Paul Krugman: Stop Being an Embarrassment to the Profession
About two-thirds of all the Medicaid enrollees in the country are enrolled in private, managed care plans. Even those who remain in traditional Medicaid are likely participating in a plan that is administered by a private company ― much as Medicare is administered almost everywhere by such entities as BlueCross, Cigna and other insurers.
I’ll have more to say about this below, but let’s move on to Paul Krugman who, in his latest New York Times column, lashes out with this array of assertions:
- Privatization of Medicaid is an idea foisted on the rest of us by conservatives.
- “When it comes to conservatives with actual power…it’s all about comforting the comfortable and afflicting the afflicted…” (They enjoy seeing poor people suffer!)
- Enrolling people in private plans, however, will cost taxpayers money “because there’s overwhelming evidence that Medicaid is much cheaper than private insurance.”
- And that’s mainly because of “the government’s bargaining power, its ability to prevent price gouging by hospitals, drug companies and other parts of the medical-industrial complex.”
- So why do it? “The answer is pretty obvious: the flip side of higher taxpayer costs is higher medical-industry profits.” (Conservatives want to see doctors get rich!)
The problem is not just that this is all wrong. Krugman is often wrong. (Just Google the words “Krugman is wrong” and see how many items pop up.) When he writes about health care, Krugman is almost always wrong. (See here, here and here.) The problem is that lay readers are inclined to think this is “economics,” rather than the uninformed diatribe that it actually is.
As noted, about two thirds of all Medicaid enrollees are in private managed care plans (see here, page 13). Participation varies from state to state, but appears to have no relationship to conservatism or liberalism or whether the state is Democrat or Republican. While South Carolina and Tennessee (are these the two most conservative states?) have 100 percent of their Medicaid enrollees in managed care programs, Alaska, New Hampshire and Wyoming (are these the most liberal?) have no Medicaid managed care enrollment.
So why are the states doing this? Because they think they are getting higher quality care for a lower price. State-specific studies in California, Florida, Nevada and South Carolina find that private plans produce better outcomes. A whole slew of state-studies, some commissioned by the states themselves, find that private plans reduce Medicaid costs.
What about Krugman’s claim that Medicaid is better at bargaining with providers than private plans are? As I responded in a previous post:
Medicaid doesn’t bargain with anybody. It sets a price and providers take it or leave it. Unfortunately, almost one-third of physicians leave the money on the table and are refusing to take any new Medicaid patients. Moreover, if this were a desirable way to hold down costs, we don’t have to enroll [anyone] in Medicaid to achieve it. We could just impose price controls on the whole health care system and let everyone pay Medicaid rates.
Of course, real economists know that the social cost of something is not the price we pay. It is the opportunity cost of the resources needed to produce it. In the case of medical care, as long as we have the same doctors, nurses, hospital personnel, etc. performing the same services, price controls do not lower costs, they shift costs — from patients to providers. In fact price controls actually increase the social cost of care — as the time price of waiting rises to ration a scarce resource.
The more important point is that Medicaid, like Medicare, is a dumb payer. It will take almost any doctor into its “network,” no matter how good or how bad. Ditto for the hospitals. It makes little effort to determine whether its prices make sense, or whether they are causing long waits and inadequate access to care. And it’s easy to cheat. In fact the best estimate is that 1 in every 10 dollars in both programs is lost to fraud and billing errors. (By contrast, the fraud rate is less than 1 percent in the credit card industry.)
That’s where managed care comes in. I have not been a fan of managed care in the past and still have serious questions about it. That said; remember the Obama administration’s goal for health reform? It wants to replace fragmented decision making by independent doctors with coordinated care delivered by doctors working in teams, connected to a medical home. It wants buyers to purchase quality, not quantity. It wants decisions to be evidence-based. It wants electronic records in order to standardize care and reduce errors.
Guess what is about the only place where all these ideas are being tried out? In private managed care plans with Medicare and Medicaid patients. In many Medicare Advantage plans practitioners are already doing what the Obama administration says it wants to do with Medicare as a whole — without any prodding or nudging from the federal government. They are using coordinated/integrated/managed care systems to achieve fewer admissions, fewer readmissions and fewer hospital days than conventional Medicare. (See the latest summary of the evidence by Jeff Lemieux in a comment at the Health Affairs blog.)
IntegraNet of Houston is an Independent Practice Association that manages about 30,000 Medicaid patients and about 12,000 Medicare Advantage patients. (See our previous description.) Through fees, quality metric bonuses and profit sharing, a typical doctor seeing Medicaid patients gets paid about 25 to 30 percent more than what Texas Medicaid pays other doctors. IntegraNet is able to pay doctors more by getting rid of a lot of the waste in ordinary Medicaid. There are fewer hospitalizations, emergency room visits are rare and fraud is almost nonexistent.
Are these efforts saving taxpayers money? That’s not clear. Austin Frakt points to this study, finding that private contracting reduced costs where Medicaid was paying higher fees ― which the insurer was able to bargain down. Part of the problem with these studies is that they lump together plans that are doing little more than trying to push down fees with those that are trying to reform the way medicine is practiced.
Here’s what I’m convinced of. A lot of people out there are making a lot of money by finding ways to reduce health care costs. But just because costs are being lowered does not mean that the taxpayers are gaining. Remember, government is a dumb buyer of almost everything.
Since Krugman singled out Florida for special editorial abuse, I’ll conclude with the latest on that experience from Michael Bond:
Has the reform saved money? The initial, cautious answer appears to be yes. During the first two years of reform, expenditures in Broward and Duval Counties were lower on per member per month basis.
Meanwhile, data on 28 different measures of health outcomes ranging from blood pressure screening to prenatal care indicated that patients in the reform plans were above the national average in 14 of the categories vs. nine for non-reform Medicaid enrollees.
In addition, the reform plans had better outcomes in 20 of the health categories vs. eight for non-reform plans. Moreover, health quality seems to be improving over time in the reform plans. In the 17 categories where data were available for at least two years, reform plan outcomes have improved in all but one category. This contrasts with only 10 categories showing improvement in the non-reform plans.
While it’s still very early in the implementation of these reforms, the initial evidence suggests that they have led to more competition, better benefits, healthier lifestyles, reduced costs, and better health outcomes.
Great post. Krugman is the Hugo Chavez of journalism.
“The problem is that lay readers are inclined to think this is “economics,” rather than the uninformed diatribe that it actually is,”
This hits at an important issue. I think that, given the economic dimensions of many major policy initiatives, the public is woefully unequipped to deal with the arguments on either side. Introductory economics should be a mandatory course at the college level so the electorate can begin to think more critically about these issues.
“[T]hey lump together plans that are doing little more than trying to push down fees with those that are trying to reform the way medicine is practiced,”
Interesting. With more transparency about what kind of negotiations occur between insurers and providers, the public could be much better informed.
Pandering to the base…tsk. tsk. tsk. The progressive agenda is becoming more and more desperate as the empirical evidence stacks up against their economic perspective.
I love your analysis, I have learned a lot from your writings. This is no defense of Mr. Paul Krugman. But if we look at the private sector of healthcare, the costs are rising faster compared to what Medicare pays per patient or per treatment. The fact is that the healthcare industry is zero percent market driven unlike any other industry in USA. There is mega rip off of the healthcare consumer even in the private sector- reference Mr. Steven Brills long evidence full article in the recent issue of the Time magazine. Hospitals, drug companies and the rest of the providers are in fact gouging people dry. I am NO economist, but my feeling is that supply and demand side of the medicine is completely out of whack. There is engineered shortage of doctors for decades and absolutely no transperancy of medical pricing or billing by hospitals, doctors, drug companies, equipment manufacturers etc. This is the only industry I know off, which has exempted it-self from Anti-Trust laws. Should we not correct these fundamental problems as our first priority to make it a level playing field?
I have long been astonished that, for all the vast fortunes spent on health research, I have never seen a single study comparing state Medicaid programs, especially the administration of those programs. I would think this would be ideal material for looking at what works and what doesn’t. “Laboratories of democracy,” and all that. Perhaps such research exists, but I have never seen it.
I expect it hasn’t been done because the results would be so embarrassing.
Fundamentals don’t generate Halo effect. Mirages do. How do u make fundamentals glamorous? U have 2 economies here. Takers rich and poor. And straight-liners. There is a huge underground economy. U guys talk as though these issues are simple enough to deal with by educating poorly educated masses. It is not education they are lacking(i doubt I will ever get a Harvard Phd). It is the value system. I find so much brushing of the fundamentals. Even the Senate Republicans, including Lamar and John), have no guts. If u think a candidate is not totally honest with u and u r not getting the answers for ur qs., why vote for the confirmation. Speak with your votes , not ur mouth. As per Krugman, I would love him to debate with us in a public forum. He is a biased Phd using biased aggregates like most flawed macro-economists. What bothers me is the amount the common man ignores even talking about debt and duty. Luckily most of these people don’t quote Krugman. The place we need to concentrate on economic development thru energy. Making our legislatures stick to principles. Start and participate in two way communication venues including town hall meetings with a theme. I am trying to encourage it with Rob Bell and Cuccinelli. Hope they will listen.
“Of course, real economists know that the social cost of something is not the price we pay. It is the opportunity cost of the resources needed to produce it. In the case of medical care, as long as we have the same doctors, nurses, hospital personnel, etc. performing the same services, price controls do not lower costs, they shift costs — from patients to providers. In fact price controls actually increase the social cost of care — as the time price of waiting rises to ration a scarce resource.”
This statement assumes an efficient market where costs have been minimized. For a myriad of reasons the healthcare industry fails to be an efficient market e.g., when the ambulance picks you up you don’t haggle with the driver about the best bargain related to the hospital they take you to.)
Under this circumstance, price leverage from payors may incentives healthcare enterprises to better control costs to maintain profit margins. Therefore, a fragmented payor industry (i.e., many buyers with no individual payor having the leverage to impact prices)may allow for inefficiencies in the pricing of healthcare products and services and may also allow healthcare enterprises to extract economic rents at the expense of patients and third party payors.
One of the biggest advances in technology now is not in science . but in Behavior science. Lean solutions is the technique most successful ventures like Toyota uses. It is based on consumption model. It preaches that consumer time and expense is more important starting point for business process analysis. Some of the good drs are using it to be available as first contact for the patient after designing for patient data readily available for the DR. On that model, third party bureaucracies are the first one to be eliminated. clerical and layman managers are the first ones to go. Krugman should go back to school and learn what our 20 year olds are learning.
John, it is the elimination of steps that will really make the difference, not the adding them like O is doing. What I really don’t understand is the passivity of our Republican legislatures.
John, that statement doesn’t assume market efficiency. I’m fairly certain that Dr. Goodman has been saying for years about how terribly inefficient price controls on a vertically specialized market would be.
You’re spot on Ramesh, problem is that fee-for-service plans leave absolutely no room for innovation. Strategic human capital managment is not on the list of 2000 prescribed reimbursable procedures.
Strong post but raises some necessary points.
Right now the entire system is flawed which allows the “need” for medicaid. It is true that the real issue is that there is no real competition in health care nor price determined by the market. It is all affected by special interests, left and right.
It is the Physicians, Pharmacies and RNs who are bringing the innovations. What we need is crucial conversations between the true leaders in these areas along with insurance carriers, TPAs, self-funded self-insurers, hospitals , pharmaceutical companies in a Town hall setting with consumers moderated by Lean solution and behavior science(experienced in conducted critical conversations) to start mapping total solutions. Knowledgeable insurance and benefit brokers , and the right technology people can complete this group. The issues have multi-dimensions. They are difficult to solve , only because peoples thinking and behaviors are hard to focus on real issues and solutions.
Does anyone have any insight as to why Krugman believes what he does? I find it hard to believe that a Nobel Laureate can be completely oblivious to what you regard as commonplace facts.
The education and award of Nobel prices are flawed. Krugman started with a strong bias. He justifies a lot on compassion and flawed aggregation of data , just like every macro-economist does. “Common Facts” are different for the biased. Macro-economics is the wrong way to show them their faults. It is map of big data of micro-economics which might help. But the maim reason they have a following is that they do one-way conversation. You need to get them to drag down debates. Romney had that chance. He blew it. He had no clue.
Louise is that really you?
This guy has to be smoking some kind of funny weed or drinking a strange cool aid. Mr. Krugman does not know what he does not know.
Gabriel, Krugman is an ideologue, and not open to honest data evaluation. If the data does not back his viewpoint he ignores it. His utopian vision is more important to him than the facts. He literally views facts as something that gets in the way of the righteous mission.
Bill Sidhu, private sector costs “have to” rise faster than Medicare costs because Medicare price fixing forces providers to raise prices where they are not fixed if possible. But you are certainly correct in that the healthcare system doesn’t come close to being market driven. Preferential pricing gained by carriers through provider contracting has assured that result. I would ask the same question regarding anti-trust laws about the insurance company operations.
Dear John and Colleagues:
Krugman is decidedly ignorant, but he would get nowhere with his simplistic and biased assumptions if the people who publish him and the readers who support those publications had the brains of a chicken; they are ignorant, too. But those of us who purport to know the healthcare system only talk with each other. How about if John leads a team to write a book for consumers called “How the Healthcare System Works,” …”Answering your FAQ’s.
For Ryan, above, just being dismissive about how the healthcare system is controlled by “special interests” is reflective of a lazy, dismissive mind; it is not an actionable statement of fact. Here’s another fact about the healthcare system that the public does not understand; most of America’s hospitals are not-for-profit, meaning there are no owners/shareholders. Any operating surplus is reinvested in the clinical programs. The Boards are volunteers; the management team are employees, not able to obtain bonuses in the form of stock, and they can be fired more or less anytime, not having the job protections of a public employee. For this, the public should be ever grateful, as these hospsitals are the backbone of the biggest share of the healthcare system, and are the source of much of the redesign effort that is going on voluntarily; building suburban satellites, organizing multi-specialty medical group practices; training nurse-midwives for areas with few obstetricians, initiating wellness programs; adopting special chronic disease care management programs, and many more.
They are also “cleaning up the underbrush” of the older part of the healthcare system–merging with nearby hospitals that are not doing well and either renewing them or converting them to another level of care, renewing their capital plant with tax-exempt bonds, not taxes or stock; and vetting new doctors to help assure high performance of its medical staff. By focusing on fraud and abuse in general terms, it sounds like it is rampant and every provider does it, and does it consciously. Actually, there is in this sector, a third or fourth standard deviation that is not so good, uses marginal doctors and has unethical management. We call these “left-over hospitals” The public could improve healthcare quality considerably by making it easier for hospitals and medical groups to remove a doctor from practice for either performance or ethical reasons.
As for rising costs, you can look at just three factors to explain them: lower payments for government patients, so that costs are shifted to charges for privately-insured patients; rising labor costs with many causes; and higher intensity of care from aging, chronic diseases and over-use of high-end imaging. As an example, I recently had a cardioversion in a hospital outpatient heart center. The billed charges were $7,300. The hospital was paid by my Medicare Advantage policy $435.00. I was billed $76.00. The government is taking advantage of its high volume to weasel out of legitimate costs. There were four health professionals involved in a procedure that took 3 hours, start to finish, although the therapeutic part was only a few seconds. During it, I had an anesthesiologist on hand, my cardiologist, a cardiology nurse, a cardio-graphy technician, plus a lab tech, and a receptionist/admission clerk. No way that expense was covered by the payment the hospital received.
It really makes me boil when I see government accusing hospitals of raising prices when they are so accustomed to paying whatever they want, and leave it to the provider to figure out how to survive. We do need an exit from this historic pattern. Problem is, that unless the Feds go along with it, just innovating with one health plan at a time will not help much. Krugman feels comfortable following the false line that high charges are just venal and have no other force at work but greed.
And for those that think there is no competition in healthcare, I beg to differ. Health plans complete on premiums and reputation plus their affiliations with providers. Providers compete program by program, as when open heart surgery proliferates in a city region because the first hospital to do it trained residents, who went out an started their own heart surgery programs, which were cheaper because they did not carry the cost of education. None of them were full, so the prices were higher than if there were fewer such programs. OB programs compete, because patients have the time to shop for the kind of delivery experience they want, and the price arrangements they can make. Medical programs compete via their medical staffs, who are often on more than one hospital staff, so pick the place where their patients can get the best care, get in fastest, or get a good price because of a charity fund.
The other thing about competition that should be recognized is that when there is a shortage of any supply, competition does not exist; to have it you have to have surplus capacity and a desire to attract more patients by lowering price or improving performance. When there is only one mental health program for children, there is no competition. Except for geographic competition. We have a national market for some cases, and an international market for others.
Competing via price assumes the inputs to the products are similar, but they are often widely different. A 550-bed hospital with a teaching program, a brand new building, a school of nursing, and 7 employees per bed will cost more than a 150-bed suburban hospital with no teaching program, no school of nursing, a 30-year old building, and only 4.5 employees per bed. Which is best for a particular case should be decided, not on price, but on appropriateness. That’s what a personal physician is supposed to do for the patient.
THe term “transparency” is being used as an incantation, apparently meaning that if patients only knew what their price would be they could make better decisions, Also known as “retail pricing,” this is a talisman for those who believe that healthcare should be wholly market driven, just like Jack in the Box. But consumers do get retail pricing for services they pay for directly, such as plastic surgery. Their health plans, which they probably chose on the basis of price, are setting prices unilaterally–telling the provider what they are willing to pay. So when you get your billing advice, look at how much the health plan subtracted from billed charges; that is another form of market competition. Don’t believe that individual consumers could negotiate better prices than that.
Cheers to all…and Krugman, the factually-challenged.
Wanda J. Jones, President
New Century Healthcare Institute
San Francisco, CA.
Frank:
You make a lot of sense. We have to look at pricing in the entire system. If it wasn’t for private insurance, Medicaid’s prices would be much higher.
Very intelligent people think that if we just let gvernment take over the pricing and paying for services, we would save oodles of money.
That is an illusion based on the supposed supremacy of government.
Well, maybe not, if we are evolving into a totalitarian system.
Don Levit
Medicaid reform? When we started Food Stamps we didn’t create separate grocery stores. Ok, the Obama abuses of the food stamp program minimize the effectiveness of using food stamps as an example, but that system allows everyone to get the same quality, selection, service, choices, etc. as everyone else. The only difference is how they pay, not what they pay.
What if “Foodicare” required grocers to accept a lower payment on each item sold to poor folks? Would the system seem absurd to you? What if grocers fixed their prices not on market forces and cost of goods sold, but on a relationship to the government pricing? What if my food cost was related to which grocers my employer chose for me as preferred grocers? Getting ridiculus huh? Welcome to U.S. healthcare where the government pays over 50% of healthcare under these “creative” 3 hump camels.
Very strong post John. Well documented too.
In response to Ramesh’s point that “It is the Physicians, Pharmacies, and RN’s who are bringing the innovations. What we need is crucial conversations between the true leaders in these areas along with insurance carriers…”, I need to point out that the primary reason Medicare Advantage and Managed Medicaid programs are so successful all over the country is that these managed care programs partner with IPA’s (physician based organizations) on a shared risk basis and these IPA’s implement Care Coordination programs that require daily conversations between the Providers (care givers) and the health Plans and IPA Care Coordination staffs of nurses, healthcare professionals, and midlevels. This daily communication is focused on delivering quality patient care in the safest and most cost effective setting. It is outcome oriented so that the patient’s health status improves. Communication between the Providers and the Health Plans in a shared risk setting actually works. It is what I would call Informed, Intelligent and Empowered Care Delivery.
Wanda,
I am glad u expanded John’s blog into a whole group of crucial conversations.
It will be wonderful , if some of the other critical players like our legislatures participate in this dialogue here.
Ome topic: Roles and Responsibilities. Producers, Providers,consumers, and Regulators. If only we have a clear understanding of roles ,rules and experiences.
2. Development and discussion on investments in the system and multipliers.
This can lead into consumption led efficient delivery of health care.
We need to find avenues for the crucial conversations happen.
Medicare price fixing causing increases in private costs makes no sense. Private insurers pay, on average, about 20% more than Medicare for the same care. In order to have their pts treated preferentially over Medicare, they need pay only 1% more. It is really the other way around. The higher private costs are driving Medicare to try to keep up.
Steve
Most Americans are completely ignorant about the real workings/state of our heathcare system unless they have totally immersed themselves in the system by either working: directly in it, or intimately with it in a business relationship for a NUMBER OF YEARS. Just because someone goes to college or is smart or has a PHD or even is a journalist has NOTHING TO DO with how much they really know about our complex system. People mistakenly believe that physicians, nurses, and long-term patients and even close family members of long-term patients have in-depth knowledge of how it all works. Most people have absolutely no idea. The problem is that even with educated journalists (or should I say, especially with journalists!?) politics always seems to come into play-even more so lately, or am I the only one that’s noticed?
Let’s just say it’s politically expedient for you as a journalist to say (and that you are therefore likely getting paid in some manner to say): “everyone needs the government to take care of them, especially our healthcare”. Well, you continue to say this regardless of whether the numbers, empirical data and studies show that the waste and fraud emanating from these growing government programs (even with all their “oversight”) is unbelievably staggering. You stick with your guns even when this same government grows so large it’s bursting, yet it still isn’t doing a hill of beans worth of a job giving patients & physicians more & better healthcare no matter how much it taxes and spends…you have to just keep on sticking to the “talking points” of your political party-no matter what. The government should run healthcare and our lives. The government should run healthcare and our lives…Well I think I just answered the question about the journalists anyways.
The debate about debt between Paul Krugman and Joe Scarborough is worth watching, especially Scarborough’s closing arguments. Krugman spends most of the time trying to avoid responsibility for things he said in the 1990s.
http://www.charlierose.com/view/interview/12802
Brian:
You say:”Medicare price fixing causing increases in private costs makes no sense. Private insurers pay, on average, about 20% more than Medicare for the same care. In order to have their pts treated preferentially over Medicare, they need pay only 1% more. It is really the other way around. The higher private costs are driving Medicare to try to keep up.”
No wonder you are confused; you really don’t know how hospitals and other providers work with health plans and how they deliver care. Private Health Plans dod not pay more for preferential treatment, as there is no preferential treatment. Hospitals and physicians are obligated to give the same quality of care, the same protocols, with the same staff, regardless of payment source.
For more about cost shift, I suggest researching through Health Affairs or other health economics journals. As long as you demonize the private sector from an ideological point of view, you will fail to evaluate Medicare accurately. They do pay less. Period. Since hospitals have to give the same quality of care, they lose on government patients, unless they receive “Disproportionate share” grants (now being phased our.)
Wanda J. Jones, President
New Century Heatlhcare Institute
Brian:
You say:”Medicare price fixing causing increases in private costs makes no sense. Private insurers pay, on average, about 20% more than Medicare for the same care. In order to have their pts treated preferentially over Medicare, they need pay only 1% more. It is really the other way around. The higher private costs are driving Medicare to try to keep up.”
No wonder you are confused; you really don’t know how hospitals and other providers work with health plans and how they deliver care. Private Health Plans dod not pay more for preferential treatment, as there is no preferential treatment. Hospitals and physicians are obligated to give the same quality of care, the same protocols, with the same staff, regardless of payment source.
For more about cost shift, I suggest researching through Health Affairs or other health economics journals. As long as you demonize the private sector from an ideological point of view, you will fail to evaluate Medicare accurately. They do pay less. Period. Since hospitals have to give the same quality of care, they lose on government patients, unless they receive “Disproportionate share” grants (now being phased out.)
Wanda J. Jones, President
New Century Heatlhcare Institute
As far as Medicaid and Medicare (and probably could be viable for all US and world healthcare): expert private sector healthcare companies coordinating physician and patient care via reimbursements from govt. programs with tight oversight, is the only way to guarantee competitive pricing for patients and better pay for physicians and providers. Oh, and we’re also seeing huge leaps in patient health & care under this system according to new Health Affairs studies.
These same studies set out to dis-prove that this privatization of our healthcare system works. Now the study conductors are back-peddling and saying “wow, it works great after all”. Plus most fraud’s eliminated due to implementation of higher physician standards of care-(much higher than govt. programs BTW), and close supervision of, more suitable and better quality patient care. I say this to anyone who disagrees with privatizing govt. programs: please take a look at reality and have an open mind, instead of spewing outdated and false talking points, designed to get average folks all riled up against all those “greedy private healthcare providers & companies.” The fact in every arena: cost savings, fraud decreases, better patient care & outcomes, physician’s getting paid to perform better, the creation of competition which lowers prices, better provider reimbursements where they are justified: these are all leaning heavily in favor of us privatizing all Govt. healthcare programs.
There can not be a free market for individuals in healthcare as long as a third party payer is involved.
Free markets allow for transparency of prices to the individual buyer. Unfortunately in healthcare the patient is not the buyer of care, but the third party in a health plan purchased by his employer.
What is the incentive for the patient to refrain from obtaining care when someone else is paying for it. The health plan becomes just another runaway entitlement.
Obamacare and the progressive movement is just shoving more and more of the same things that caused the healthcare crisis down our throats.
My question is what will replace Obamacare when it fails miserably?
Will it be a true free market, or a forced govt single payer?
There were several crucial discussion points came up in the last few posts and Krugman debate video.
1. What after Obamacare collapses. That is not going to happen.It will crimp along, since there is not going to be a revolt against it.
2. Krugman debate was wasted opportunity to Joel. As Krugman pointed out too much talking about what he said in the past. Krugman said let us talk substance, so let us talk substance.
3. He and the general public substance sometimes meand data. Substance can only be talked about wisely , if it is chunk-ed down to specific topics.
4. Their(krug ship) main point is Debt doesn’t matter for next 10 years. Spending is crucial for economic growth. But they have know multiplier measurements for spending to growth.
5. cutting spending , even cutting waste, he came up with de-multiplier. According him cutting will cause a multiplier of 1.5 reduction in growth. I guess he is going to use the same multiplier for additional spending.
6. let us examine his contention that cutting waste has a 1.5 negative multiplier effect. I will contend that it will have a .5 negative multiplier. I would like to see somebody debate him on it. This is where Joel lost an opportunity. Not cutting waste on the other hand will have at least a 1.5 negative multiplier. Because that money can be spent on productive ventures(which is what O’s Jonestown people want to do-more on this is in next point). That is a total of 2 point multiplier in favor of cutting waste. This ought to be the starting point in deficit reduction.
7. Jonestown’s biggest trump card on which they would wager their life is spending is stimulus that will increase employment. Hagwash. Most of their spending is either wasteful, or marginal multiplier generator. The other side(conservatives-ignore republicans with wishy washy talk) hint on the right spending. But they need to spell it out and push it, like Gingerich did(but in right order).
8. For every enterprise resource allocation, measurement of multiplier(ROR), and right execution are the most important tasks. Each initiative need to be committed in a measured way. The biggest growtrh is in the proper exploration and use of the Government resources. The immediate effect can be had in the energy sector. Removing restrictions and releasing permits have mainly one small cost. The only cost , which will have a good multiplier effect, to the Government is having the agencies find a workable research crew that look into mitigating any asset damages due to exploration. It may involve infrastructure rebuilding and even creating new cities in the explored areas. These two alone along with waste removal close budget gaps created by stagnant growth.
8. spending on hiring by Government is less useful than converting our unemployment offices into employment offices. Spending on community colleges grants is less useful than focused skill development thru joint ventures between employers, employment offices and skill development experts. We need a focused 6 week skill development, not a 2 year general (albeit technical) education). Stop creating a welfare education state.
9. Simplify tax code. Romney proposal of limiting deductions to a $25k or $50k can streamline the loopholes. Get rid of all subsidies. Find ways to slowly reduce Govt agency partnerships and limit them to very high multiplier areas.
10. Recognize a dollar borrowed is virtually a dollar not available for another better multiplier initiative.
11. Health care issues are topic for another comment.
This is substance Mr. Krugman and Jonestown need to pay attention to and so should we all. Let us not waste time on how ignorant others are. Let us engage everybody in crucial conversations with substance.
I’m concerned that an economist of his stature would use the term “price gouging.”
It’s important for critics of Krugman to understand that his rantings are not about economics, they are about political philosophy.
Underlying all of his nonsense is the premise that freedom, profit, self-interest, capitalism, etc. lead to a dog-eat-dog, winner-take-all society where “the rich” exploit “the poor” and drive all but a few into poverty. Government, therefore must restrain freedom, profit, self-interest, etc. and control them. This is nonsense on stilts and this is what needs to be refuted.
The truth is that self-interested profit seeking is good – good for everyone – because profit is a result of trading value for value. It is the opposite of dog-eat-dog. Government coercion, not freedom, is what leads to exploitation and grinding poverty.
We don’t need to know economics to grasp basic difference between voluntary interaction and coerced action – which is what Krugman is trying to obscure.
Government is force, it does not “bargain” it compels. This is what makes free-enterprise different than government. Krugman’s argument is that freedom (free-trade, respect for contracts, profit-making, self-interest,etc.) is bad for people and leads to death and destruction, while coercion and following government dictates is the way people should live.
This is complete backwards and this is what needs to be challenged. Freedom is good – it is pro-life. Government force, which Medicare, Medicaid, etc. are – is bad – it is anti-life.
Jim, u r right.
This guy is pure marxist.
Why does not he unveil the cloak?
It is so strange.
We have to fight marxism in the capitalist capital, and they occupy the seats of power.
Did Russia win the cold war?