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Thursday, October 22, 2009

Paul Krugman Is Wrong About Medicare and Medicaid- They Cost More For Less Quality

In the New York Times today, economist Paul Krugman waxes triumphant for socialized medicine:

Steve Benen gets exercised over a new appearance of a zombie lie in the health care debate — the totally false claim that Canadian health care won’t pay for hip replacements for the elderly.

But the hip replacement scam is even worse than Steve realizes. Because who, you might ask, pays for hip replacements in America? The answer: Medicare pays 63.8% of the cost, Medicaid 6.8%. That’s right, the U.S. government pays for 70% of hip replacements in this country.

Aren’t you glad we don’t have evil, Canadian-style government-run health insurance?

As pleased with this observation as Dr. Krugman is, it doesn't tell us anything at all about the superiority or inferiority of a government-run health insurance industry.

Tomorrow, government could decide to take over the shoe industry and buy 70% of Americans their shoes. That wouldn't mean that "socialized footwear" is more effective than a free market for shoes. All it means is that the government forcibly took over 70% of the market by law.

Likewise, the mere fact that the U.S. government pays for 70% of hip replacements isn't a reason why it should. That seems to me like a pretty amateur mistake for such a well-venerated intellectual (and Nobel Prize Laureate) as Paul Krugman.

The U.S. government doesn't have more market share because it provides a better product or does so at a lower cost, but simply because it's the U.S. government and all it has to do to garner market share is pass a law. The Cato Institute's Michael F. Cannon makes this clear:

A full accounting shows that government programs cost more and deliver lower-quality care than private insurance. The central problem with proposals to create a new government program, however, is not that government is less efficient than private insurers, but that government can hide its inefficiencies and draw consumers away from private insurance, despite offering an inferior product.

Mr. Cannon also points us to the question we should really be asking about Medicare and Medicaid: "Why Don’t We Fix the Two Public Options We Have Now Instead of Creating a Third One?"


  1. You argument is a complete strawman! You're saying Krugman doesn't understand something which isn't what he was saying!

    What he's saying is that the comparison Steve Benen made is completely dishonest and not grounded in fact.

    There are many arguments for why "socialised medicine" is a better system, but Krugman wasn't making that argument in this post, he was just pointing out the dishonesty of the other side.

    Complete and utter strawman.

  2. I see what you're saying. You're definitely right that Dr. Krugman is calling out Steve Benen on a false claim.

    I disagree however, that Dr. Krugman is only calling Benen out. If he stopped at the first paragraph, you'd be correct and I wouldn't have authored the above post.

    Paragraphs 2 & 3 however, do clearly make the tacit assertion that government run, command-and-control care is superior to private, free, and voluntary care.

    No strawmen here.

  3. Incorrect, it is still a strawman in the way the "counterargument" (if you can go as far as calling it that) sets up the clash.

    Krugman was not asserting that in all instances and for all procedures government run healthcare is better, and if you read his papers and listen to his lectures on this matter you'll find this is not his assertion.

    His opinion is considerably more sophisticated than that, and it'd be a good idea to recognise this.

    The post by Krugman is a simple one in which he suggests that the comparison of hip replacements in Canada as opposed to the US is a completely dishonest one.

    The two paragraphs after are suggesting that even if their assertion was correct, to blame government run healthcare on that discrepancy would still be dishonest. He's merely going further in refuting the ridiculous claim.

    When you have to suggest he was tacitly suggesting something, you're well and truly into serious strawman territory. Better to avoid it all together and actually engage with what you know the post is saying. I.e. that the comparison made by Steve Benen, and all the other people making the same claim, is a dishonest one and completely at odds with the facts.

  4. Liam- looking and thinking it over, I think what you're saying is pretty fair.

    My criticism of Dr. Krugman may be unwarranted here. I think the assertions I make are valid and important though.

    The fact that I came away from the article with the interpretation that I did indicates to me that others can get the same impression.

    It is important for us to understand that as I said above, the government's market share doesn't tell us anything about the quality or efficiency of its involvement.

    But yes, I think you're right that Dr. Krugman isn't quite making that argument here.

    Thanks for clearing things up, and please feel welcome to comment here in the future.

  5. I must say I appreciate your candor on this.

    I probably came across as a bit accusatory, and for that I apologise.

    Your assumption wasn't entirely unwarranted, as Krugman is obviously an advocate for some form of socialised medicine, I just feel that in a debate lacking in much real debate on the economic arguments in the media it's important that actual arguments are engaged with rather than ideological positions as we perceive them.

    Due to your nicely measured response, I will continue to read and comment in the future. I would just ask that your future posts be more measured in their criticism.

    In light of this discussion the line "That seems to me like a pretty amateur mistake for such a well-venerated intellectual (and Nobel Prize Laureate) as Paul Krugman." is particularly the thing I would hope not to see in the future.


  6. Agreed. That excerpt doesn't really elaborate on my argument so much as poke Dr. Krugman in the side a little.

    I can promise to try not to write that way in the future, and I think that you're right that I shouldn't write that way.

    If I happen to slip up (little human being that I am), you are always welcome and encouraged to keep me straight in the comments or via e-mail.

  7. The top 5 health insurers made a 12 billion dollar profit this past year by covering 2.7 million fewer customers. Anthem Blue Cross in Ca. is raising their rates on Mar 1st between 30% and 39%. They made record profits also this past quarter. You are espousing the benefits of private insurance. A luxury that is pricing itself beyond millions of Americans, many of whom will die as a result of not being able to afford insurance. Americans already pay 17 cents of every dollar on health services more than any country in the world per capita. We need to direct those funds directly to medical services and make private health insurance companies illegal. I would offer one alternative that being that health insurance companies could not be publicly traded. Thereby eliminating the incentive to drive up the stock price and to rely upon customer satisfaction.

  8. Accoding to the economist the top ten cities to live in are in Canada, Australia, New Zealand, and Finland. All of which have nationalized health care. You deride govt. health care. I hope for your sake you do not have a serious bout with something like cancer. The result being in about a year after your health insurance co. has met it's current obligation of covering you for the term you paid for you will then experience one of two things. A rate increase you will not be able to afford as you wont be able to work and if you could still work you probably would still not be able to afford; or you would be dropped altogether. You would then have to rely on govt. health care. You could avoid being a hypocrite and try to pay for chemotherapy yourself which could cost you over 100 thousand dollars a year. My point being, when you can't afford health insurance single payer looks very appealing. Good luck to your health staying in the fat portion of the Bell curve.