Paul Krugman: Children Versus Insurers

Since resources are limited and choices must be made, what types of health care programs should the government support?:

Children Versus Insurers, by Paul Krugman, Commentary, NY Times: Consider the choice between two government programs.

Program A would provide essential health care to the eight million uninsured children in this country.

Program B would subsidize insurance companies, who would in turn spend much of the money on marketing and paperwork, and also siphon off a substantial fraction ... as profits. With what’s left, the insurers would provide additional benefits, over and above basic Medicare coverage, to some older Americans.

Which program would you choose? If money is no object, you might go for both. But if you can only have one, it’s hard to see how anyone could, in good conscience, fail to choose Program A. I mean, even conservatives claim to believe in equal opportunity — and it’s hard to say that our society offers equal opportunity to children whose ... families can’t afford proper medical care.

And here’s the thing: The question isn’t hypothetical..., but the choice between A and B is playing out right now.

Program A is the proposal by Senator Hillary Clinton and Representative John Dingell to cover all children by expanding the highly successful State Children’s Health Insurance Program. To pay for that expansion, Democrats are talking about ... shutting down Program B, the huge subsidy to private insurance plans ... so-called Medicare Advantage plans — created by the 2003 Medicare Modernization Act. The numbers for that trade-off add up, with a little room to spare. ...

Now, nobody is proposing that Medicare ban private plans — all that’s on the table is requiring that they compete with traditional Medicare ... on a fair basis. And that’s not what’s happening now. ...Medicare Advantage plans now cost taxpayers an average of 12 percent more per enrollee than traditional Medicare. Private fee-for-service plans, the fastest-growing type, cost 19 percent extra.

[T]he Bush administration ... is adamantly opposed both to any attempt to expand the children’s health insurance program — in fact, the administration wants to cut its reach — and to any attempt to reduce Medicare Advantage payments.

The official reasons given for this position are evasive and dishonest.

Explaining the administration’s opposition to expanding the children’s program, Michael Leavitt, the secretary of health and human services, said the program “should not be the vehicle by which we insure every adult and every child in America.” But that isn’t what the Democrats are proposing.

As for why the administration wants to keep subsidizing insurance companies, Mr. Leavitt says, “The president and I are for competition.” But nobody is against competition — it’s subsidized competition that’s the problem. Mr. Leavitt added that “the marketplace beats the government at controlling costs and delivering value” — but he’s not willing to put that assertion to the test by requiring that private insurers compete on a level playing field.

Lately, both the insurance lobby and the administration have also started playing the race card, claiming that Medicare Advantage offers special benefits to the poor and to minority groups. ... But a new report from the Center on Budget and Policy Priorities thoroughly debunks these claims...

Clearly, the real reasons for the administration’s position ... are ... political, having to do with the long-term battle over the future of the welfare state.

But that’s a subject for another day. For now, the choice is between A and B — health care for children, or subsidies for insurance companies. Which will it be?

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Previous (4/2) column: Paul Krugman: Distract and Disenfranchise
Next (4/9) column: Paul Krugman: Sweet Little Lies

Comments

[anne]

John Edwards, as Paul Krugman wrote, has a complete and fine health care plan, however what puzzles me is why Barack Obama still has no health care plan. Obama who is wonderfully inspirational on a general level, came to a forum for candidates in Las Vegas with nothing to say on health care though that was the subject. Now, not days but weeks later, Obama is still not able to present a plan or answer a specific question from a cancer research and treatment advocate in Iowa. How can this be?

[anne]

Hillary Clinton by the way also has not set out a health care plan, which amazes me, but her position on forever occupying Iraq makes her an impossible candidate for me in any case. There is a special irony to haing a plan to occupy Iraq but not for health care support.

[anne]

Obama would not or worse could not answer a question on health care from a cancer cure advocate yesterday, saying he was listening and interested in building a consensus of policy, but what policy? When pushed again in a different setting in Iowa, Obama blathered on about saving money for health care by reducing obesity. What the heck is wrong with the guy or the advisers?

[evagrius]

Health care for children is simply the most logical choice.

[anne]

"Since resources are limited and choices must be made, what types of health care programs should the government support?"

Well, we must always remember that resources are being artificially and insanely limited to the direct extent of $14 billion a month by the tragic occupation of Iraq. Why is it that economists can simply repeatedly refuse to notice or if noticing mention that we have chosen guns over butter, destruction over our very health, destruction over the health of children?

[Callahan]

I'll be expecting duct tape and bandaids.

[anne]

Well, to be fair, Clinton is at least looking to secure health care coverage for children, who are increasingly threatened with limits on Medicaid, and Clinton is looking to limit insurance company discrimination against perceived-at-risk adults.

[jh]

The current system where employees rely on their employer to provide health insurance sucks. It has always seemed like a form of indentured servitude to me. People need to be able to change jobs freely and not have the fear of no health insurance hanging over their heads. The employers also need to have that burden lifted from them. They should not be responsible for their employees health care and retirement.

The government needs to put the smack down on the health care industry. Many will say that this will destroy innovation in that field but that is a bunch of crap. Science has flourished for thousands of years despite the relatively low compensation and social status.

[Stephen Heyer]

I can see why Barack Obama is avoiding having a health care plan.

To begin with, as this article points out, any logical choice at the moment disadvantages (at least in the short) term a lot of older persons who vote. It advantages a lot of children who don't.

It will also bring down the terrifyingly well funded anger of the medical insurance industry and lobby on the head of whoever proposes it.

To get elected, sometimes, you have to avoid taking positions until AFTER you have been elected: Blame the system, and the public.

Also, of course, in the USA knowledge and acceptance of what would be the best, or even a better system is still very much a work in progress. A sensible person cannot have too detailed a policy and must be ready to adopt new ideas as they emerge.

[anne]

No; absolutely not. I assure you just that if Barack Obama is perceived as avoiding the most important domestic issue, he will lose support as he already looks to be losing support in New Hampshire. There is no avoiding Iraq and no avoiding health care. The whole point of supporting Obama or John Edwards is to have a candidate with the courage to set down and fight for a policy that is specific.

American Cancer Association advocates are not going to be fooled and not going to allow Obama to avoid a health care policy, and Obama promised a policy but has not delivered a policy.

[anne]

Hillary Clinton sought to fool voters about support of the war in and occupation of Iraq, but voters would not be fooled and forced responses. The pretense is over. To fail to understand the need for a health care policy and fast, will be a severe problem for Obama. We have had pretense and deception for 6 years; this election will not allow for either for a successful candidate.

Obama has promised a health care policy and I am amazed that he has not delivered such a policy, but there is time though after these years in the Senate the time should be now.

[Callahan]

Our future "leader(s)" may also have to deal with Social Security.

[Callahan]

To date our presidential candidates cannot waste time on such low priority issues as health care. Why? MONEY, it is all about how much MONEY they can raise. Now of course once they have raised sufficient MONEY (Millionses, possibly Billionses of DOLLARS), then and only then can they consider it safe to discuss issues, and not MONEY.

[save_the_rustbelt]

Krugman always writes about healthcare in stark A or B scenarios that are not necessary accurate.

Not to defend the Bush-ites, but Krugman really doesn't know all that much about healthcare, other than what he learns from sitting in his office reading.

[anne]

Oh, and our future leaders will surely not have to deal with Social Security.

And, Paul Krugman's writing on health care has of course been incisive which is a terrible problem to a Republican not-defending the Bush-ites.

[wjd123]

"Lately, both the insurance lobby and the administration have also started playing the race card, claiming that Medicare Advantage offers special benefits to the poor and to minority groups. ... But a new report from the Center on Budget and Policy Priorities thoroughly debunks these claims..."

Medicare Advantage plans do offer special benefits and they are not just to the poor or minorities. I don't know what claims the insurance lobby is making but the fact that Medicare Advantage plans offer special savings is incontestable. And that is what is important. Playing the race card isn't.

I'm in a Medicare Advantage plan, and I know why: I simply can't afford traditional Medicare. I'm on a fixed income and I need to know what my medical expenses will be for the year. I can't do that with traditional Medicare.

Here are some examples of how my Medicare Advantage insurer, Medblue, allows me to get a hold on expenses.

With traditional Medicare I will pay $992 if I'm admitted to the hospital during the year, with Medblue I pay nothing. (I'm disabled and there is hardly a year that goes by that I'm not in the hospital.)

With traditional Medicare I will pay a 20% co-pay when I see a doctor, with Medblue I pay nothing to see my primary doctor and $15 for specialist.

With traditional Medicare I will pay 20% of the schedule charge for an ambulance, with Medblue I pay nothing.

With traditional Medicare it's the same 20% co-payment on durable medical supplies, outpatient medical services, diagnostic tests, preventive services, with Medblue I pay nothing.

With traditional Medicare Part D I will pay monthly fees, a deductible, and a co-payment for my prescription drugs, with Mediblue I pay no fees or deductibles, a co-payment is $7, and there is no donut hole for generic drugs.

With traditional Medicare general hearing, vision, and dental services aren't covered, with Mediblue I'm covered for exams and some limited services.

I could go on, but I won't.

What I give up for these savings is some freedom to choose, I'm limited to their providers. And sometimes I have to play detective to find out if I have been preapproved for some service or to find our where a provider of a product is located, but with my limited income I simply don't have a choice.

I have no idea if Medicare Advantage plans could offer these some savings without their government subsidies. That's the question here since it's these subsidies that will go to pay for insurance for children. And I have no idea what the Center for Budget and Policy Priorities has "thoroughly debunked" because Krugman didn't leave a link, but it's not the fact that Medicare Advantage plans save money or the fact that they are needed by more than the poor and minorities.

By the governments standards, I'm not poor. I'm also white. And I'm happy I have a Medicare Advantage plan that saves me money over traditional Medicare. For me traditional Medicare is simply to expensive; I have other obligations. BTW, I am quite sure that the extra expense of traditional Medicare would end up in my receiving less medical care.

I'm certainly not against medical insurance for children, but I get a little disturbed when liberals start going after the lowest hanging fruit in order to pay for it.

[Barry]

"Not to defend the Bush-ites, but Krugman really doesn't know all that much about healthcare, other than what he learns from sitting in his office reading."

Posted by: save_the_rustbelt

Amazing, isn't it, how many times he's been able to scoop so many people during the past seven years. It's almost like sitting in one's office, reading and talking with experts can actually improve one's knowledge.

[donna]

We can only afford welfare for the rich or for companies, not healthcare for children.

What a fucked up world view Republicans have.

[bob]

As a California public hospital MD, helping the poor, I am not impressed with either the Edwards or Clinton health plan.. Obama stalls because he can’t provide a truly comprehensive plan without offending special interests. I don’t support Obama or either of the other Senator weathervanes (C or E) because they say different things to different groups and bow to AIPAC.

If you want real doctors to work for Medicaid rates, you have to pay for their education & training. I’m old, I owe no money, but most MDs finishing training 1. owe a lot of money 2. have been indoctrinated by drug companies- people on the outside don’t realize the large role of Big PhRMA in US medical education today- US physicians prescribe more drugs per patient, brand name drugs when generics would be fine (I take a generic drug for hypertension), drugs when nondrug treatments are as good or better. Young MDs don’t want to work for Medicaid- low reimbursement, hassles if you prescribe the brand name drugs that they have been told to use..

I understand why wid123 likes Medicare Advantage but it’s bad for the country. I have elderly low income relatives but I say that if we can’t cover everybody, children should come first. If we gave up the idea that it’s great to kick butt in the Middle East and halved our defense budget, we could cover everybody (in a program that compels use of generic drugs first). A truly Universal program would cover some illegals and Tancredo, Domenici, Rush Limbo et al would go bananas. We can’t do it without big cuts in defense spending or significant tax increases- the baloney from the generally good CBPP about saving money by cutting training reimbursement for public hospitals that see many Medicaid and uninsured patients (like mine) would give PhRMA even more control over medical education. They don’t want to face the music- C & E just distort the facts, like Dubya. Go to /www.cbpp.org/4-3-07health.htm for a discussion of Medicare Advantage by Park & Greenstein

[wjd123]

"I understand why wid123 likes Medicare Advantage but it’s bad for the country. I have elderly low income relatives but I say that if we can’t cover everybody, children should come first."

Bob,

Medicare Advantage plans aren't bad for the country since they help millions of people like me who would literally be nickled-and-dimed to death without them. The question is are the subsidies offered in the 2003 Act necessary for these plans to offer lower rates. I think not. Why? Because my Medicare Advantage plan before the Bush subsidies were put into effect offered me the same benefits I mentioned and more. The only cost difference to me since I take only generic drugs was falling into the donut hole the year Medicare part D started. I admit that it's now easier for me to afford non-generic drugs but they are still expensive enough to wreck my budget. I suspect it would be easier for me to get non-generic drugs if Medicare was allowed to negotiate prices with the drug companies.

My problem with Krugman's column was the rather dismissive view he seems to take of the advantages these plans offer when he wrote, "Lately, both the insurance lobby and the administration have also started playing the race card, claiming that Medicare Advantage offers special benefits to the poor and to minority groups. ... But a new report from the Center on Budget and Policy Priorities thoroughly debunks these claims...". I find this deceptive because people who aren't poor or minorities are helped by these plans and that's an argument health insurance companies can make without question.

If his comment was an effort to get my mind off of the people these plans do help and on to the greed of health insurance companies, he needn't have bothered. Just who do you think will take the hit once subsidies are removed, the stock holders, the CEO with the multimillion dollar salary, no it will be people like me who can't afford traditional medicare.

I would be willing to pay an extra hundred dollars in taxes to insure children. But the chances are that once the subsidies are taken away, whether they are needed or not, insurance companies will start raising co-payments I'll end up paying thousands extra. The argument then becomes will the neediest end up paying the lions share for the neediest.

The competition that Kurgman is willing to bet my health on isn't between Medicare and private insurers. Medicare isn't going to lower its 20% co-payments or deductibles. No, the competition will be between private insurers. That competition will ultimately end up being about which company can find the most surreptitious ways to screw its consumers to make up for subsidies it didn't need but now can't do without.

Kurgman offers a choice either plan A or plan B. I'll pick plan A. However, I don't like the way Kurgman is so dismissive of how important Medicare Advantage plans are to people like me.

[standard]

How can you not afford traditional Medicare? That just does not make sense.

It is Medicare that is paying your insurance company. If the insurance company is providing you with better benefits it is only because they are cheating someone else out of benefits and redirecting that money to you. And this is after they take 15% off the top.

Your favored status was a come on to lure you into the plan. It will not last. Economically they just cannot forever go on paying you higher benefits that what medicare would provide. The money just isn't there.

[a]

You just have to laugh at the way Krugman presents his two options.

It continues to astonish that people can take him even slightly seriously.

[wjd123]

"How can you not afford traditional Medicare? That just does not make sense.
It is Medicare that is paying your insurance company....

If the insurance company is providing you with better benefits it is only because they are cheating someone else out of benefits and redirecting that money to you. And this is after they take 15% off the top."

standard,

This is both ambiguous and wrong. First of all I pay Medicare $93.50 from my social security each month. and the government raises that amount every year. I also payed it 1.45% of my wages when I was working. On top of that Medicare charges a 20% co-payment on just about everything. I'm ill and disabled. I see four different specialist during the year so that 20% adds up to real money for me. It's not as if my medical bills consist of and annual check up each year.

I don't ask the taxpayers of anything. If my medical bills drive me into poverty, I will.

If I can direct Medicare to take the money I've payed in and give it to a private insurer, so I can receive my health care from them how does that make Medicare any poorer. Just where am I cheating someone else? I've merely traded liberty of choice for lower costs. Once this is no longer available I'll have to go the Medigap route which will be very expensive for me.

The problem is that along with Medicare Part D the Bush administration decided to start subsidizing private insurers. (I tried to find out they were being subsidized before Part D, it seems they were, but I'm not sure it was through Medicare.) They lobbied for the subsidies, not me. Before the Medicare Part D subsidy took effect my health insurance company provided me with all the generic drugs I wanted. My expense was a $10 co-payment for each drug. After Medicare Part D took effect, I ended up paying an extra $449 because of the donut hole.

Krugman wants to take away those subsidies and use the money to pay to insure children. I've agreed. so what's your problem. He claims it's a matter of competition and equality. I agree with the competition part but his argument; it's the equality argument that strikes me as the opposite of the progressive taxation, since the result will be the neediest paying for the neediest.

[anne]

Thank you, WJD. Please do add to the detail as the thought occurs.