Health care reform-good enough

Here is what Paul Krugman says in his column on the New York Times online:

December 9, 2009, 8:48 am

The health care compromise

Here’s what’s being reported. No public option, but a trigger which is unlikely to be pulled. But some good stuff in exchange: nonprofit plans available through the exchanges, plus Medicare buy-ins for the 55-65 set (me! me! me!).

If this is the final plan, it’s better than most of us were expecting — and definitely good enough to go with.

Good enough for what?  Does it make health care more affordable (affordable does not mean you can now buy it because the government is subsidizing your premium by the way), is the quality of your health care raised or will it be raised because of “good enough?”  Is there any benefit for the millions of Americans with health insurance today?  Does it take steps to solve the financial woes of Medicare (cutting payments and gutting Part C are not the answer).

If “good enough” is expanding coverage for some into a flawed system and creating more demand thereby setting the stage for further uncontrolled health care spending, then yes, it is good enough.


  1. That seems a rather simple view. Medicare is able to do what it does because the differential is picked up by the private sector. I doubt that all medical bills could be paid by the government dictating what it wants to pay without major consequences, some of which Americans may not fund acceptable.


    1. If what you say is true, then the Canadian medical system is impossible – yet it exists and works very well.

      There they have a single payer system in which doctors are essentially their own employees but there is only one insurance company, which is the government. There is no (well very little) private sector to pick up the difference. Yet by virtue of its bargaining power, the Canadian government is able to pay for health care equivalent to American care (measured in terms of outcomes). So health care providers (hospitals, doctors, etc) manage to provide the same services in Canada as they do in the US for half the cost, when the government demands it.

      Now the US system couldn’t make this transition overnight – it’s only possible in Canada (and every other developed country) because the medical system has had to cope with these spending restraints for a long time, and has so built itself to be more efficient, functioning just as well on less money.

      If this sounds implausible, go look at a typical American hospital, and you can see the waste built in. There’ll be several X ray scanners, one in each of several departments, each of which maintains its own staff, bills separately, sometimes negotiates with insurance companies separately… most of which sit empty a bunch of the time because nobody in orthopedics (or whichever unit) needs an x-ray right then. It is FAR more efficient to have only 1 x-ray unit for the whole hospital (and surrounding local doctors), and to have far simpler rules about billing (i.e., all bills get to only one to four insurers, who have completely standardized billing procedures).

      A big chunk of the problem is that the health infrastructure in the US has not grown in an environment in which money was tight, so it has built in a lot of redundancy and over-medication (it is common to find places where Americans receive many more medical procedures than people in other countries, yet have no better outcomes to show for it).

      Health care just isn’t a normal market like TV’s or cars, where people can easily make apples to apples comparisons of what they are buying, and walk away if they don’t find what they want. Most people have no idea what their insurance even costs because it is taken out of their wages and packaged as a “benefit” by their employer so it doesn’t show up on their pay stub. No market is going to be very efficient under those circumstances.


  2. You are right that it won’t affect most Americans directly. But it will mean that upwards of 30 million people who currently do not have medical insurance now do. That’s a pretty good thing. Insurance companies won’t be allowed to kick you off coverage just because you become sick. That’s a great thing.

    It doesn’t directly reduce costs overnight, though, you’re right about that. It is a fairly small step in the grand scheme, but even as small as it is, it’s only on the brink-edge of being able to pass the sclerotic messed-up senate here.

    The underlying problem, strangely, isn’t the insurance companies per se, for the most part, it’s that the American health delivery system is unbelievably inefficient. We pay twice as much per capita here for health as any other developed country, and have health outcomes that are no better (on average). The cost problem won’t go down unless health care providers can start structuring and delivering high quality care in much more economical ways. And that’s just the bottom line.

    For the best explanation of this you can find in one place, see Ezra Klein’s interview with the head of America’s largest HMO:


    1. A good thing perhaps, but adding those people to a still flawed system can have adverse consequences mainly adding to the cost problem.

      Better to tackle this problem in stages and by making health care truly affordable more people could purchase coverage without government subsidy.


      1. Well there’s sort of two parts to that.

        One is that even if costs were brought down to the level of other industrialized countries, which even with painfully industry-convulsing rapid action (which we’re not going to see), it would still be many many years before the costs came down that much, and even then there would be a lot of people who couldn’t afford it without some kind of subsidy. If we want universal coverage so that we don’t have people dying because they have the wrong color credit card there’s going to have to be some considerable amount of subsidization.

        And frankly, we are currently subsidizing these people anyway, just in ugly expensive ways with terrible outcomes. They don’t get preventative care, or catch problems when they are small, so they let things go until they stagger into an emergency room with a now-ridiculously expensive condition… Which hospitals have to treat, and we all end up paying for when the poor person can’t. So in some sense subsidies can actually SAVE us money.

        The other point is that subsidies and mandates can help costs, because what we need are large numbers of people coming in through some insurers, giving them the market power to dictate costs to hospitals. This purchasing power is primarily how medicare gets cheaper coverage than private insurance, and how medicare has managed to keep slow cost growth than private insurers. Medicare has enough customers that they don’t have to negotiate with each hospital separately, they can dictate prices that hospitals across the board can accept or reject – but have to accept because they can’t lose that many customers. So really, bringing more people into the system can be used to generate market forces that bring costs down.


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