Saturday, December 5, 2009

Why Does Krugman Have to Keep Doing This?

. Saturday, December 5, 2009


Health care reform hangs in the balance. Its fate rests with a handful of “centrist” senators — senators who claim to be mainly worried about whether the proposed legislation is fiscally responsible. ...

But if they’re really concerned with fiscal responsibility, they shouldn’t be worried about what would happen if health reform passes. They should, instead, be worried about what would happen if it doesn’t pass. For America can’t get control of its budget without controlling health care costs — and this is our last, best chance to deal with these costs in a rational way. ...

You might think, given this picture, that extending coverage to those who would otherwise be uninsured would exacerbate the problem. But you’d be wrong, for two reasons.

First, the uninsured in America are, on average, relatively young and healthy; covering them wouldn’t raise overall health care costs very much.

Second, the proposed health care reform links the expansion of coverage to serious cost-control measures for Medicare. Think of it as a grand bargain: coverage for (almost) everyone, tied to an effort to ensure that health care dollars are well spent.

I really feel kind of silly posting this, because Krugman has just committed such a simple logical fallacy that it shouldn't even have to be pointed out. But one of my favorite quotes comes from Orwell: "We have now sunk to a depth where the restatement of the obvious is the first duty of intelligent men." I am not so stupid as to compare my intelligence to Krugman's, at least the Old Krugman, but in the interest of restating the obvious, here's what Krugman is saying:

1. We need to cut costs.

2. We should add some costs, but they won't be too big.

3. Then we should cut other costs, and the new savings will be bigger than the new costs. Honestly. Smart people who know nothing about politics say so.

What's the problem with this? Well, even if you believe #3 is feasible, and even if you believe that it is politically possible to cut Medicare by even one cent and live to tell the tale, there is NO REASON why enactment of #3 depends on the enactment of #2. In other words, if we can cut Medicare costs without sacrificing quality of care then we should do it. Absolutely. Yesterday. But that has absolutely nothing to do with whether we should then turn around and give those savings back to "relatively healthy" people rather than, say, balancing the budget. The case for #2 has nothing at all to do with the case for #3, and it directly contradicts #1.

The rational response to this sort of argument is to say "Yeah? Prove it. Cut Medicare costs without sacrificing coverage or quality of care first, build up a trust fund for this new expanded coverage with the savings (and without any other sources of funding), and if the balance of the fund is positive in say 2015 then we'll spend it on covering the 'relatively healthy' people who don't currently have insurance."

Think Krugman would take that deal? Of course not. Because he knows, as I know, that cuts to Medicare are politically impossible. And he knows, as I know, that magical mystery health care savings have a tendency to not materialize. And he knows, as I know, that universal health care is impossible without increases in taxes even if generating some savings from Medicare reform were possible. And he knows, as I know, that it is impossible to pay for health care reform without redistributing from "relatively healthy" people to "relatively unhealthy" people (i.e. it's not at all just a rich -> poor transfer).

Now that might be justifiable along any number of dimensions (although the median voter doesn't seem to think so, and Krugman knows that too, which is presumably why he's trying this end-around in the first place). But if it is than Krugman should make that case rather than the one that he is making, which amounts to "We all get health care and ice cream and pet unicorns and have money left over for cap-and-trade!"

He should really stop this. It's beneath him.

UPDATE: And here is Krugman complaining about good unemployment news because it will distract from what's really important: er, unemployment. What?


GabbyD said...

"Because he knows, as I know, that cuts to Medicare are politically impossible. "

why are efficiency enhancing measures impossible?

Kindred Winecoff said...

Because the median (AARP) voter isn't thinking in terms of efficiency gains. They're thinking in terms of whether the funding goes up or down. Moreover, even if these cost savings were directly related to efficiency gains, that fact wouldn't be transparent: there would be no way to demonstrate that the amount cut actually saved the amount saved.

But even if *that* were possible, Medicare recipients could still argue that savings from Medicare should be reinvested in Medicare. anything else would be a "cut". even if you grant all of Krugman's premises, he still has to justify what that money should to go the "relatively healthy" rather than some other group.

as i said before: if there are really that many savings to be had from Medicare, then by all means let's wrench them out. but that is not a prerequisite for anything else, it doesn't justify anything else, and it is perfectly rational to be skeptical of the claim.

GabbyD said...

"Moreover, even if these cost savings were directly related to efficiency gains, that fact wouldn't be transparent: there would be no way to demonstrate that the amount cut actually saved the amount saved."

i think thats the reason why it should be treated as a bundle. since its non transparent, doing what u proposed --do the cuts now, save, and spend more later, would be more difficult due to the transparency issue.... assuming the efficiency gains are real.

Kindred Winecoff said...

Gabby -

My proposal was clearly stated: take the savings from Medicare and put them in a trust fund. When the balance of the fund is large enough to cover the currently uninsured, then do it.

This seems like the most transparent way to do it. Is it perfect? No. But it's better than what PK is proposing.

Why Does Krugman Have to Keep Doing This?




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