Krugman: Why markets can’t cure healthcare

[invictus]

There are two strongly distinctive aspects of health care. One is that you don’t know when or whether you’ll need care — but if you do, the care can be extremely expensive. The big bucks are in triple coronary bypass surgery, not routine visits to the doctor’s office; and very, very few people can afford to pay major medical costs out of pocket.

This tells you right away that health care can’t be sold like bread. It must be largely paid for by some kind of insurance. And this in turn means that someone other than the patient ends up making decisions about what to buy. Consumer choice is nonsense when it comes to health care. And you can’t just trust insurance companies either — they’re not in business for their health, or yours.

This problem is made worse by the fact that actually paying for your health care is a loss from an insurers’ point of view — they actually refer to it as “medical costs.” This means both that insurers try to deny as many claims as possible, and that they try to avoid covering people who are actually likely to need care. Both of these strategies use a lot of resources, which is why private insurance has much higher administrative costs than single-payer systems. And since there’s a widespread sense that our fellow citizens should get the care we need — not everyone agrees, but most do — this means that private insurance basically spends a lot of money on socially destructive activities.

The second thing about health care is that it’s complicated, and you can’t rely on experience or comparison shopping. (”I hear they’ve got a real deal on stents over at St. Mary’s!”) That’s why doctors are supposed to follow an ethical code, why we expect more from them than from bakers or grocery store owners.

You could rely on a health maintenance organization to make the hard choices and do the cost management, and to some extent we do. But HMOs have been highly limited in their ability to achieve cost-effectiveness because people don’t trust them — they’re profit-making institutions, and your treatment is their cost.

Between those two factors, health care just doesn’t work as a standard market story.

http://krugman.blogs.nytimes.com/2009/07/25/why-markets-cant-cure-healthcare/

[paulk]

1. which is why a single payer system is the only way to go

something our President and Congress understand but don't have the courage to act on.

Anything but single payer is bound to fail - all the current "reform" will amount to is a kick of the can down the road.

[Phx_Dem]

2. Mr. Naysaying pessimist speaks again! So, since there will absolutely

not be a single-payer health care plan, I guess we should just leave everything as it currently is, right Krugman?

[Jennicut]

3. Krugman wants us to get there eventually

You know, he is not negative all the time and just recently praised Obama about his news conference. I think he wants to push the left as far as it can go but I do think he gets that we bump up against reality (at times...other times he can be stubborn). I am neither a lover nor hater of Mr. Krugman.

[debbierlus]

6. He didn't say that - he is making a logical argument why mandatory insurance won't work

We have it in MA. It isn't working.

Here is the list of the problems:

Unequal coverage - some people can only afford 'catastrophic coverage' which covers nothing but the most serious health emergenices and has extremely high deductibles.

Unaffordable coverage - if you don't have employer base health insurance and are not eligible for the government assistance for low income individuals, you must buy into a group pool of state offere insurance. For a family of three making over 56,000 a year, the cost - 1,200 dollars a month.

It is impossible to make insurance truly affordable as one third of health care dollars go to health care administration. And, in order to maintain the profit margin, insurers continue top deny care.

This is the system that Obama an health insurance lobbyists are selling you. Do you think that is a good system?

If not, stop decrying the messenger and understand that the corporate powers that be will put their profits over you and your family's health any day of the week. Then, start advocating for real change.

[quiller4]

8. I think you and I disagree on affordable

For a family of three making over 56,000 a year, the cost - 1,200 dollars a month. doesn't sound high to me at all.

[PVnRT]

9. It doesn't?

What planet do you live on that a $1,200 expense per month, added to mortgage, car payments, etc., isn't that high? Good grief. That's $14,400 per year, with the only benefit being that it's before taxes.

Yes, 25.7% of a family's gross income "isn't that bad."

[PVnRT]

10. Do you actually read any of his columns?

Or do you just start screaming and hollering because he wasn't 100% on board with Obama in the primaries?

[Enthusiast]

4. Recommended! Krugman is right on!

He will not be able to make this argument on MSM TV. The insurance & pharmaceutical assholes will make sure of that. GOP assholes are forever saying market forces will lower costs and improve care. These arguments are utterly ridiculous.

[MH1]

5. Well, duh.

But recc'd because it seems that the obvious does need to be pointed out sometime.

[andym]

7. The irony is that many for-profit insurance plans discourage competition themselves

There are different levels where competition could take place. One is choice of insurance plan, but that is not done in an effective way for those working for medium and smaller businesses who usually offer a very limited choice of packages. However, more competition at this level would probably be fairly ineffective as Krugman states, since there is unnecessary overhead for managing the plan and extracting the maximum profit (for-profit insurers) or operating margin (non-profit insurers)

Now at the level of procedures and physician choice, I disagree with Krugman. Many plans available from private insurers, restrict their clients to a particular HMO. Plans that don't usually charge 10-30% or more for the freedom to choose. There are already quality comparison websites that help one make a good decision on doctors and hospitals. Information on the success rate of some procedures (such as open heart surgery)is available from some states such as California. All that would be needed is that success rate information by more broadly available (with the caveat that some centers treat more difficult cases-- which should be quantified and included in the statistics) and cost comparison information also be available. That would have to be mandated by law, since it is unlikely that the operators and insurers would reveal their complete rate structures (offered to different plans, etc). I think that kind of competition would do two things, it would cut costs, reward competent doctors/hospitals and punish lower quality providers.