Friday, April 10, 2015

qotd: Krugman: Government does health insurance better

The New York Times
April 10, 2015
Where Government Excels
By Paul Krugman

Like all advanced nations, America mainly relies on private markets and
private initiatives to provide its citizens with the things they want
and need, and hardly anyone in our political discourse would propose
changing that. The days when it sounded like a good idea to have the
government directly run large parts of the economy are long past.

Yet we also know that some things more or less must be done by
government. Every economics textbooks talks about "public goods" like
national defense and air traffic control that can't be made available to
anyone without being made available to everyone, and which
profit-seeking firms, therefore, have no incentive to provide. But are
public goods the only area where the government outperforms the private
sector? By no means.

One classic example of government doing it better is health insurance.
Yes, conservatives constantly agitate for more privatization — in
particular, they want to convert Medicare into nothing more than
vouchers for the purchase of private insurance — but all the evidence
says this would move us in precisely the wrong direction. Medicare and
Medicaid are substantially cheaper and more efficient than private
insurance; they even involve less bureaucracy. Internationally, the
American health system is unique in the extent to which it relies on the
private sector, and it's also unique in its incredible inefficiency and
high costs.


Comment by Don McCanne

Next week, when the Senate returns from its break, they will likely
approve House-passed H.R.2 - the "SGR fix" - a bill that is being used
as a vehicle to move Medicare closer to privatization by taking small
incremental steps in increasing Medicare premiums and deductibles -
features that are more characteristic of private individual plans than
public social insurance programs.

Paul Krugman reminds us that governments are better at providing health
insurance. So we should reject the current bipartisan efforts that are
moving us further in the direction of converting Medicare from a public
insurance program into a premium support model (defined contribution
vouchers) of a market of private health plans.

This week's taxpayer boost given by the Obama administration to the
private Medicare Advantage plans - the fourth such devious boost in the
past four years - enhances the private plans to set them up as a model
for privatized Medicare. Is there no stopping this?

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