Krugman on Health Reform Myths

Discussion in 'Economics' started by hermit, Mar 12, 2010.

  1. Health reform is back from the dead. Many Democrats have realized that their electoral prospects will be better if they can point to a real accomplishment. Polling on reform — which was never as negative as portrayed — shows signs of improving. And I’ve been really impressed by the passion and energy of this guy Barack Obama. Where was he last year?

    But reform still has to run a gantlet of misinformation and outright lies. So let me address three big myths about the proposed reform, myths that are believed by many people who consider themselves well-informed, but who have actually fallen for deceptive spin.

    The first of these myths, which has been all over the airwaves lately, is the claim that President Obama is proposing a government takeover of one-sixth of the economy, the share of G.D.P. currently spent on health.

    Well, if having the government regulate and subsidize health insurance is a “takeover,” that takeover happened long ago. Medicare, Medicaid, and other government programs already pay for almost half of American health care, while private insurance pays for barely more than a third (the rest is mostly out-of-pocket expenses). And the great bulk of that private insurance is provided via employee plans, which are both subsidized with tax exemptions and tightly regulated.

    The only part of health care in which there isn’t already a lot of federal intervention is the market in which individuals who can’t get employment-based coverage buy their own insurance. And that market, in case you hadn’t noticed, is a disaster — no coverage for people with pre-existing medical conditions, coverage dropped when you get sick, and huge premium increases in the middle of an economic crisis. It’s this sector, plus the plight of Americans with no insurance at all, that reform aims to fix. What’s wrong with that?

    The second myth is that the proposed reform does nothing to control costs. To support this claim, critics point to reports by the Medicare actuary, who predicts that total national health spending would be slightly higher in 2019 with reform than without it.

    Even if this prediction were correct, it points to a pretty good bargain. The actuary’s assessment of the Senate bill, for example, finds that it would raise total health care spending by less than 1 percent, while extending coverage to 34 million Americans who would otherwise be uninsured. That’s a large expansion in coverage at an essentially trivial cost.

    And it gets better as we go further into the future: the Congressional Budget Office has just concluded, in a new report, that the arithmetic of reform will look better in its second decade than it did in its first.

    Furthermore, there’s good reason to believe that all such estimates are too pessimistic. There are many cost-saving efforts in the proposed reform, but nobody knows how well any one of these efforts will work. And as a result, official estimates don’t give the plan much credit for any of them. What the actuary and the budget office do is a bit like looking at an oil company’s prospecting efforts, concluding that any individual test hole it drills will probably come up dry, and predicting as a consequence that the company won’t find any oil at all — when the odds are, in fact, that some of the test holes will pan out, and produce big payoffs. Realistically, health reform is likely to do much better at controlling costs than any of the official projections suggest.

    Which brings me to the third myth: that health reform is fiscally irresponsible. How can people say this given Congressional Budget Office predictions — which, as I’ve already argued, are probably too pessimistic — that reform would actually reduce the deficit? Critics argue that we should ignore what’s actually in the legislation; when cost control actually starts to bite on Medicare, they insist, Congress will back down.

    But this isn’t an argument against Obamacare, it’s a declaration that we can’t control Medicare costs no matter what. And it also flies in the face of history: contrary to legend, past efforts to limit Medicare spending have in fact “stuck,” rather than being withdrawn in the face of political pressure.

    So what’s the reality of the proposed reform? Compared with the Platonic ideal of reform, Obamacare comes up short. If the votes were there, I would much prefer to see Medicare for all.

    For a real piece of passable legislation, however, it looks very good. It wouldn’t transform our health care system; in fact, Americans whose jobs come with health coverage would see little effect. But it would make a huge difference to the less fortunate among us, even as it would do more to control costs than anything we’ve done before.

    This is a reasonable, responsible plan. Don’t let anyone tell you otherwise.
  2. Rush,Beck,Palin followers etc wont like this
  3. Vienna


    New York (CNN) -- If President Obama had been forthright last week at the health care summit, he would have opened the meeting by stating: "If you have health coverage, under our reform bills you are going to pay more and get less. If you are one of the 45 million elderly or disabled people on Medicare, you are going to get less. There is no such thing as free medical care. Somebody has to pay! And in the end it is you."

    Those are the facts! And as Senate Majority Leader Harry Reid stated to the Republicans : "'re entitled to your opinion, but not your own facts."

    However, the facts, as the president has found out, are not exactly a compelling message to persuade a reluctant Congress and public to overhaul nearly one-fifth of the nation's economy.

    Adding 31 million people (45 million now don't have coverage) to the health care system will cost the taxpayers trillions over time. Many of that uninsured group can't afford health insurance, and if this legislation passes, the government will create an entitlement program to subsidize them. In the end, like the entitlement programs that have gone before them, they will far exceed any cost estimates on the table today.

    Just to remind you, Mr. President and members of Congress, the taxpayers have a right to know the full fiscal consequences of this legislation. The United States is spending this year nearly $2.5 trillion on health care. That is 17.3 percent of the U.S. economy and it's rising at a rapid rate. We spent $134 billion more in the past year than in the year before.

    To put $2.5 trillion into perspective, that is more money than the federal government received in taxes and revenues this year. The problem is nobody knows (and especially the Congress) what a trillion dollars really means.

    A trillion is a million million. Still means nothing to most of us. If you spent a million dollars a day since the birth of Jesus Christ, it wouldn't even equal a trillion. If you stacked up a trillion dollars in dollar bills, it would reach 68,000 miles into the sky, about a third of the way from the Earth to the moon. Those numbers are too big for any of us.

    Somebody has to pay for the most expensive health care in the world. Many experts would argue it is also the very best health coverage in the world.

    Health care today is paid for by three entities. The government (federal, state and local) pays more than 50 percent of the costs. That is us, the taxpayers.

    The insurance companies pay about one-third of the costs. That again is us.

    We pay the premiums and the insurance company pools the risk, and distributes our monies back for the medical services. They obviously add an overhead cost as does any business, but it's still our money being paid out.

    The third payer is again us. Out-of-pocket reimbursements or additional fees come directly out of our pocket and paycheck.

    Health care has changed as dramatically as anything in our society in the last half century. First, we are living longer. In 2007, American men could expect to live 3.5 years longer and women 1.6 years longer than in 1990.

    We are long past the days when you walked into a doctor's office and the doctor -- armed only with a stethoscope, blood pressure monitor and a thermometer -- listened to our symptoms and made a diagnosis. Maybe in a rare case an X-ray was called for. We paid our bill and went to the drugstore and got our prescription. There were no MRI's, no heart diagnostic tests, no CT scans or any of the wonder drugs that have extended our lives and in many cases made the quality better.

    It's not that people aren't seeing doctors. In the last several years, more than 1.2 billion annual visits to a physician's office have taken place, averaging more than three a year per person.

    Certainly, some efforts must be made to provide some insurance reform -- but that also means malpractice insurance reform. Some massive efforts need to be made to curb Medicare and insurance fraud. And efforts must be made to create more competition among insurance companies across state lines.

    The president's attempt to add some of the better suggestions from the Republicans addressing these issues is not going to add any support from that side of the aisle. They are minor changes that are positive but don't tackle the fundamental cost issues or address the new entitlements and mandates that Republicans object to most.

    Reducing costs in most cases means reducing services. Who doesn't want an MRI for their child injured in a car wreck? Who doesn't want tests done on a spouse or parent who has chest or abdominal pain? But if Reid and Pelosi shove this legislation through Congress against public opinion, they and their party will pay a price.

    Yet the price Democrats will pay at the polls in November won't be nearly as big a price as our kids and grandkids will pay when the bill comes through years hence. If you're going to have reform, make the system better. Take your time and do it right.
  4. Funny how the American public is smarter than one person who wrote an article... The Dems will find out the truth when they get dumped en masses in the interim election cycle. I HOPE they lose in the House vote.

    "This is a reasonable, responsible plan. Don’t let anyone tell you otherwise."

    In other words, don't confuse the matter with facts. Stamp out all debate. He says it is "reasonable and responsible" so it therefore must be true. Umm, NOT!

    Good thing we don't live in a dictatorship and don't have to accept spoon-fed propaganda. This entire bill has a habit of putting off a huge and growing amount of future costs until "later."
  5. TGregg


    Nancy Pelosi:

    " . . .we have to pass the health care bill so that you can find out what is in it . . ."

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  6. you're a moron if you're against the bill and ur middle class and not rich


    when you're middle class and get sick ur screwed!
    u lose ur job, so u lose ur insurance,
    u now have a pre-exisitng medical conition
    u go bankrupt like half a million other every year

    this bill is only a good thing!!!
  7. What are these facts, please elaborate.
  8. What did she say next, FOX is known to edit clips in a way to support the narative they are selling.
  9. You post someone else's link, and expect others to elaborate? The article writer is a simpleton, an idiot and a moron. On his good days.

    These are the facts. And anyone saying basically, "don't debate the issue" has sunk even lower.
  10. Well, you say the article contradicts the facts but you never mention these facts, and didn't he win the Nobel Price for Economics?

    Again, what are these facts, let's debate them just like you seemingly want to.
    #10     Mar 12, 2010