Paul Krugman: Mooching Off Medicaid

Continuing the conversation on "how you can tell if Republicans (a) are philosophically inclined toward a smaller government, or (b) rent-seekers working on behalf of the wealthier members of society":

Mooching Off Medicaid, by Paul Krugman, Commentary, NY Times: Conservatives like to say that their position is all about economic freedom, and hence making government’s role in general, and government spending in particular, as small as possible. And no doubt there are individual conservatives who really have such idealistic motives.

When it comes to conservatives with actual power, however, there’s an alternative, more cynical view of their motivations — ...it’s all about comforting the comfortable and afflicting the afflicted, about giving more to those who already have a lot. And if you want a strong piece of evidence in favor of that cynical view, look at the current state of play over Medicaid. ...

Last year’s Supreme Court decision upholding Obamacare also opened a loophole that lets states turn down the Medicaid expansion if they choose. And there has been a lot of tough talk from Republican governors about standing firm against the terrible, tyrannical notion of helping the uninsured.

Now, in the end most states will probably go along with the expansion because of the huge financial incentives... Still, some of the states grudgingly allowing the federal government to help their neediest citizens are ... insisting that it must be run through private insurance companies. And that tells you a lot about what conservative politicians really want. ...

Don’t tell me about free markets..., privatizing Medicaid will end up requiring more, not less, government spending, because there’s overwhelming evidence that Medicaid is much cheaper than private insurance. ...

You might ask why, in that case, much of Obamacare will run through private insurers. The answer is, raw political power. Letting the medical-industrial complex continue to get away with a lot of overcharging was, in effect, a price President Obama had to pay to get health reform passed. And since the reward was that tens of millions more Americans would gain insurance, it was a price worth paying.

But why would you insist on privatizing a health program that ... does a much better job than the private sector of controlling costs? The answer is pretty obvious: the flip side of higher taxpayer costs is higher medical-industry profits.

So ignore all the talk about too much government spending and too much aid to moochers who don’t deserve it. As long as the spending ends up lining the right pockets, and the undeserving beneficiaries of public largess are politically connected corporations, conservatives with actual power seem to like Big Government just fine.