Sunday, September 22, 2013

Krugman on health care costs

You should check out this excellent blog post from Paul Krugman, which, in a few short paragraphs, distills out some of the fundamental questions affecting American health policy:
Everyone who’s serious about the budget realizes that to the extent we do have a long-run fiscal problem — which we do, although it’s far from apocalyptic — it’s mainly about health care costs. And then there’s much wringing of hands about how nobody knows how to control health costs, so maybe we should just give people vouchers, and if they still can’t afford insurance, too bad.  
 Meanwhile, we have ample evidence that we do know how to control health costs. Every other advanced country does it better than we do — and Medicaid does it far better than private insurance, and better than Medicare too. It does it by being willing to say no, which lets it extract lower prices and refuse some low-payoff medical procedures.  
 Ah, but you say, Medicaid patients have trouble finding doctors who’ll take them. Yes, sometimes, although it’s a greatly exaggerated issue. Also, middle-class patients would surely be unhappy if transferred from the open-handedness of Medicare to the penny-pinching of Medicaid.  
But the problems of access, such as they are, would largely go away if most of the health insurance system were run like Medicaid, since doctors wouldn’t have so many patients able and willing to pay more. And as for complaints about reduced choice, let’s think about this for a moment. First you say that our health cost problems are so severe that we must abandon any notion that Americans are entitled to necessary care, and go over to a voucher system that would leave many Americans out in the cold. Then, informed that we can actually control costs pretty well, while maintaining a universal guarantee, by slightly reducing choice and convenience, you declare this an unconscionable horror.
Of course, the underlying point here is one that anyone with even a vague awareness of health policy has known for a long time: health care spending isn't driven by who gets care so much as it's driven by what kind of care they're getting.  As a result, expanding access doesn't fix cost growth--or necessarily worsen it, either.  The bad thing about this is that, as Krugman says, it forces us to make genuinely hard choices about rationing care.  The nice thing about this is that it frees us up to listen to our consciences when confronting questions of access.

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