Krugman Summarizes the Health Care Problem

While researching a few facts about health care, I came across this excellent Paul Krugman article on health care in the New York Review of Books from 2006. Anyone who wants a good overview of the debate should check out the article in full – but here are a few highlights.

Krugman sees the growth of health care costs as being driven by new technology but exacerbated by aspects of our private system. He includes this informative graph to demonstrate the significance of health care spending:

He points to a study which quantifies the difference in spending between private and public health care plans:

For example, a study conducted by researchers at the Urban Institute found that

per capita spending for an adult Medicaid beneficiary in poor health would rise from $9,615 to $14,785 if the person were insured privately and received services consistent with private utilization levels and private provider payment rates.

He points to another study which tracked the changes in the growth of spending in Medicare and private insurance:

Comparing common benefits, says the Kaiser Family Foundation,

changes in Medicare spending in the last three decades has largely tracked the growth rate in private health insurance premiums. Typically, Medicare increases have been lower than those of private health insurance.

He makes a good point (with his wry wit) about the fragility of Medicaid:

Unlike Medicare’s clients—the feared senior group—Medicaid recipients aren’t a potent political constituency: they are, on average, poor and poorly educated, with low voter participation. As a result, funding for Medicaid depends on politicians’ sense of decency, always a fragile foundation for policy.

Krugman also points out yet another study which demonstrates how a market-based approach does not necessily lead to better health results – or even cheaper results – as bad choices in the short-term often lead to expensive treatments in the long-term:

A classic study by the Rand Corporation found that when people pay medical expenses themselves rather than relying on insurance, they do cut back on their consumption of health care—but that they cut back on valuable as well as questionable medical procedures, showing no ability to set sensible priorities.

Finally, Krugman continues to make the case that our health are system is simply not the best one out there:

The data in Table 1 show that the United States does not stand out in the quantity of care, as measured by such indicators as the number of physicians, nurses, and hospital beds per capita. Nor does the US stand out in terms of the quality of care: a recent study published in Health Affairs that compared quality of care across advanced countries found no US advantage. On the contrary, “the United States often stands out for inefficient care and errors and is an outlier on access/cost barriers.”