend it is not God guiding them. It is either demonic or completely imaginary, ultimately ego. Faith based on NOTHING! The Bible makes no reference, gives no plan, for a great centralized manmade earthy utopia. The exact opposite, if you are honest with your self.

      As a minority Christian, my Bible says this.

      1 John 2:15
      Do not love the world or anything in the world. If anyone loves the world, love for the Father is not in them.
      James 4:4
      4 You adulterous people, don’t you know that friendship with the world means enmity against God? Therefore, anyone who chooses to be a friend of the world becomes an enemy of God
      2 Corinthians 4:4
      The god of this age has blinded the minds of unbelievers, so that they cannot see the light of the gospel that displays the glory of Christ, who is the image of God.
      John 12:31
      31 Now is the time for judgment on this world; now the prince of this world will be driven out
      Matthew 4:8
      Again, the devil took him to a very high mountain and showed him all the kingdoms of the world and their splendor. “All this I will give you,” he said, “if you will bow down and worship me.”
      Mark 2:13
      13 Once again Jesus went out beside the lake. A large crowd came to him, and he began to teach them. 14 As he walked along, he saw Levi son of Alphaeus sitting at the tax collector’s booth. “Follow me,” Jesus told him, and Levi got up and followed him.15 While Jesus was having dinner at Levi’s house, many tax collectors and sinners were eating with him and his disciples, for there were many who followed him. 16 When the teachers of the law who were Pharisees saw him eating with the sinners and tax collectors, they asked his disciples: “Why does he eat with tax collectors and sinners?”17 On hearing this, Jesus said to them, “It is not the healthy who need a doctor, but the sick. I have not come to call the righteous, but sinners.”
      John 18:36
      Jesus said, “My kingdom is not of this world. If it were, my servants would fight to prevent my arrest by the Jewish leaders. But now my kingdom is from another place

      Revelation 12:7-12 “And there was war in heaven: Michael and his angels fought against the dragon; and the dragon fought and his angels, And prevailed not; neither was their place found any more in heaven. And the great dragon was cast out, that old serpent, called the Devil, and Satan, which deceiveth the whole world: he was cast out into the earth, and his angels were cast out with him. And I heard a loud voice saying in heaven, Now is come salvation, and strength, and the kingdom of our God, and the power of his Christ: for the accuser of our brethren is cast down, which accused them before our God day and night. And they overcame him by the blood of the Lamb, and by the word of their testimony; and they loved not their lives unto the death. Therefore rejoice, ye heavens, and ye that dwell in them. Woe to the inhabiters of the earth and of the sea! for the devil is come down unto you, having great wrath, because he knoweth that he hath but a short time.”

      • Major_Freedom says:

        By faith I mean faith in the outcomes of reductions in individual private property rights as a means to producing wealth.


        You wrote:

        ” I contend it is not God guiding them. It is either demonic or completely imaginary, ultimately ego.”

        That is EXACTLY what I “contend” about you and Murphy and all other theists.

        How can you prove to me that the God you say exists, is something other than a product of your own Ego?

      • Major_Freedom says:

        And once again, you’re wrong about the Bible’s take on government. Romans13 tells us to obey and pay government.

        Your attempt a few weeks ago to spin that as something else failed, yet you continue to write as if it didn’t.

  10. Andrew' says:

    So, we need esteemed professional economists to tell us,

    “yes, death panels, really.”


    “yes, we have to pass it to find out what’s in it, really.”

    Got it.

    • Andrew' says:

      Or, a tad more speculatively “If you liked your sub-standard garbage plan, you really didn’t. We’ve upped your standards, now up yours!”

    • Major_Freedom says:

      “Death panels” is obviously a rhetorical flourish. It makes it sound like some Nazi or Communist death squad of murderers. Deliberately it seems.

      All we’re really discussing with “Death panels” are decisions of some people to withhold, or notwithhold, healthcare services for other people.

      If deciding that makes a person a member of a “death panel”, then we’re ALL a member, because we decide everyday, at our own particular margin, to withhold charity from poor and starving African children.

      • Andrew' says:

        I don’t buy into the “everything is the same” theory.

        They first said there would be no death panels. Then they said we actually needed death panels, that it was a feature, not a bug.

        And by “death panels” they actually mean something very close to death panels. Which is not something very close to what you are describing. Government rationing and economic rationing may both be named rationing, but beyond that they are very nearly opposites.

        • Major_Freedom says:

          Yes, if government or anyone else hampers or bans induvidual economic competition in healthcare, then I would agree that their decisions to ration constitute real death panels, because they would be initiating violence against others to stop them from saving each other’s lives according to their preferences for their own person and property.

          That’s different from someone deciding to use their own person and property in non-aggressive ways that a person in need or anyone else does not apporove.

  11. Dyspeptic says:

    …”We just need to be patient and let it work out. And you know what, if it turns out to be bad, I have every faith in the American system that they’ll get rid of it.”

    I distinctly remember a radio interview with Gruber conducted in 2009 by a nationally syndicated Neo-Con law professor (the truly annoying, rabid chicken hawk, Hugh Hewitt). Of course Gruber made Hewitt look like a know nothing jackass because when it comes to economics (and history too) he is a know nothing jackass. But that’s not my point. At the time, Gruber was full of certitude that Obamacare couldn’t possibly be worse than the prevailing system and would prove to be a great improvement.

    Now that Genius Jonny’s little healthcare scheme is coming apart at the seams, that certitude has turned into CYA defensive posturing and a lunatic faith that bad policy will inevitably be repealed. This is why William F. Buckley believed that it was better to be governed by the first one hundred people from the Boston phone book than the Harvard faculty.

    • Capt. J Parker says:

      Yes, you nailed it, Dyspeptic. Gruber was a major force in designing Romney care here in Massachusetts, on which Obamacare is based. There was data on Romney care even before Obamacare became law that said that at least some of the predicted cost savings, like reducing expensive Emergency Room visits by the uninsured, never happened. Gruber had to know this but he remained an unrepentant advocate for Obamacare nonetheless. For him to start doing a major hedge like this is truly spectacular. Just another example of how, at least at MIT and Princeton (probably Harvard too, But, I have a soft spot for Mankiw)an awful lot of ideas masquerading as economics is principally informed by politics.

      • Yancey Ward says:

        Five years from now, if Obamacare does crash and burn, Gruber will deny ever supporting it.

    • Andrew' says:

      Being a professor means never having to say you are sorry.

      In fact, you get at least two papers out of a failure!

  12. joe says:

    Worst case scenario is that we adopt one of solutions proven to work in every other developed country where they are getting better results at lower costs. The problem in health care is greed. Doctors are ripping people off. Drug companies are ripping people off. Health insurance companies are ripping people off. Anyone saying we need to put up with their dishonesty and greed is a fool.

    socialized medicine is far superior to what we have now.

    • Bob Roddis says:

      It’s an iron law of the universe that no statist can ever comprehend, much less acknowledge, the simple fact that most economic problems are caused by prior violent interventions.


    • martinK says:

      So with socialized medicine the greed is going to just go away?

    • Eduardo Bellani says:

      So, more government intrusion would solve the vice of greed?
      Humans will henceforth be more virtuous the more aggression is applied?
      Have you ever considered employment in a government cage? I have a feeling you’ll fit right in.

      • Andrew' says:

        Government intrusion would at least f up our advances that other countries free ride off of.

        Then we could do more medical tourism.

        Correcting for bad data from other countries and accidents, our life expectancy is far superior to other countries.

        Joe and his ilk lied from the very beginning of this boondoggle in the middle of their depression.

        • Andrew' says:


          They didn’t even get right what this dumb law would do with a 3 year prediction.

          Where they aren’t lying, they are just wrong.

          • Harold says:

            Interesting that you link to an article that demonstrates almost exactly the opposite of what it claims. “the Myth of American’s Poor Life expectancy” is the headline claim. “It’s gross domestic product per capita, and not health-care policy, that correlates most strongly to life expectancy” it claims and links to Gapminder to illustrate. However, the graph shows that once you are over about $12,000 GDP per capita, then increasing GDP has no effect on longevity. In this region life expectancy is independent of GDP.

            Another claim “If you really want to measure health outcomes, the best way to do it is at the point of medical intervention.”

            This in itself is wrong, as earlier detection could show longer life expectancy at diagnosis with absolutely no improvement in actual outcomes – it is just that you start measuring from an earlier point. The other main problem with this approach is cherry picking. How do you know that you haven’t just selected a few conditions your country is good at?

            Then the point that USA has not one health system but three. If you selected only those with private health insurance then USA would rise up the table. Well duh. We are looking at “American’s poor life expectancy”, so we must look at all Americans. The corollary to this is if you just looked at those in the USA without private health insurance they would plummet to the bottom of the table.

            Then there is the bit about taking out the fatal injuries. Not sure about this one. He says ” the adjustment factor was based on fatal injury rates relative to the average. Hence, the adjusted numbers shouldn’t be seen as hard numerical estimates of life expectancy” Would need to look into this one a bit more to see if there is anything in it. Either way, it would not do anything to dispel the “myth” of poor life expectancy, but might (or might not) get the health system off the hook a bit.

            Even if we use just this one source, we could still not conclude “Correcting for bad data from other countries and accidents, our life expectancy is far superior to other countries.” This piece concludes “..But cannot conclude U.S. system performance is markedly better either, despite higher levels of spending.”

            • Harold says:

              Ignore the misplaced apostrophes. We are talking about all Americans, nit just one.

              • Andrew' says:

                Well, you are wrong.

                But at least I can’t tell if you are purposely lying.

              • Andrew' says:

                My point is very simple.

                1. Back when Obama and all the sycophants were falling in lock step to push this through in the depth of the recession, they did not bring up that “no, the US is not far behind in the actual statistics relevant to the medical system and life expectancy.”


                2. They were too busy implying, either just ignorant or lying, that we could drastically cut healthcare spending with only an improvement in life expectancy.

                If you want to go the route of “oh, sorry you got that misconception from the Obamacare marketing machine” we can do that little dance.

              • Harold says:

                I am not making any wider point about Obamacare – I don’t know enough about it. I just found the article to be striking in its errors and false claims.

                On the broader point, I think a reasonable position is that the American healthcare system *as it is currently configured* has no better outcomes yet costs much more than other developed nations. It is also clear that the American healthcare system is a horrible mish-mash of public and private. I am just guessing, but probably either a system like the NHS or Canadian system OR a properly private system would be better than what there is at the moment. Each would have its own problems and benefits.

              • Andrew' says:

                To know that we’d have to know what the outcomes are and what the costs are.

                The study you are criticizing is the most basic attempt to compare apples-to-apples.

                The people in a mad dash to push towards socialism have no interest in actually studying it to the extent of even using the most basic life expectancy numbers.

                And everyone knew, and some of us said that ACA would not actually improve on the claims made in the propaganda.

                Under what mechanism could that even be possible? Extend the super expensive, below par healthcare to the uninsured?

            • Tel says:

              If you really want to measure health outcomes, the best way to do it is at the point of medical intervention.

              Sounds like complete crap to me. Keep the population well fed with a decent diet, reasonable amounts of exercise, not too stressed, clean water, comfortable housing, affordable heating.

              Those things make more difference to life expectancy than the entire medical industry.

    • Andrew' says:

      They haven’t worked in other countries.

      They haven’t controlled costs.

      They are undoing them in other countries (e.g. UK)

      We have more socialized medicine than many if not most of the countries Joe…well, let’s be honest, he doesn’t have any idea what he is talking about so he wouldn’t know any actual examples. Just go look at what our government spends on medicine compared to what other supposedly socialized countries spend on medicine. Spoilers, we spend more.

      The only thing he is accidentally correct about is that our government has managed to screw up our healthcare almost as much a full-blown socialism would.

      • Andrew' says:

        The nihilistic “we can do whatever and it doesn’t even matter” mentality of Joe is going to bite his gang electorally in the arse, unfortunately after it bites the rest of us.

        So, they lied about life expectancy. After adjustments the US is near the top.

        Not that medicine should be assumed to affect lifespan, but anyway, if they didn’t get the first part right I won’t even have that discussion now.

        So, once you take out the nihilistic BS, we are only left with the fact that it is too expensive.

        Do you think that might have something to do with THE GOVERMENT DISREGULATING 50% OF WHAT IS SPENT ON HEALTHCARE IN THIS COUNTRY?


    • Mike T says:


      “The problem in health care is greed.”

      >> Even if one were to nonsensically reduce the problem of healthcare to a single psychological motivation, do you mind explaining how government politicians and bureaucrats are somehow immune to “greed?” In your world, I assume our benevolent public servants couldn’t possibly “rip people off,” right?

    • Mike M says:


      “The problem in health care is greed.”

      What greed? Whose greed? What evidence? So you suggest the political class is not greedy?

      “Doctors are ripping people off”

      Please provide evidence. Make sure such evidence indicates a wide spread systemic issue versus anecdotal exceptions.

      “Drug companies are ripping people off”

      Please provide evidence. Make sure such evidence indicates a wide spread systemic issue versus anecdotal exceptions.

      “Health insurance companies are ripping people off”

      Please provide evidence. Make sure such evidence indicates a wide spread systemic issue versus anecdotal exceptions.

      “socialized medicine is far superior to what we have now”

      What we have now and have had recently is a form of socialized medicine. Accordingly your position fails by the weight of experience.

      Your failure to substantiate your assertions will reveal your statements to be nothing more that bloviating pabulum.

    • Major_Freedom says:

      So why not socialized everything? Human greed does not exist only in healthcare.

      What about political greed? Do you deny it exists?

      At a time in the distant past, when the US was far more free economically while the rest of the world was less so, the US had the best healthare.

      Thus, according to your reasoning from the past, you should want more freedom, not less, in healthcare.

  13. Bitter Clinger says:

    The problems with the US Medical System (Health Care) are the predatory monopolies of the AMA and the FDA. Let me try to explain. In the automobile repair business you can take your ailing car to the dealer monopolies and like US Health Care pay the big bucks. But with auto repair you have other choices, the first is a secondary market consisting of independent auto repairs and chains such as Firestone and Goodyear along with the muffler, transmission, and brake places. But what really makes the system work is the third tier which is the “do it yourself” market supported by Auto-zone, O’Wrongly, and NAPA stores. My friend had a problem with her Saturn, $94 for diagnosis at Hyundai Dealer (took over Saturn maintenance) and would charge her for wheel bearings repair $860. I bought a bearing for $54 and had it pressed into the hub for $30 and a wheels alignment for $50. I was able to do the job for $228, essentially a quarter of the dealer cost. Before that she had a transmission problem, the Dealer wanted $1000, the local transmission shop wanted $700 (he claimed to rebuild the valve bodies for the dealer, I don’t know if I believed him) and to do it myself was $285 for the fluids, gaskets, and a re-manufactured valve body from the internet. Again to do it myself was only a quarter of the Dealer cost. The same costs will hold true in the medical profession. Until we can come to grips with the “War on Drugs” and allow citizens of this country to self medicate; nothing you do will lower the costs of medical care. Today the medical industry is sucking up 16% of GDP. I bet if the ACA continues to be implemented, by the time of the next administration, it will end up being 20%. (I will even go farther and say that I will kiss your ass if it ever falls below 16% of GDP in my lifetime) Good Luck Guys.

    • Mike T says:

      To further your automobile analogy, imagine if the state mandated car insurance cover routine procedures (eg oil change, tire rotation, etc) and how that would effect the prices of those services. Part of the problem in the healthcare industry is also being overly insured for routine preventative and basic care which, along with mandated 3rd party payment systems, obfuscates actual costs.

  14. Smilingdon says:

    Are you implying the Reid and Pelosi are complete fools?

    Good for you!

  15. Bitter Clinger says:

    The state mandates minimum automobile insurance requirements, the equivalent of Bronze Plans, and makes it mandatory upon getting your new license plates. Why do we need the exchanges? I don’t have an exchange for auto insurance. If you meet the minimum health insurance requirements you file your income tax and get a subsidy, just like the EIC or Child Credit. Just like I get my license plates. My clinic has a bunch of excess capacity, at least on Saturday, and if you could schedule your healthcare needs for Saturday visits could probably get very low cost coverage. I just don’t get why they just didn’t pass the minimum requirements and let the industry sort it out.
    Your second point on the 3rd party payments, back when I started working the executives got all sorts of “perks”. Company Cars and Country Club memberships but these have all disappeared. In my last few years of working I had to buy my own cell phone, even though it was required for employment, and expense the portion used for company business each month. My computer would have a pop-up every time I would access the Internet that said, “THIS COMPUTER IS FOR COMPANY USE ONLY” The only perk left is health care and that should be eliminated. I think McCain suggested that in 2008 campaign and was shouted down. If health benefits from the employer were taxed, the healthcare system in the US would be fundamentally different.

  16. Tel says:

    This is a totally off topic Krugman gotcha… but I need to be first at something:


    First, do you see any sign that workers are about to (or are even able to) demand higher wages to compensate for the higher prices of gas and food?

    Second, do you any sign that employers are getting ready to make more generous wage offers?

    Third, have you heard anything about companies feeling that they have room to raise prices by substantially more than the rise in their raw material costs?

    The answer to all three questions is clearly no. So what we have is a rise in raw material prices, which will largely get passed on the consumers, but no hint that this is spreading into a wider rise in prices; and with labor costs flat, that means we get a one-time jump in consumer prices, but no persistent rise in inflation.

    So in 2011 when prices are rising, we are told to just look at wages. Nup, nup, no inflation to see here.


    And what’s wrong with rising wages, anyway? In the past, wage increases of around 4 percent a year — more than twice the current rate — have been consistent with low inflation. And there’s a very good case for raising the Fed’s inflation target, which would mean seeking faster wage growth, say 5 percent or 6 percent per year. Why? Because even the International Monetary Fund now warns against the dangers of “lowflation”: too low an inflation rate puts the economy at risk of Japanification, of getting caught in a trap of economic stagnation and intractable debt.

    Oh wait, now we are told not to worry about rising wages. We like rising wages. So errr, doesn’t that imply those people in 2011 were right all along? Excess money does indeed take time but steadily trickles down through the economy, and now monetary inflation has resulted in wage inflation. And yeah, it really is inflation, no matter how you want to jigger the figures.

    • Major_Freedom says:

      There is so much economics fail in those posts that the “Kontradiction” almost an afterthought.

      Wage push inflation myth…

      Low prices implies monetary deflation myth…


  17. Ryan Murphy says:

    Is that a bet, Bob? because it sounds like a bet

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