March 30, 2012

Krugman - still in a tinfoil hat

Photo via Death by 1000 Papercuts.
Whenever I get bored by the political landscape - we're in a gap between GOP primaries right now - there are a few places I can go to get inspired to write something.  I've been busy of late and I haven't been doing that, but today I have some bandwidth and I went back to one I haven't in quite a while: Paul Krugman.  For a Nobel Prize winner, he rarely fails to bring a tinfoil hat perspective to the table.  With the Supreme Court taking a look at the Constitutionality of Obamacare, Krugman has decided that he needed to scold the Supreme Court on their lack of understanding of how health care is different from broccoli.

In his column in the New York Times, Krugman argues:
Let’s start with the already famous exchange in which Justice Antonin Scalia compared the purchase of health insurance to the purchase of broccoli, with the implication that if the government can compel you to do the former, it can also compel you to do the latter. That comparison horrified health care experts all across America because health insurance is nothing like broccoli.

Why? When people choose not to buy broccoli, they don’t make broccoli unavailable to those who want it. But when people don’t buy health insurance until they get sick — which is what happens in the absence of a mandate — the resulting worsening of the risk pool makes insurance more expensive, and often unaffordable, for those who remain. As a result, unregulated health insurance basically doesn’t work, and never has.

There are at least two ways to address this reality — which is, by the way, very much an issue involving interstate commerce, and hence a valid federal concern. One is to tax everyone — healthy and sick alike — and use the money raised to provide health coverage. That’s what Medicare and Medicaid do. The other is to require that everyone buy insurance, while aiding those for whom this is a financial hardship.
First let's start with Krugman's generalization that the comparison to broccoli horrified health care experts all across America. By that he means health care experts who see things his way. I'm sure there were also plenty of health care experts who agreed with Scalia - health care is a product, so is broccoli and there are indeed certain similarities. Regardless, Krugman misses the thrust of the argument entirely by focusing on health care experts. The question Scalia raised is about the legislative power of government. It has nothing to do specifically with the product of health care. The point is that if government had tried to regulate broccoli by making people purchase it, would it have the power to do so. That is the question (or one of the questions) the Supreme Court is addressing. It is about the Constitutionality of a mandate to purchase - the Commerce Clause versus the idea of liberty as described in the preamble.

To be fair, there are differences - health care is not a product like broccoli or oil, as Krugman tries to establish.  "When people choose not to buy broccoli, they don’t make broccoli unavailable to those who want it." That, under the previous health care situation was also true of health care.  My decision not to purchase health care does not prevent you from getting it.  You can still purchase it. But Krugman presses on: "But when people don’t buy health insurance until they get sick — which is what happens in the absence of a mandate — the resulting worsening of the risk pool makes insurance more expensive, and often unaffordable, for those who remain."  Krugman concludes that unregulated health insurance doesn't work, and never has.  The conclusion is a great leap of conjecture, even if his premise were true - which it isn't.  One of the arguments of the left has always been about preexisting conditions preempting people from getting insurance at all.  Apparently they believe that is true of genetic problems and a known cancer, but if I get cancer suddenly I would be free to buy insurance because insurers would be willing to let me get insurance but at a very high price.  Both those conditions from an insusrer perspective are the same.  They will either insure you or they won't.

Again, let's assume that they would for the sake of Krugman's shaky argument.  Where that person would decide to get insurance the price would be steep for him or her because of their own past decision making. It would also likely have an impact on others' insurance rates because to spread out the cost, some additional cost-spreading would be necessary.  But the people creating the impact would be those who chose not to insure themselves, which should be a small percentage of the overall insurance market.  If everyone decided not to buy insurance until it after the fact of a condition, then why would a mandate help?  The fine for not purchasing is lower than the purchase itself, so the people who do not want insurance until they get sick, will opt for the cheaper choice and pay the fine.  It will just generate government revenue and not address the supply and demand issue that Krugman imagines.  

Lastly, in the final paragraph Krugman says there are only two ways to address the issue. His list is not completely exhaustive.  He fails to mention the option of removing the government entirely from the health care insurance discussion, remove barriers to having insurance available across state lines and allowing a preponderance of supply to address the cost issue.  Localized monopolies do not allow for pure competition and therefore the existing environment did not provide a proper benchmark to measure against.  The pure marketplace option would leave out those who are not employed or could not afford coverage.  The argument as to whether and how to cover those people is for another time.  That is not for the court to decide right now.  The court is looking at the Constitutionality of this mandate, not what the best solution is to the nation's health care needs. It's a question of scope.

If Krugman is looking to ensure health care for all, there are ways to reform Medicare and Medicaid - existing but unsustainable programs - rather than layering on more, redundant government mandated programs. Those government programs should be measured against the marketplace.   The reality is that under no conditions can everyone have access to all the health care they need at all times, at consistent a  quantity, quality and price.  A government mandate will not change that.  Indeed the ridiculous overhead of 2700 pages of legislation will make the system more complex, more inefficient and therefore more costly.  Nevertheless Krugman continues to argue for a progressive solution to a problem that requires nothing of the sort.

UPDATE:  Left Coast Rebel tackles "Yoda" as well, on the same issue.  


  1. Great post. I guess it is a slow news day!

  2. So far, it has. Otherwise Krugman isn't worth a first look, never mind a comment.


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