Political Hay

Nanny Knows Best

At Krugman General, Nurse Government, RN can never leave your bedside.

By 1.26.06

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It takes an artful bit of sophistry to convince people they are better off giving up their liberties and letting government dictate to them. One has to hand it to Paul Krugman. He almost pulls it off.

In three recent columns, Krugman outlines how socialized medicine is really what's best for us. Krugman complains that the current health-care "system is now failing. And a rigid belief that markets are always superior to government programs...stands in the way of rational thinking about what should replace it." He claims the current system is set up so that to incur large costs at the expense of cheaper preventative services. Insurance companies "often refuse to pay $150 for a doctor to see a podiatrist," yet most will "cover amputations, which typically cost more than $30,000." He also notes that "We've traditionally relied on doctors to make" decisions about treatment, but with the rise of expensive technology plus doctors' vested interest in prescribing costly treatments, "if costs are to be controlled, someone has to act as a referee on doctors' medical decisions."

Health savings accounts (HSAs) would seem to be the ideal vehicle for doing this. They enable the individual to decide whether to pay for the podiatrist. Since the individual is spending his own money, he has an incentive to be careful with what his doctor prescribes.

However, according to Krugman, individuals just can't be trusted with such decisions:

...it's neither fair not realistic to expect ordinary citizens to have enough medical expertise to make life-or-death decisions about their own treatment. A well-known experiment with alternative health schemes, carried out by the RAND Corporation, found that when individuals pay a higher share of medical costs out of pocket, they cut back on necessary as well as unnecessary health spending.

Few reports on health care are more exaggerated than the RAND experiment. What the RAND report actually found was that cost sharing only had adverse affects on managing blood pressure, dental care, and eye care. Other than that, it found no "deleterious health effects." That's hardly evidence that ordinary citizens cannot make "life-or-death decisions about their own treatment."

So who should make these decisions? Krugman gives a cryptic answer: "...health care -- including the decision about what treatment is provided -- is a public responsibility." While "public responsibility" sounds nice, what Krugman surely means is a government-run health insurance. This begs the question, does a "public" solution to health care result in better decisions about treatment? Since Krugman likes Ted Kennedy's slogan "Medicare for All," and has called Medicare "a highly successful, popular single-payer program," let's look at how well Medicare performs.

A study in Health Affairs found that "states with higher Medicare spending have lower-quality care. This negative relation may be driven by the use of intensive, costly care that crowds out the use of more effective care." A study in the Journal of the American Medical Association, entitled "Measuring Underuse of Necessary Care Among Elderly Medicare Beneficiaries Using Inpatient and Outpatient Claims," also found lackluster results. The study's "results indicate that vulnerable populations [such as African-Americans and the poor] were less likely than their counterparts to receive necessary care and preventive care and were more likely to have higher rates of avoidable outcomes" under Medicare. Most tellingly, the study finds that for "14 of the 37 necessary care indicators, the administrative data show less than two thirds of Medicare beneficiaries...received care that a physician panel considered to be a minimum quality standard." Compare that to the RAND study where patients showed adverse effects on only three conditions.

Ultimately, Krugman's solution for America's health-care system is a program under which politicians and bureaucrats will decide what treatment you will receive. Yet there is increasing evidence, both here and abroad, that collective solutions to health care are ineffective. Who's being rigid in his thinking, Paul?

David Hogberg is a senior research analyst at the Capital Research Center. He also hosts his own website, Hog Haven.

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David Hogberg is a senior fellow at the National Center for Public Policy Research.  Follow David Hogberg on Twitter.