The American Spectator

The Public Policy

Scandal and Disgrace

By David Hogberg on 1.18.07 @ 12:06AM

I had hoped that Paul Krugman would make giving up his jeremiads on universal health care one of his New Year's Resolutions. No such luck. Indeed, time had barely run out on 2006 when the New York Times ran one of his most embarrassingly ill-informed efforts to date. So let's get 2007 off on a better note with an adequate fisking, shall we?

Krugman writes, "The U.S. health care system is a scandal and a disgrace." Although Krugman is overstating his case, I would agree that our health care system has some serious problems. While I would argue that the reason is government mismanagement, I'm guessing Krugman thinks government is the solution. In the next sentence Krugman writes, "But maybe, just maybe, 2007 will be the year we start the move toward universal coverage." Surprise.

Anyway, Krugman continues:

In 2005, almost 47 million Americans -- including more than 8 million children -- were uninsured, and many more had inadequate insurance.

Apologists for our system try to minimize the significance of these numbers. Many of the uninsured, asserted the 2004 Economic Report of the President, ''remain uninsured as a matter of choice.''

And then you wake up. A scathing article in yesterday's Los Angeles Times described how insurers refuse to cover anyone with even the slightest hint of a pre-existing condition. People have been denied insurance for reasons that range from childhood asthma to a ''past bout of jock itch.''

What a distortion! First, note how Krugman infers that lack of insurance is due largely to denial of coverage by private insurance companies. But does Krugman have any evidence of that other than the anecdotal presented in the L.A. Times article? Well, no, because lack of insurance is due to many factors and surveys that have looked at the matter have found about five percent of the uninsured are denied coverage due to poor health.

Furthermore, the Economic Report of the President (pdf) does not minimize the problem of the uninsured by dismissing it as a "matter of choice." Indeed, the report notes that there are many reasons why people are uninsured, including those who are temporarily uninsured (four months or less) or have access to public programs like Medicaid but have not signed up (see page 197). Of course, treating the President's report fairly would undermine Krugman's argument for government-run health care.

Next,

Some say that we can't afford universal health care, even though every year lack of insurance plunges millions of Americans into severe financial distress and sends thousands to an early grave. But every other advanced country somehow manages to provide all its citizens with essential care. [Italics mine.]

They do? Krugman could try telling that to the 50 Canadians who once lived in southern Ontario and were on a waiting list to receive a cardiac catheterization, but they are now dead. Maybe he could tell it to the 59 other Canadians on that waiting list who suffered a serious heart attack. Or perhaps he could tell that to the families of the nearly 15,000 victims of a French heat wave in August 2003 who died in part due to an overburdened and unprepared health care system. Or perhaps it just depends on Krugman's definition of "essential care."

Next up is Krugman's attempt to paint our health care system as inferior,

The only reason universal coverage seems hard to achieve here is the spectacular inefficiency of the U.S. health care system. Americans spend more on health care per person than anyone else -- almost twice as much as the French, whose medical care is among the best in the world. Yet we have the highest infant mortality and close to the lowest life expectancy of any wealthy nation.

I'm not going to get into the defects of using life expectancy and infant mortality as measurements of a health care system (go here for that). The question here is whether Krugman knows that these are poor measures. Since 2002 he has written a least 8 columns in the New York Times plus an article in both the New York Times Magazine and the New York Review of Books using these measures to bash our health care system. It is difficult to believe that, in all that time, he has never received an email telling him that such measures tell us little about a health care system. Indeed, going back to one of his columns from 2005, it's pretty clear that he has received such an email:

Most Americans probably don't know that we have substantially lower life-expectancy and higher infant-mortality figures than other advanced countries. It would be wrong to jump to the conclusion that this poor performance is entirely the result of a defective health care system; social factors, notably America's high poverty rate, surely play a role. Still, it seems puzzling that we spend so much, with so little return.

Krugman is clearly weasel-wording his way to an admission that life expectancy and infant mortality are poor measures of a health care system. So, Krugman knows that these measures are lousy, but he continues to use them. I can't imagine why.

Finally, Krugman promises that government-run health care will be cheaper than the present system:

If it were up to me, we'd have a Medicare-like system for everyone, paid for by a dedicated tax that for most people would be less than they or their employers currently pay in insurance premiums.

How does Krugman know that the tax would be less than what employers currently pay in premiums? In his recent "Medicare For All" proposal, Senator Ted Kennedy claimed that funding for his plan would come in part from a seven percent payroll tax on business. Kennedy claimed that businesses spend 13 percent of payroll on health insurance, but government data contradicts that claim. According to the Bureau of Labor Statistics, average total hourly compensation was $27.31 in 2006, and health insurance accounted for about 7.6 percent ($2.09) of that. While that 7.6 percent appears larger than Kennedy's seven percent payroll tax, remember that is just a tax on business. Kennedy also taxes employees another 1.7 percent to fund his health care plan. And that only covers 85 percent off the cost of the plan -- the remaining 15 percent comes from "general revenues." If Krugman wants a "dedicated tax," then it would cost about 9.1* percent of payroll under the Kennedy plan -- a fair amount more than what employers are currently paying. Perhaps he has a plan other than Kennedy's in mind, but Krugman's lack of specifics in that passage in cause for considerable skepticism.

Indeed, a huge amount of skepticism is in order because, in the very next sentence, Krugman claims his Medicare-like system "would, at a stroke, cover the uninsured, greatly reduce administrative costs and make it much easier to work on preventive care. Such a system would leave people with the right to choose their own doctors, and with other choices as well." Always be wary of lefties promising massive government benefits that will cost less.

(*percentage corrected, 1/22/07--Ed.)

David Hogberg is a senior analyst at the National Center for Public Policy Research. He also hosts his own website, Hog Haven.

Letter to the Editor

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Taxes, Health Care, Business, Medicaid, Books, NATO, Medicare