Krugman Disposed Of
Game. Set. Match.
In a post at the Health Affairs Blog, Tom Saving and I have written what we think is the definitive response to the claim by Paul Krugman and Robert Reich that Medicare is efficient.
I want to add a brief word here about the sociology of health policy. Krugman and Reich don’t know anything about health economics. Yet they are the ones making the claims. What about all the real scholars who do know something? What have they been doing while all this gibberish is being tossed around?
Answer: they have either been sitting on the side lines saying nothing or, in the disappointing case of Austin Frakt and Aaron Carroll, allowing an otherwise excellent blog site to be used as a forum for Krugman’s uninformed ranting and raving.
BTW, this is not unusual in the field of health policy. It is normal. When people who should know better don’t speak up, the public is ill served by their silence.
Health policy is an area where otherwise intelligent people swallow the paternalistic notion that medical care costing thousands of dollars — if not hundreds of thousands of dollars — should somehow be free without any repercussions. Yet, it cannot be so. Finite resources must be rationed somehow. If you do not make any of those decisions, someone else will have to.
I’ve never found any of Krugman’s arguments convincing. The Health Affairs post is a magnificent evisceration of Krugman’s post. Good job.
Krugman doesn’t know anything about health care. He proves that every time he writes on the subject.
Despite all evidence to the contrary, Krugman continues to contort the facts. And now Reich, playing Richelieu to Krugman’s Louis, sallies forth parroting the insanity. They may achieve some notoriety for their assertions, but what about the average family that has to a) pay for Medicare’s gross inefficiencies, and b) suffer the loss of access to quality care when, in their advancing years, they must rely on it. But neither Krugman nor Reich will be around to pay that tab.
I thouhgt you disposed of Krugman once before on this issue. This must constitute double disposure.
John,
As someone who felt physically ill when reading the claims made by Krugman and Reich about Medicare’s efficiency, thank you and Tom Saving for attending to this important matter.
I’m all for a free exchange of ideas so we can get some solutions in the works that will actually improve health care.
The really interesting thing here is John’s observation that the people making the claims are the ones that don’t know anything about health econonmics and the people who do know about health ecnomics are not saying anything.
How could anyone believe medicare is efficient? I think that is a self-disposing argument in itself.
John,
Austin Frakt responded to your post on his “forum for Krugman’s uninformed ranting and raving” with some critiques. I was wondering if you would be able to address them.
http://theincidentaleconomist.com/wordpress/medicare-and-facts/
In many ways, Robert Reich offends me more than Krugman. At least Krugman is a Nobel Prize-winning pioneer in trade policy and comparative advantage (although he probably should have shared the prize with his thesis advisor). Krugman’s sin is that of pride, believing himself a public intellectual free to demagogue about any topic regardless of his training.
Reich, on the other hand, seems a little too much like a Marxist economist for my comfort. He laments that over the past several decades the economy has doubled in size, but all of the gains have gone to the rich! He claims the rich don’t pay enough taxes. As proof the rich are not paying enough, he mentions much of their income is capital gains, which are only taxed at 15%.
He uses bullet points (i.e. dots) to make his points. But it doesn’t take a rocket scientist to connect the dots. If most of the income accruing to the rich is from capital gains. And if most of the increase in income over the past few decades is going to the rich that suggests the rich became rich by investing in the economy. If we tax away their income the economy won’t grow (because you are taxing away capital). As a result, the rich won’t invest as much (because you are taxing away capital and decreasing their returns to capital).
As additional proof the rich aren’t paying enough he cites marginal tax rates that were twice as high before 1980. The economy sucked before 1980. Carter lost the election largely because the economy was so bad. Yet, Reich looks to the years before 1980 as the Golden Age and believes taxing and spending is the way to prosperity. That’s very short-sighted.
As a student with minimal health insurance, I often wish a trip to the doctor could be as upfront about costs as my annual visit to Sam’s Club’s optometrist.
@ Eric
I have responded to Austin at his blog. My comment awaits moderation. At this site we don’t moderate. People can pretty much post whatever comment they like.
This is fantastic. I have heard a great deal from the left about the comparative cost and efficiency of Medicare and not nearly enough from the right. All free-market healthcare advocates need to read this and equip themselves with the right information.
Thank you for finally pointing out that it IS private insurers that administer Medicare, so how can Medicare have lower overhead? And thank you for setting the record straight on Medicare Advantage – there’s a reason that 25% of seniors immediately jumped ship from “basic” Medicare to MedAdv.
I hope you will, in a future post, note that the economists who do the research showing that Medicare is cheaper are also tied in with PNHP, so they have a clear agenda.
However, I do wish you hadn’t ended your Health Affairs column with the reference to the Ryan plan. That will immediatately turn people off and they will discount the excellent case you built. Sad, but true.
Clearly no one actually on Medicare is ever asked to discuss its efficiency. Who looks at a plan with potentially disastrous life time limits, geographic restrictions, high hospitalization deductibles but low co-pays (unless you are in the hospital too long by some arbitrary definition), low medical deductibles but high co pays, a drug plan with a $2000 deductible that does not kick in until half way through the expense, a reported 20% fraud/waste/abuse factor and trillions in unfunded liablity and considers it efficient?
Paul Krugman and Robert Reich both have something that you and your readers lack: an education. They understand the mechanics of health care and of economics. And they understand Lincoln’s idea of government of the people, by the people and for the people. Not of the rich, by the rich and for the rich. Face it — you people (“peasants with pitchforks”)are way out of your league.
@ John Goodman
See the proofpoint for moderation on a blog above. You should ban ads for Penny Healthcare, ad hominem and off topic (the one above is a two-fer)