Krugman Misses the Point on Universal Health Care

NYT Columnist (and supposedly an economist) Paul Krugman totally misses the key points in the argument against Universal Health Care in the US in his opinion piece today. Some examples:

What’s easy about guaranteed health care for all? For one thing, we know that it’s economically feasible: every wealthy country except the United States already has some form of guaranteed health care.

It is not economically feasible. There is a cost of providing unlimited health care, and it is a cost many cannot afford. Health care has to be rationed just like every other scarce resource. We do not have an unlimited number of hospitals, doctors, nurses or even medications. Today those resource are allocated based on price. For many Americans the prices come in the form of insurance premiums and co-pays, but it is a real cost. Now with HSA and FSA, people can make choices about their health care based on cost. This is a positive step in the reduction of health care costs (actually having people bear the cost themselves makes them think about the true cost).

The politics of guaranteed care are also easy, at least in one sense: if the Democrats do manage to establish a system of universal coverage, the nation will love it.

All people will NOT love it. Particularly the people that see their tax bills skyrocket to pay for coverage for people that would rather drive nice cars and have cell phones instead of paying for health care insurance for their families. The people that have to wait in line for hours to get an emergency procedure or the the people that have to wait months to get in the que for surgery that may save their life will not like it. Just ask the Canadians about this "little" problem with Universal Health Care. The other people that will not love it are the people that can make their own health care decisions that will now be made by some lousy government bureaucracy.

I know that’s not what everyone says; some pundits claim that the United States has a uniquely individualistic culture, and that Americans won’t accept any system that makes health care a collective responsibility. Those who say this, however, seem to forget that we already have a program — you may have heard of it — called Medicare. It’s a program that collects money from every worker’s paycheck and uses it to pay the medical bills of everyone 65 and older. And it’s immensely popular.

Medicare is not all that popular. Ask anyone under 65 if they like getting 1.65% of their check taken out in the form of taxes for 45 years. I don't. Older people are over-consuming health care resources today (at subsidized rates) and that is driving up the cost for the rest of us. For many elderly, there is absolutely no cost for them to spend a couple days in the hospital. Again, those beds are a limited resource. Low government reimbursements through Medicare mean the rest of us have to pay more to cover those expenses. We have the few taking care of many just around the corner which is very different from the many taking care of the few that we experience today.

The Massachusetts plan has come in for a lot of criticism. It includes individual mandates — that is, people are required to buy coverage, even if they’d prefer to take their chances. And its costs are running much higher than expected, mainly because it turns out that there were more people without insurance than anyone realized.

Mandates are just a nice way of saying taxes. It also is code for you do not know what is best for you and the government will show you the light. Costs are higher than expected because people over consume things they perceive as being free.

The short lesson on universal health care is that nothing is free and that prices are the best means to guide decisions. I know of no one that does not like the idea of universal health care, myself included, but then again I know of no one that would not like to live in utopia either. If government really worked this way we could have a department of gasoline that gave us all free (albeit subsidized) gas. Do you really think that would be costless to society? Health care is no different.