Not surprisingly, Paul Krugman is excited, and so is the Obama administration. The government, with the help of the medical industry, is going to contain health care costs. Wow! I’m shocked! Why hasn’t anyone thought of that before?!?
The Great Nobel Laureate lays out the plan:
In his previous job, as the director of the Congressional Budget Office, Mr. Orszag argued that America spends far too much on some types of health care with little or no medical benefit, even as it spends too little on other types of care, like prevention and treatment of chronic conditions. Putting these together, he concluded that “substantial opportunities exist to reduce costs without harming health over all.”
Sure enough, the health industry letter talks of “reducing over-use and under-use of health care by aligning quality and efficiency incentives.” It also picks up a related favorite Orszag theme, calling for “adherence to evidence-based best practices and therapies.” All in all, it’s just what the doctor, er, budget director ordered.
Gee, why hasn’t anyone else thought of this? I mean, I don’t recall my doctor telling me, “Bill, we are going to have you overuse and underuse (simultaneously) the healthcare system.”
Of course, as Krugman does not point out, the devil always is in the details. Doctors today often require a number of tests, many unnecessary in hindsight, for two reasons:
1. They can be sued for malpractice if that one-in-a-million situation actually comes to fruition and they had not ordered a test to cover that one-in-a-million situation, they can be put through the legal wringer, something Krugman does not address, since his political party is a wholly-owned subsidiary of the American Trial Lawyers Association.
2. Government often requires overkill on tests and other procedures. For example, we are in the process of adopting a child and have had to undergo a number of costly medical procedures to meet the government standards that would permit us to be approved for adoption.
We have seen how the “single payer” systems “cut” costs: they deny care. What Krugman fails to point out is that he wants the entire medical system to be controlled by risk-averse bureaucrats. This will “cut” costs, no doubt, as healthcare will shift from being oriented to consumers (or at least semi-oriented) to being oriented to bureaucrats and the suppliers of care. The ramifications are obvious, but Krugman also knows he won’t have to worry about being subject to the rules that the rest of us will face when KrugmanCare comes into being.
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Orszag greatly under estimates the complexities of health care research particularly the retrospective ,data-dredging type studies he bases his sweeping conclusions upon.But I don’t understand why Krugman would be exempt from the restrictions and rationing of government medicine.
His political status means he will be in a special health care system for those who are more equal than the the rest of us.
Doctors today often require a number of tests, many unnecessary in hindsight, for two reasons:
On top of that, it’s important to remember that when you first go into the doctor’s office the doctor doesn’t know what ails you. Every patient is different. Medicine is as much art as science. I wonder how that will “compute” in the bureaucrat’s “calculations”.
(I use quotation marks around “calculations” since of course the bureaucrat won’t be able to do any genuine calculation; all he can do is consult his budget and regulations.)
Single payer health care cuts costs by denying care? No kidding. Over here (Finland) the public clinics actually prioritize who gets a doctor’s appointment based on a 2 minute conversation over the phone. And the scary part is that the people manning the phones are not even proper nurses. I’m not sure what they are called in English, but they are basically orderlies except with slightly more training. But apparently that is enough to warrant them to make diagnoses over the phone. Which is why my mysterious cough has gone unchecked for almost a month…
I live in country where health care is fully socialized, therefore I happen to know something about its working. Such a system is always in crisis, it is always doomed to fail very soon, it is always insolvent, there are hospitals going under in next few months, health insurance companies running huge deficits and so on. And of course there is always a hero present, appointed by prime minister himself. Every new hero boldly announces new plan and spends huge amounts of money. Alas, it never works! Life span of usual politician in this chair is from six to twelve months. Then he is thrown away as an example of incompetence and new hero is appointed to make new promises and to perish after another six to twelve months. There are really only few constant factors in this turmoil, perilous crisis itself, waste, corruption and budget deficits everywhere you look.
Interestingly Krugman the Nobelist does not know much about European health care systems. If he did he would not praise even tiny step towards such mess.
It is interesting to read first hand accounts of the glories and virtues of socialized medicine. I have a friend from England with his own horror stories.
How amazing that we are publicly fed rank propaganda about the success of socialized medicine in other countries when the truth is available to any person who takes the time to listen to victims of those systems. Are Americans truly so naive they do not know anyone from a foreign country who could give them good information? Are Americans not only ugly, but stupid as well?
I agree with David, nice to hear first hand from our friends that live under medical tyranny.
Does anyone know a study that highlights the effects of the Medicare pricing requirements everyone else’s healthcare costs? My doctor diagnoses me in about five minutes, but is required to charge no less than he charges medicare. He told me that it may take him six to eight times longer to review and diagnose a medicare patient’s problems.
Wait, I cannot fathom it being so srtiahgftorward.
Everyone complains about the inaptness of health care and blame goes all around everywhere. Blame even on the free market where none existed. Meanwhile gigantic insurance+drug companies hanging out rolling int he doe. Yet no one questions their close relationships with FDA and other various government entities.
If I could only abolish a single department of the U.S. government, it would be the FDA. If I could only enact a single separation of a thing from the state, it would be healthcare. As Ruwart and others have pointed out, healthcare costs would be cut by 80% by getting government out of healthcare. Just think how many lives we can save if we adopt a free market healthcare system!
Regards,
Alex Peak
If it were possible to tally the number of deaths caused by government, which agency would emerge triumphant, the Pentagon or the FDA? I think the Pentagon would win, but it would be a photo finish.
Strange thing is that life under European socialized health care system does not enlighten citizens. Even though almost everyone knows about incompetence of such system from his own experience, about corruption and stupidity inherent in its working, only few are able to identify real cause. For example my friend (surgeon in nearby hospital) is fully aware of many system flaws yet his own proposals are another socialist measures bound to fail. And this is quite usual. No one proposes liberal measures, less government intervention, quite contrary. According to usual opinion our failing system can be repaired only by ministry or parliament, market is never an answer. As it seems not even life in half-socialist country does not endow you with much understanding.
Of course this does not absolve Krugman. As an economist he should know better.
So what’s the alternative to socialized medicine? I can’t defend the current system in the US where health insurance costs over $14,000 per year for a family, a simple office visit is $80 and a night in a lousy hospital is $2,000 a night.
Of course, a free market health care system is the answer, but like the gold standard, it ain’t gonna happen in my lifetime or my kids’ lives. I’ll take the European socialist model of rationing over the US system. It’s the lesser of the two evils.
PS, Doctor fees and hospital charges make up about 80% of all health care costs in the US. Doctor fees are high because of the AMA monopoly on physician training. I’m not sure why hospital fees are so high but some people have pointed to excess capacity in expensive equipment.
In future you shall see additional regulations imposed UPON current health care system. This is the logic of political action, lots of small steps, there will be no truly grand reform introducing full-fledged socialism of some more or less rational sort (yes, certain socialist schemes are better than other ones). Thus you really cannot choose full socialism over current system, only (current system + additions) over (pure current system).
Since there is not only one European model, but many models in many countries, you certainly cannot generalize as much as you did. Health care systems have been constructed gradually step by step (socialism always emerges this way). Thus in some countries results are more terrible than in others. You would have to pick one of them and show its superiority (gargantuan task) and then you would have to show path from current US model to this one (impossible).
In addition you would have to employ some type of interpersonal utility comparison. European models are usually less costly because health care is generally worse. Are you prepared to cut costs, to deny some types of care? Europeans are mostly unaware of such denial, otherwise they would not be able to suffer it. In their opinion health care is free, at least such is the majority opinion here in Czech Republic. Since it is free there are no limits except technological ones. If some type of care is not granted the reasons are (according to majority opinion) purely objective. If people knew about arbitrary line between life and death drawn by nameless bureaucrats they would take to the streets. Have you really got a stomach to draw such line, to ration health care? I have not.
Moreover there is no need to advocate socialism for it is climax stadium of your health care system, it is going to be socialist one way or another. It is free market idea that needs do be defended.
I live in Canada and worse I live in Quebec. And that’s exactly what we have done, we have contained costs to the point where we can’t afford health care as a nation, where people get crappy and useless service, where doctors get to treat you like outdated dog meat and where people die on “waiting” lists.
If people want to DIE then adopt Obama’s health “care” plan. We in Canada were going to the USA to get better health care because in Canada our health care SUCKS.
But now, where are we going to go if there is no longer any free market in the USA ?
I guess we’ll have to go to India ! Medical tourism is going to be a flourishing industry in the future.
“is going to contain health care costs. Wow! I’m shocked! Why hasn’t anyone thought of that before?!?”
Americans want socialized medicine. That is why they elected Obama. Free benefits were promised to be paid by rich people and rich corporations.
Get used to high taxes, high inflation, and less liberty. You can vote in 2010 and 2012 but it will be too late to repeal the new system. When it gets bad we will get the republicans back. They will likely make it even worse. The US has done this before. Hoover and FDR wanted control not to mention Nixon with wage price controls.
Work less, pay off your debts and accept a lower standard of living is better than working like a dog and having your labor stolen by the government.
Killmore –
A pretty awesome explanation. Thanks!
Since I started whining about public health care, I figured I’d convey this hilarity as well: my local public clinic doesn’t offer any kind of antiseptics to patients (unless you count the soap in the toilets). They use to have disinfectant liquids in bottles, but apparently some of those were stolen, so they stopped putting them out. Yet they spend tons of money on treating and screening people who get nosocomial infections from the clinics and hospitals.
Maybe my mathematical skills aren’t that good, but it seems to me that having a few bottles of disinfectant stolen is cheaper than having people get sick because they can’t disinfect their hands when leaving the clinic. But apparently the central planners don’t think that far ahead.
We don’t have free market health care in the US. The AMA controls the supply and salaries of doctors through its lock on medical schools. Its sole purpose is to increase salaries of its members by creating artificial shortages. The Center for Medicare and Medicaid Services (CMS) controls the supply of medical care by making it free to the elderly who consume most of the medical services. CMS has an elaborate math model that determines how much it will pay for tens of thousands of procedures. All hospitals and doctures use the CMS scale to set their rates for insurance companies, HMO’s and private individuals.
You can’t get much more socialist than that.
It is one form of fascism in action when elite private institutions manipulate government to their private ends. Yet another when this relationship is a more equal public-private partnership.
However, Krugman et al. are advocating for the most Nazi-like form, the situation where government dicates to ostensibly private institutions.
A funny thing happened the other day. I received a call from a government telemarketer (the worst combination) and he left me a message informing me that I could be eligible for national health care coverage that costs as little as $3 per day.
The punchline….I opted out of my employer provided insurance this year in favor of a high deductible HSA which costs a grand total of $82 per month ($2.76 per day).
What you guys don’t seem to understand is that the only reasons socialized health care is bad everywhere it’s been attempted is because a) they didn’t do it right, b) the voters put the wrong people in charge, or a combination of both. But with the likes of Obama and Krugman to light the way I’m positive we’ll get it right this time in the good ol’ U.S. of A.!!!
“A simple doctor’s visit is $80″…
I got a quote to clean my gutters today – a job that takes me 90 minutes (when I am in town). $225.
Let’s not lose perspective
To Fundamentalist:
You really CAN get much more socialist than that. Imagine ministry of health care setting ALL the prices (salaries, every treatment, every pill and so on), establishing almost all hospitals and so on. Thus even directors of hospitals are political posts! Moreover they just get all their money through compulsive taxation of general population, there is almost no exemption. Health insurance is market only in name, since every such company is very precisely directed by government regarding its operation and its “just” profits.
Really you have not got much of socialism yet. Still you can evade it, in true socialism evasion is impossible. More generally, in many areas there is some hope for US while there is almost none for Europe. I really cannot understand why you of all should despair.
While everyone argues this way and that way about how to reduce costs and increase coverage, self employed individuals like myself live without any health care. Don’t you feel trapped by the fact that you must work for a big company to get reasonably priced coverage? I deserve access to the same exact coverage offered to state or federal employees, now. Health insurance cost must be reduced and available to everyone who wants it regardless of where they work. Free the workers from this stupid choice – work for a big company and get good health insurance, or be self employed and have none.
Good luck John. There is strong bipartisian support for the government to eliminate competition for the big “responsible” companies. If you don’t like being a slave then maybe you need to get tasered more.
@John Napoletano,
There are other choices but it appears that you have not bothered to discover them. I work for a large company and buy health insurance on my own for $82 per month. I suggest you look for high deductible health insurance plans.
Reducing the cost of health care is simple; end the tax subsidy for employer provide health insurance.
I work for a company that charges me $300 per month as a health insurance premium. The ironic part, however, is that my company also pays another $900 per month to my health insurer. I’ve tried to get my employer to pay ME the $900 and I would get my own Health Savings Account. They say no dice.
“A simple doctor’s visit is $80″…
I spend half the year overseas. If I have a common cold I don’t need to spend $80 to visit a doctor. I walk into the local clinic. They do the same basic measures of blood pressure and ask the same questions. All I pay for are the pills I take home. Sometimes I get just the equivalent of Tylenol, other times something else to clear up my nose for example. The doctor and pharmacy are one in the same in this example. From what I can tell the doctors are happy with this type of system, so why pay retailers? The healthcare issue is confusing because I’m sure that family practice is a fraction of the overall costs. Us consumers are partially to blame. Overseas you can pick your bed accommodations from a list, pay more or less like picking a hotel room. There are multiple hospitals to choose from. You have some ability to choose how many people you would like to share a room with. I’ve seen large cafeteria like rooms full of people that I’m sure would not be allowed in the USA. If I had no money that’s where I’d want to be instead of going broke trying to pay the hospital bills. Living overseas makes you think differently about what we really need and what is just wasteful.
@Zach Bush if you pay $82 per month I can’t imagine what you got for health coverage, that is extremely low. Since May 2009 I did do more research, because I planned to stay longer in the USA, almost 1 year now. Guess what I got, $2,500 high deductible Anthem Blue Cross Blue Shield of Connecticut family plan (2 persons). Started at about $325 per month. January 1st it increased 24% to about $403 per month. Why the increase? They told me on the phone it can go up or down depending upon “the group” results. Has anyone read the news lately about the profits made by health insurance companies in 2009? I joined in, did my research, and got spanked regardless with a 24% increase. Didn’t even go to the doctors yet. Wake up America.
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