Health care is not a bowl of cherries. Or a carton of milk, or a loaf of bread.Krugman may wish to argue against this strawman, but neither George nor Greg are "basically arguing" that we "don't need a government role" regulating the health industry. Rather, they think that too much of a role--such as a national monopsony--will be harmful to quality of care and R&D. Offering a public plan puts us on the most politically expedient path to this.
Both George Will and Greg Mankiw basically argue that we don’t need a government role because we can trust the market to work — hey, we do it for groceries, right?
Um, economists have known for 45 years — ever since Kenneth Arrow’s seminal paper — that the standard competitive market model just doesn’t work for health care: adverse selection and moral hazard are so central to the enterprise that nobody, nobody expects free-market principles to be enough. To act all wide-eyed and innocent about these problems at this late date is either remarkably ignorant or simply disingenuous.
Of course, I agree with George and Greg: modern medicine has been developed at its faster rate compared to other nations partly because of America's for-profit healthcare system. Just look at some high-end equipment numbers compared to Canada's:
Does anyone believe these numbers would be as lopsided if the U.S. had a nonprofit, national system like Canada?
This ties in with my earlier post about taking a long view on wealth, rather than shooting for more equal distribution in the here-and-now--as lefties like Krugman are wont to do.
I have no doubt that if tomorrow we nationalized the US healthcare industry and provided universal coverage for all, access would become more equitable and many people would have improved access to helpful treatments. For the immediate present, this would be a boon.
But 10, 20, maybe 40 years down the line, their children would be worse off. Again, see my wealth growth over time draft for the math behind this thinking.
Additionally, the rest of the world would also be worse off--because presently, countries with socialized medicine like Canada and Britain basically wait for U.S.-developed treatments to become cheap enough before making them available to their population. If the U.S. develops new treatments at a reduced rate, the model stagnates.
A comment from Metavirus that was lost as I was reworking this post:
ReplyDeletei think you're being a little willfully uncharitable to what Krugman likely meant.
when Krugman says "Both George Will and Greg Mankiw basically argue that we don’t need a government role because we can trust the market to work", what he appears to clearly mean is that George Will and Greg Mankiw are arguing against the creation of a new government-run health insurance plan.
If Krugman were to be fairly presenting their position--which is that there should be no gov-run plan but there can other other, limited government roles to make the market honest and trustworthy--then his post contributes nothing.
whichever way you slice it, Krugman wasn't putting up a straw man.
ReplyDeleteErm, no. "basically argue that we don’t need a government role" looks like a strawman to me, because if Krugman understands that government can play a role that does not involve a public option then his post is not a response to George and Greg.
ReplyDeleteKrugman's position may be that the only way government can play a role to keep the market trustworthy is to create a public plan. But that's evidently false.
He may think a public plan is the best way--or at least the best politically feasible way. And if so, he should put forth an argument for that, and counter George and Greg's points.
That's not what he does here.
All he does is say that healthcare isn't cherries/milk/bread and can't be trusted to work in the same way, as if that somehow invalidates George & Greg's position that we should limit government's role to appropriate regulation and not undermine the market.
Also, how about this:
ReplyDelete"George Will and Greg Mankiw basically argue that health care is similar to groceries in that we don't need the government to make our groceries, and we don't need it to go shopping for us. We may need it to make sure food is properly labeled with nutrition facts so that everyone can trust what they're getting, but that's it."
If Krugman had written something like that, he'd have accurately conveyed their position. But he didn't.
There are tradeoffs in the health care discussion, to be sure. I'm willing to concede that a smaller (in terms of less cost) health care system will mean that a lot of cures will take longer to be found. This is certainly an argument against a single-payer system, though the idea that they produce NO cures is not really credible. With respect to equipment, again, private systems might produce more of it, but one of the principal arguments on the left with respect to health care reform is that patients with health insurance are being overtreated, while patients without insurance are being undertreated. So all this doesn't address that argument (made by Ezra Klein, among others).
ReplyDeleteUltimately, though, this post belies a worldview that, no offense, reminds me of why I'm not a libertarian. Specifically, there's no mention of the 40 million or so people with no health insurance who can't afford basic treatment now, let alone new, spiffy treatments developed in the future. The basic libertarian argument, so much as I can tell, is that interfering with the functioning of the market is harmful because it lowers the standard of living and costs jobs by creating inefficiencies that waste resources and jobs in the long run. I understand this concept, but I think it's too abstract and too speculative, and it's curiously indifferent to peoples' problems right now. I would favor a single-payer system, in spite of its negatives, because I think it's reasonable for someone who's sick to be able to see a doctor regardless of how much they earn. I think that the sort of futurist thinking I'm talking about is pretty pervasive on the right--the Iraq War comes to mind as something where Bush only cared about the opinions of (friendly) Iraqis and future generations' views, not of the American public's views.
I'll agree that your concerns are not unreasonable, but I don't think that they are political winners, and I don't think that they're satisfying in terms of social justice, at least compared to the arguments for fundamental reform. When one sees Republicans getting wiped out everywhere but the Bible Belt, this is the reason why. Nobody, and I mean nobody, who has lost their insurance after getting laid off or gotten a claim denied because it's too expensive is going to buy these arguments. So when Mitch McConnell keeps saying that we've got the best healthcare system in the world, it's more than just a little insulting to everyone who has fallen through the cracks of it at one point or another.
Look, deep down I'm a pragmatist. If I believed that libertarian ideas created the sort of broad-based prosperity that they have at times claimed to do, I'd buy in instantly. I have no innate love of government action. But despite some brief success in the late 1980s, conservatives have had little success in delivering economic broadly-shared economic prosperity while, despite some brief failures in the late 1970s, liberals have generally had great success in delivering such prosperity. This is obviously crude and reductionist, but I think there's something to it. And I'm not just talking modern conservatism either--the pre-New Deal era was much closer to the libertarian ideal, and it was even more economically unstable and far less class mobile than the current mode of conservatism has produced. If a libertarian-leaning Republican gets elected president at some point in the near future and delivers that sort of prosperity I'll rethink things for sure.
I make no mention of the 40 million uninsured because there IS no cost-effective way to insure them that won't interfere with the market. Asking me to come up a solution to this problem is like asking me to devise a perpetual motion machine before I'm able to criticize someone else's energy ideas.
ReplyDeleteThe CBO scored a couple liberal plans recently (Ted Kennedy's among them) and concluded that they would cost between $1 and $1.6 trillion over 10 years to insure a mere third of those 40 million.
If we take the mean 1.3 trillion / 10 years / 40 million / 12 months * 3 (because it only insures a third of the 40 mil) that's $812/mo. per newly insured person, and leaves 27 million uninsured.
You say you "think it's reasonable for someone who's sick to be able to see a doctor regardless of how much they earn", and it's a noble thought, but it's totally impractical to pay for if we are to keep our current advanced, for-profit system intact. The only way you can do it is with a single-payer monopsony, essentially turning the our system into Britain or Canada's, with all the drawbacks that entails.
You simply can't have your cake and eat it too, and no amount of harping about evil insurrance company woes will change this.
Presently, for about a couple hundred dollars a month, uninsured families can purchase some high-deductible insurance that will ensure they never go bankrupt from health costs. That's a little more than the cost of their cell phone or cable plan.
If we need to force companies to offer insurance to anyone with a pre-existing condition, let's consider it. If we need more stringent regulation of what plans will and will not cover so that customers can trust what they're getting, let's consider that. None of those problems require introducing a government-run plan. And we can't give 40 million people free care or force them to buy care without something closer to a single-payer nationalization that would dismantle a system that's doing a heck of a lot more good for the world than insuring 27-40 million US people will accomplish.
Them's the utilitarian gripes. It's not pretty, but it's reality, and I don't see how any amount of stary-eyed leftism can change it.
With all respect, I don't think I'm the one that's starry-eyed. For-profit systems presumably create more advanced cures because they have more money to spend on R&D. But if we had a single-payer system we could presumably put some of the savings into medical R&D, unless corporations have some sort of magical ability to generate scientific breakthroughs. I tend to think that they don't, and my thoughts on this tend to be informed by the economist Herb Simon, who studied this public vs. private problem and basically came to the conclusion that the reason that the free market produces better outcomes than the government is largely because it is better managed. I'll readily admit that Americans could choose better administrators, but when nonmarket systems insure everybody for a much smaller cost per person and much higher satisfaction levels than our system, one must wonder why. I don't think that insurance companies are evil, to be honest. I think that their job is maximizing profit, and they seem to do a great job of that. But they aren't nearly as efficient as Medicare, for example.
ReplyDeleteAlso, there is a difference between medical insurance corporations and pharmaceutical corporations. The latter I don't mind as much because they actually do add value, even if their output at this point are mostly lifestyle drugs like erection pills and that stuff to eliminate toenail fungus. Insurance corporations add no value whatsoever. Other countries do just fine without them--tales of woe regarding rationing over there ignore that there's rationing here as well, just that it's private bureaucrats deciding if you get a kidney transplant instead of government bureaucrats. At least the government is supposed to be concerned with your well being, I say. But I think this just ultimately boils down to first principles, so I don't really think it it can be resolved.
But you are correct about one thing--Krugman is a horse's ass. I've written about this before. Basically, the guy's economic analyses are informative, but once he starts talking politics he's sort of a clod. His comments about Waxman-Markey opponents being treasonous would have been a jump-the-shark moment, if he hadn't done that with his shameful hackery during the Dem primaries last year.
> came to the conclusion that the reason that the free market produces better outcomes than the government is largely because it is better managed.
ReplyDeleteWell, duh. Of course that's true. The reason it's true is that the private sector operates under profit constraints and attracts good management, whereas the government does not. Introduce too much government and you go the way of the USSR.
The conceit of leftists is to believe that if only their Good People were in control of Well Intentioned government programs, they could be as efficient as the private sector. History has not been kind to them.
> when nonmarket systems insure everybody for a much smaller cost per person and much higher satisfaction levels than our system, one must wonder why
Wonder why? Because they ration more and don't provide advanced treatments. They wait for other systems like the US to innovate.
Medicare is a fiscal disaster with very low administrative costs--3% compared to insurance companies' 30%--because it doesn't do any rationing. It just signs checks.
Now, you could set up a very un-Medicare-like public system in the US that rations as much as Britain and Canada's. You could do it. But funding for advanced treatments would go way down, and you would lose a great deal of innovation. Public R&D funding like the NIH only goes so far. Under such a nationalized cost-containment system, people aren't going to have an incentive to develop innovative ideas and sell them. This is what happens when you disrupt the market, as a public plan is meant to do.