Arnold Kling  

Krugman Comes Out

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Paul Krugman writes,


I like Ted Kennedy's slogan "Medicare for all." It reminds voters that America already has a highly successful, popular single-payer program, albeit only for the elderly.

So that is Paul Krugman's health care plan. Medicare for all.

There is no actual evidence that the elderly receive better care, or more cost-effective care, or more egalitarian care than people under 65. Particularly interesting is the data that the U.S. spends about 40 percent more per capita on health care for the elderly, just as we spend about 40 percent more per capita on health care for those under 65. Where in the data is the much-vaunted efficiency of Medicare?

Krugman thinks that health care policy is a morality play, in which those who favor national health insurance where white hats, and that their opponents are "special interests." That is not a viewpoint for which economic analysis is necessary or sufficient.


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COMMENTS (15 to date)
William Woodruff writes:

You have aptly noted the "US spends 40 percent more per capita on health care for the elderly".

More than who ?

Krugman is stating his opinion on a national health care system.

Fact One: The United States ranks 23rd in infant mortality, down from 12th in 1960 and 21st in 1990*

Fact Two: The United States ranks 20th in life expectancy for women down from 1st in 1945 and 13th in 1960*

Fact Three: The United States ranks 21st in life expectancy for men down from 1st in 1945 and 17th in 1960*

Fact Four: The United States ranks between 50th and 100th in immunizations depending on the immunization. Overall US is 67th, right behind Botswana*

Fact Five: Outcome studies on a variety of diseases, such as coronary artery disease, and renal failure show the United States to rank below Canada and a wide variety of industrialized nations*

Source,United Nations 2001

Yet, how often do we hear politicians say "We have the best health care system in the world".

Now, I ask if you, if you were a citizen of Luxembourg, would you VOLUTNARILY ditch your health care, provided by your tax dollars, for the American system ? Why not ? An overweight, overfed and undernourished American politician says "The American system is the best health care system in the world"

William

Mr. Econotarian writes:

http://content.healthaffairs.org/cgi/content/abstract/23/3/89

How Does The Quality Of Care Compare In Five Countries? (in Health Affairs, 2004)

International data on quality of medical care allow countries to compare their performance to that of other countries. The Commonwealth Fund International Working Group on Quality Indicators collected data on twenty-one indicators that reflect medical care in Australia, Canada, New Zealand, England, and the United States. The indicators include five-year cancer relative survival rates, thirty-day case-fatality rates after acute myocardial infarction and stroke, breast cancer screening rates, and asthma mortality rates. No country scores consistently the best or worst overall. Each country has at least one area of care where it could learn from international experiences and one area where its experiences could teach others.

Let us also keep in mind that US medical care is 50% financed by government, so if one thinks it is bad, half the blame goes to the government...

spencer writes:
is the data that the U.S. spends about 40 percent more per capita on health care for the elderly, just as we spend about 40 percent more per capita on health care for those under 65.

This data implies that Medicare has roughly the same efficiency as other US healthcare.

I did know that anyone was claiming that Medicare was more efficient. I am always hearing claims that it is inefficient and wasteful, but I do not remember seeing anyone before this make any claims that Medicare was more efficient.

I do not understand your point.

Mr. Econotarian writes:

For those interested in the cost of US health care versus other OECD nations, I also suggest US Health Care Spending in an International Context in Health Affairs (2004).

Using the most recent data on health spending published by the Organization for Economic Cooperation and Development (OECD), we explore reasons why U.S. health spending towers over that of other countries with much older populations. Prominent among the reasons are higher U.S. per capita gross domestic product (GDP) as well as a highly complex and fragmented payment system that weakens the demand side of the health sector and entails high administrative costs.

Steve McMullen writes:

I may be misreading your post, but it seems that even if Medicare were more efficient, we still would expect to see greater per capita spending on the elderly, who face more health problems than the young. Additionally, many of the efficiency gains that Krugman would like to claim are supposed to come from getting into the single payer system, and might not be realized until the medicare system is made to be universal.

Michael Giesbrecht writes:

William writes:


"How do we know that it's not simply a case of US citizens placing less value on good health? Achieving good health implies opportunity costs that many US citizens appear to think are not worth it."

How do we know that it is not simply the case that Americans, on average, simply don't value good health as much as people in other countries? Americans would rather eat cheeseburgers and spend more money on healthcare, than eat lentils and spend less money on health care. The end result is that Americans spend more money on health care, to compensate for their unhealthy life-styles choices, not to achieve better than average health.


If Americans didn't have the money to spend on health care, they might choose to cut back on some of their unhealthy life-style choices, but since they do, they simply choose to live unhealthy lives and spend more on health care.


The net result is that some other countries spend less on health care, and have better overall health, but what they don't have is a luxurious diet cheeseburgers and French fries and leisurely past times involving lots of sitting around do nothing.


Cheers,
Michael

Deb McAdams writes:
There is no actual evidence that the elderly receive better care, or more cost-effective care, or more egalitarian care than people under 65.

What a weird statement.

Of course you mean you don't know of any evidence that the elderly receive better ... etc care, but who are you?

I can provide evidence that people who lose their jobs but have access to Medicare do not lose their healthcare coverage.

When the opposition to an idea asserts that "I don't have evidence that your idea is better" then we are looking at really weak opposition.

On what grounds do you assert that the current system is better than Medicare?

Richard Hall writes:

The question of equity is equally important as efficiency. Without Medicare, many elderly people would be unable to afford health insurance. While the question of the efficency of a single-payer health system is interesting, the more important point is that the U.S. is one of the few industrialized nations where a large percentage of the population has no medical insurance. So, Medicare for all.

ain't telling writes:

My wife is a financial analyst in a hospital, where she deals specifically with reimbursement by Medicare. I think I've got a pretty good understanding of (many of) the problems by way of her rants.

First, when considering the cost of Medicare, it's difficult to capture all of the direct costs. For example, her job and most of her department, as well as a whole pile of bureaucrats and auditors at Medicare's contractors at Blue Cross, exist solely to shuffle Medicare paperwork.

Second, there are myriad ways in which Medicare forces inefficient operations through the entire hospital structure. For example, wife is currently arguing about one issue. Background: it's a teaching hospital, and med students have the option of taking a rotation outside the hospital in the offices of private doctors; these doctors don't charge for this, presumably because they benefit as well (finding new partners to bring in, learning themselves about new technology, participation in the hospital's seminars). Medicare says, believe it or not, that they cannot accept this service from private doctors without paying for it. In other words, they are forcing hospitals to increase expenses by paying (significantly!) for something they could get free.

Medicare has the wisdom to understand that not all services in all areas cost the same, and so they scale their payments by the level of expenses incurred by the hospital. This makes sense on its face, but a moment's reflection reveals the perverse incentive built into this: hospitals with higher expenses get more money, so hospitals are willing to waste money (or at least not attempt to save).

I especially liked Krugman's preemptory:

Let's ignore those who believe that private medical accounts - basically tax shelters for the healthy and wealthy - can solve our health care problems through the magic of the marketplace.

It's certainly easier to ignore them than to refute them.

But, spencer, aren't you the guy who is always claiming that I can't get any facts right? Yet you say:

I did know that anyone was claiming that Medicare was more efficient. I am always hearing claims that it is inefficient and wasteful, but I do not remember seeing anyone before this make any claims that Medicare was more efficient.

When that is exactly the point of the Krugman column under discussion. HE said:

The great advantage of universal, government-provided health insurance is lower costs. Canada's government-run insurance system has much less bureaucracy and much lower administrative costs than our largely private system. Medicare has much lower administrative costs than private insurance. The reason is that single-payer systems don't devote large resources to screening out high-risk clients or charging them higher fees. The savings from a single-payer system would probably exceed $200 billion a year, far more than the cost of covering all of those now uninsured.

But, as Arnold Kling correctly points out, there is absolutely no evidence for this claim.

Nicholas Weininger writes:

Krugman, IIRC, also likes to point out, when in anti-Social-Security-privatization mode, that Medicare poses a much larger long-term fiscal shortfall problem than SS, and one that is politically much more difficult to deal with. Which is, of course, true.

Yet in pro-socialist-medicine mode, he blithely declares it "successful and popular" with no mention of its budgetary problems. Now that's hackery.

awptimus writes:

Krugman is like an Encyclopedia: full of information, but shouldn't be in the opinion business.

simon writes:

William, I can't help but tell you that we in the US have the best health care in the world.

All your facts are true but in no way contradict the statement.

You incorrectly link your outcome variables unilaterally to health care ... this is incorrect

One needs to connect the dots and there many that stand between your outcome and health care ...

A simple trick is to look at all the possible variables that stand between the two variables ... wealth, life style, etc. ... there are a ton of them

SavageView writes:

Who once said that the absence of evidence is not the evidence of absence. Given the crank who publishes this blog, one ought to expect an understanding of the nuiance of evidence.

Peter K. writes:

William Woodruff wrote:

Fact One: The United States ranks 23rd in infant mortality, down from 12th in 1960 and 21st in 1990*

Fact Two: The United States ranks 20th in life expectancy for women down from 1st in 1945 and 13th in 1960*

Fact Three: The United States ranks 21st in life expectancy for men down from 1st in 1945 and 17th in 1960*

Fact Four: The United States ranks between 50th and 100th in immunizations depending on the immunization. Overall US is 67th, right behind Botswana*

Fact Five: Outcome studies on a variety of diseases, such as coronary artery disease, and renal failure show the United States to rank below Canada and a wide variety of industrialized nations*

Source,United Nations 2001

I am having a great deal of difficulty grasping his point.

This is largely because rankings, by themselves, may mean nothing. If I ran faster than you in 2000, and you run faster than me in 2005, that could mean we both improved, but you improved a lot more. Or it could mean we both got slower, but I slowed down more than you. Or that I slowed down considerably , but you remained as fast as you were, but no faster. Or that I am only as fast as I was in 2000, but you got a lot faster.

Is the improved ranking of the U.S. infant mortality rates since 1960 the result of other countries' adoption of socialized medicine?
Are the increased rankings for life expectancies in countries other than the United States since 1945 the result of the spread of modernization to the rest of the world, a reduced risk of death from war in those countries, or some other factor? Does the United States have lower immunization rates because its wealth causes less opportunity for exposure, thus less need and consequently less demand? Or do other countries have higher immunization rates because of bureaucratic commands independent of need or demand? And does the immunization ranking of the United States actually result in harmful consequences? (Does the U.S. have more cases of the subject diseases than Botswana?)

In the final "ranking" Woodruff cites, I can't tell, from the way he says it, what he means: What does it mean that the U.S. "ranks below Canada" in "outcome studies" of coronary artery disease and renal failure? Does Canada have a higher or lower percentage of patients, who experience these, dying from these? And if so, what does that mean? Is it considered good that Canada directs its resources towards treating conditions that may shorten a life by a few months or years, and away from treating conditions that can shorten a younger person's life by decades?

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