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Friday, April 06, 2007

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?

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

    Posted by on Friday, April 6, 2007 at 12:15 AM in Economics, Health Care | Permalink  TrackBack (1)  Comments (24)


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    » Krugman: Good Versus Evil in Health Care from Health Care BS

    Via Economist’s View, Paul Krugman provides a typically disingenuous analysis of the congressional deliberations concerning the State Children’s Health Insurance Program (SCHIP) and Medicare Advantage (MA). His caricature of the policy choices is d... [Read More]

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