22 May 2014

Krugman on VA Health Care as a Model for Reform

Health Legislation, Krugman 37 Comments

I sometimes fancy myself as a sophisticated economist who knows what’s up, wise to all the hijinx and mayhem flowing out of DC. But nope, I am still a little bunny cowering in the corner.

Yesterday I actually hesitated before relating the VA hospital scandal to ObamaCare and socialized medicine more broadly, wondering if that was somehow taking a cheap shot. But thanks to Chris Rossini’s wonderful find, we can see that nope–not a cheap shot at all. Here’s Paul Krugman back in November 2011:

Krugman on VA Care in 2011


(I’m doing this as a screen shot because I want to get a PNG file I can post on social media.)

This really needs to go viral. This is up there with Krugman’s “Greenspan needs to create a housing bubble” or Yglesias’ announcement to “lay down a marker” on ObamaCare’s rollout success. When the problems coming from ObamaCare and the subsequent overhauls rear their heads–and smug guys like Noah Smith explain it all away with their fancy “models,” telling you common sense is just blind religious faith when it comes to medicine–you keep Krugman’s confident praise of the VA in mind.

37 Responses to “Krugman on VA Health Care as a Model for Reform”

  1. Innocent says:

    Okay, now in all fairness no system is ever going to be perfect. However, when an institution such as the Government takes on a responsibility such as healthcare they MUST be perfect. This is one of the reasons why this responsibility should NEVER be given to a Government institution because perfection is an ubiquitous hope, faith that can never be realized.

    ALL public healthcare systems have had this very issue. People who are sick get put on waiting lists or told tough cookies. One of my fathers business partners who lives in Canada had a form of Cancer that the Government said, “well, sorry you are going to die.” Instead he spent the money in the USA and has now been cancer free going on 10 years ( knock on wood ). I know this is anecdotal, but seriously he was handed a death sentence by a government as real as anyone on death row.

    The system in health care as it stands now was and to be honest still is broken. Barring you get cancer it does not make sense to participate. In my own state for my family I can go and get coverage for $500 a month. With a $5,000 individual and $10,000 family deductible.

    So before the insurance company pays anything I will spend $11,000 in medical care… That is not a good system. My annual cost on average is about $5,000. So barring I have cancer it would be better for me to place that other $6,000 into a system where I can earn a return on it.

    Just saying.

    Second if you want costs to come down then you have to focus on what drives costs. Supply and Demand and the cost of technology. Increase supply, COSTS WILL GO DOWN barring there is a regulatory or monopolistic reason for the cost not to go down. So if you want cheaper healthcare, create more supply!

    Argh… But instead we create additional regulation, make entry to the industry more stringent, and then eventually will cap prices in order to accomplish what could have been done simply by capping prices to begin with or if the correct route was taken prices would have dropped because people would be fighting with each other to get customers in the door and a new equilibrium would exist.

    Anyway. I am ranting now. I just get so frustrated that people think the Government is the solution when most of the time it is simply not the answer. Oh Government can AID in a solution but that is different.

    • Tel says:

      Ahhh you silly supply siders, you just don’t understand aggregate demand.

      If we make as many people as possible get sick, it will boost demand for medical services and thus stimulate the industry and create a better life for everyone! This fact is so incredibly self evident that after falsifying the records we have rock solid empirical evidence!!

      Why do you keep resisting?

  2. Cosmo Kramer says:

    Just say NO! I can not get cared for through the VA. They treat any illness or injury as if it were able to be fixed with band aids. The longest I have ever seen my VA doctor was 2 minutes in one visit. The system is overburdened.
    I purchased a private sector policy for this reason. Id rather get some care for $ than no care for free.

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

    I’m not so sure this is quite the “smoking gun” that everyone thinks it is. Presumably, the “multiple surveys” Krugman refers to do in fact exist. I have no doubt that some IG report somewhere declares that the VA system is great and that outcomes are better than the evil private sector.

    So, IF this gets spread around to the point where Krugman feels the need to address it, I’d predict something of the following. “Those crazy right-wingers are using the anecdotal evidence of a few tragic suicides and a few corrupt officials in one or two VA hospitals to suggest the entire system is broken, when all evidence suggests that it’s better than the evil free-market health care they seem to love so much. People commit suicide when waiting to see private doctors too, you know? Medical malpractice and waiting lists are common in private hospitals. Furthermore, their solution to this is to CUT government funding and that would lead to even longer wait times and even lower care for these veterans. What a bunch of stupid jerks!”

    • Bob Murphy says:

      Right Matt M., that’s the first thing he’ll say. But after he realizes that won’t fly, in a few months he’ll say, “I was obviously joking. And I suppose I shot JFK too.”

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

        Unfortunately, I think that *will* fly. When it comes to Krugman, lame excuses always seem to fly with the general public…

      • LK says:

        You’ve got claims of abuses in one Medical Center in Phoenix. Let us say they are true, for the sake of argument.

        And yet people like you want to draw the inference that all single payer/universal health care systems (e.g., France, Germany etc) are all totally deficient or, generally speaking, incapable of providing high quality health care?

        Thank you for that grotesque non sequitur.

        • Bob Murphy says:

          LK, was it a “grotesque non sequitur” when Krugman said the good reports on the VA showed that a single payer system was a good idea for health reform?

          • LK says:

            No, because Krugman’s evidence from 2011 that, generally speaking, VA health care outcomes were superior to highly privatised US health care outcomes then is not refuted by a single instance from today of some abuses in one hospital — anymore than the strong empirical evidence that, generally speaking, smoking causes cancer is not refuted by some single instances of life long smokers not getting cancer.

            Evidently someone needs to bone up on logic, and it is not me.

            • LK says:

              Progressive: “most violent crime is, generally speaking, committed by men.”

              Libertarian: “have you read these news stories about how some women committed some shocking violent crimes? Obviously that refutes what you’re saying you dirty, statist progressive, you!!.”

              Progressive: “um, no,… ‘generally speaking’ only means in most cases and your example doesn’t refute my statement.”

              • Major-Freedom says:

                Progressive: “Government hampered production of goods and services can be used as evidence to show the failures of laissez-faire production of goods and services.”

                Libertarian: “By that logic, government hampered production of goods and services can be used as evidence to show the failures of government hampered production of goods and services.”

                Progressive: “We don’t live in your fantasy world of laissez-faire so you can’t claim the failures are due to government.”

                Libertarian: “By that logic, since we don’t live in your fantasy world of more government and less market, you can’t claim the failures are due to the market.”

                Progressive: derp

            • Major-Freedom says:


              That is another ridiculous claim. Krugman was taking one small portion of overall healthcare, VA, and then extrapolating from that to make a conclusion about the desirability of a full fledged socialized single payer healthcare system.

              Speaking of logic…

            • Tel says:

              If you find one example of the statistics being falsified we can still trust the overall statistics right? I mean they are mostly good, only a little bit mangled.

              In this case we have more than one secret waiting list, and falsified waiting times, but oh look over there! Smoking!

        • Richard Moss says:

          LK wrote:

          “You’ve got claims of abuses in one Medical Center in Phoenix”

          I think you’ve got more than that.

          In the article Bob linked to there is this quote;

          March 2013: The GAO’s Debra Draper tells a House subcommittee: “Although access to timely medical appointments is critical to ensuring that veterans obtain needed medical care, long wait times and inadequate scheduling processes at VAMCs (medical centers) have been persistent problems.”

          And in another article linked in the above (http://www.usatoday.com/story/news/nation/2014/05/21/shinseki-va-veterans-delay-healthcare/9365935/) there is this;

          On Friday, minutes after Shinseki testified that there were only “isolated cases” of hospitals covering up delays in care, Acting Inspector General Richard Griffin told the Senate VA Committee that 10 hospitals were under investigation.

          By Tuesday, that number had more than doubled to 26, according to Griffin’s office …

  4. Major-Freedom says:

    Time and time again, we are made witness to socialist minded pundits who claim to ground their support of various governmental coercion based programs on “facts”, when in reality it is nothing more than faith and ideology.

  5. Major-Freedom says:

    Smith doesn’t seem to take too kindly to those who question the sacredness of his progressive-statist religion, and who propose that maybe, just maybe, individuals should not have externalized costs imposed upon them by the holy state empire.

    Has Smith integrated state intervention models such as…um, adverse selection, moral hazard, or principle-agent problems? Does he have empirical evidence that statesmen and regulators behave perfectly rationally when it comes to spending other people’s money that was confiscated under the threat of being thrown into a cage, thus rendering moot any real competition against said statesmen to provide customers what they want? Does he even have evidence that the severely government hampered US healthcare underperforms because of the hampering and not because of free choice? Does he have any emoirical evidence that proves there exists a class of goods that ought to be made via government coercion, despite what individuals choose to pay for voluntarily?

    No. He doesn’t. All he has is his instinctive belief in benevolent government.

  6. Keshav Srinivasan says:

    I posted this in the previous thread as well, but these are two links that Krugman has cited in past posts to demonstrate that VA health system is a model of quality and cost control:
    So I think Krugman would just say that this story about a Phoenix medical center is an abbé ration rather than the rule.

  7. Bob Murphy says:

    OK, and that famous photo of the two Koreas at night means nothing. I mean, light bulbs go out in the free market too!

    • Major-Freedom says:

      And, some tropical island resorts do feel like concentration camps sometimes. All crammed in the cafeteria, then being shuffled in groups this way and that on the day trips to cocoa plantations, then getting woken up by construction equipment at 6 in the morning, then waiting your turn to pee in the public bathtub, not to mention reusing other people’s towels and robes and slippers, reusing their bedsheets.

      You know, this post started out as a joke, now I am not so sure…

  8. Yancey Ward says:

    Where is Daniel Kuehn when you need him. I am sure Krugman was in no way actually holding up the VA as a model for healthcare in general.

  9. Bob Roddis says:

    Boettke explailns basic topics unknown to LK, Krugman, Smith etc…:

    In Mises’s writings there are four basic warnings against socialism, the most decisive, of course, was the problem of the impossibility of rational economic calculation. Nevertheless, it is essential to recognize that Mises does present four arguments which include: (1) private property and incentives, (2) monetary prices and the economizing role they play, (3) profit and loss accounting, and (4) political environment. In a fundamental sense, all of these arguments are derivative of an argument for private property. Without private property, there can be no advanced economic process.

    To the economically illiterate, Mises had to explain how private property engenders incentives which motivate individuals to husband resources efficiently. To the more informed, but still economically uninformed, he had to explain how the exchange ratios established in a market allow individuals to compare alternatives by summarizing in a common denominator the subjective assessment of tradeoffs that individuals make in the exchange and production process. To the trained economist, Mises had to explain how the static conditions of equilibrium only solved the problem of economic calculation by hypothesis, and that the real problem was one of calculation within the dynamic world of change, in which the lure of pure profit and the penalty of loss would serve a vital error detection and correction role in the economic process. And, finally, to scholars, activists, and political leaders, Mises warned that the suppression of private property leads to political control over individual decisions and thus the eventual suppression of political liberties to the concerns of the collective. All four arguments are criticisms of socialist proposals. On the other hand, the private property market economy is able to solve each of the three economic issues, and constitutional democracy does seek to guarantee individual rights, and protect against the tyranny of majority. Where socialism fails, in other words, liberalism succeeds.

  10. Bob Roddis says:

    I’m going way out on a limb and submit that Noah Smith does not understand economic calculation, “THE Austrian Contribution to Political Economy”.


  11. Bob Roddis says:

    How does the above post by Noah “not entitled to an opinion” Smith differ from this Yglesias hack job on Tom Woods from May, 2009?


  12. Bob Roddis says:

    Medical care is no different than any other type of good or service in the sense that it is subject to the same laws of reality which the “progressives” refuse to engage or run through their minds (due to fear, I say):

    [A]s Hayek points out, “What is forgotten is that the method which under given conditions is the cheapest is a thing which has to be discovered, and to be discovered anew, sometimes almost from day to day, by the entrepreneur, and that, in spite of the strong inducement, it is by no means regularly the established entrepreneur, the man in charge of the existing plant, who will discover what is the best method” (Hayek 1940, p. 196). The pressure to find more economically productive methods of production is a consequence of the ability to enter at one’s own risk and to attract consumers. “But, if prices are fixed by the authority, this method is excluded”

    (Hayek 1940, p. 196). Boettke @ 145

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

      “Medical care is no different than any other type of good or service in the sense that it is subject to the same laws of reality which the “progressives” refuse to engage or run through their minds (due to fear, I say):”

      I try not to link to my own blog too much, it’s there with my name if anyone wants to read it, and I’m not really any sort of important person, nor do I want it to seem like I’m trying to use Bob’s blog for free advertising or whatever.

      But I once addressed this specific notion!


      • Bob Roddis says:

        Good post, Matt M. But we’ve all made this point so often but that little lightbulb just won’t switch on in the minds of the statists.

  13. Keshav Srinivasan says:

    Kevin Drum has an informative post on the VA:

    Among the facts he cites are 1) that VA healthcare still has higher satisfaction rates than private hospitals and 2) so far the investigation into the Phoenix story has not actually found a single death due to high wait times.

  14. Koen says:

    This may be the toughest situation for Krugman to try to wiggle his way out of yet. And I don’t say this lightly.

    (to be sure, I have little doubt that neither he nor 90% of his supporters will change their mind in any substantial way on the relevant set of issues. It’s just that even for somebody as superbly skilled and experienced at/in debating techniques of the sort needed to prevent or get out of similar kinds of situations, this presents a big challenge, even more so if he tries to do it by using actual argumentation or at least the appearance thereof.

    he may be more inclined to just try to dismiss it and not get into it (like with the housing bubble), although I somehow think that this issue (as well as his ego) is too big for him to just decide to dismiss it with a couple of remarks.

  15. Koen says:

    Also, qua toughest situation I don’t necessarily mean just this concrete VA scandal right now, but the general discrepancy between Krugman’s praise of the VA and its actual quality as this and subsequent investigations / revelations / stats will reveal it to be.

    I’m kind of surprised Krugman actually made such bold statements. It kinda makes you think he actually believes this stuff.

Leave a Reply