Krugman Wrong Again–This Time Both Obama and McCain Are Right

The problem with being an economist, a newspaper columnist, or both, is that you might get a distorted view of the real world from looking at abstract data. Paul Krugman once again demonstrates this in today’s column. He has attacked Obama’s health plan with such regularity that we knew it was time for another attack. Daniel Drezner, writing at Megan McArdle’s blog, has predicting Krugman down to a science. His formula ends with Krugman’s columns arguing “Barack Obama is not a real progressive.”

If you are one of those people who believes that everything which is accepted as truth in the liberal blogosphere is true, and anything proposed by a Republican such as John McCain is not only wrong but evil, you might as well stop here because you are not going to agree with this post. Today John McCain is right and many liberal bloggers, along with Paul Krugman, are wrong.

While there is plenty to criticize in John McCain’s health care plan, Krugman chose to attack an aspect which is actually a good idea (and which is similar to a proposal made by Democrat Bill Richardson). Krugman quotes from McCain’s web site:

“America’s veterans have fought for our freedom,” says the McCain Web site. “We should give them freedom to choose to carry their V.A. dollars to a provider that gives them the timely care at high quality and in the best location.”

Krugman fails to recognize that this is a good idea as he has been suckered into the belief, repeated by many liberal bloggers, that the V.A. health system is the Mecca of health care. This fallacy comes from computerized reports which evaluate health care plans. The problem, as most people who actually work in health care realize, is that the state of the art of evaluating medical outcomes is still quite primitive. Krugman raves about the integrated system and their use of information technology. While this probably has brought about significant improvements, the main benefit of such a system is the ability to generate data which improves their ratings.

In the private sector, there is very poor data available to evaluate care provided. Some H.M.O’s are trying, but their data at this point is pathetic. Private practices providing good care will not be recognized. The V.A. has an advantage as their system can provide just what data is needed to make themselves look good.

Those of us who actually see patients who also go to the V.A. system, as opposed to relying on computerized print outs, see plenty of evidence that the V.A. system has its faults. I see many patients who come to me because they do not receive adequate care from the V.A. They often go the the V.A. intermittently because they pay for their medications but do not receive meaningful care to manage their medical problems. The decisions made by the V.A. with regards to medications are frequently based upon short term cost.

Sometimes it is not only beneficial to the patient but also more cost effective in the long run to pay more to treat chronic diseases aggressively at an earlier stage. For example, while the consensus is that lowering the LDL to under 70 is beneficial in regressing heart disease in many patients, I’ve had the V.A. refuse to cover additional medications once the LDL is below 110. It wouldn’t take very many extra bypass surgeries to blow all the savings from refusing medications.

Hopefully some readers are thinking, “to hell with the cost benefits. If the medications mean I’m less likly to need bypass surgery, or less likely to die of a heart attack, I want to go with the current medical recommendations, not V.A. policy.” This comes down to that C-Word which Paul Krugman hates: Choice. Patients might want the choice to receive the medications recommended for their problems, not those which the V.A. finds most cost effective.

I fail to understand why some liberals defend choice when it comes to abortion rights, as they should, but some have absolutely no respect for an individual’s choice in matters such as health care and personal economic decisions. The V.A. system does vary in quality. There are also geographical issues. People often have to drive a long distance to receive care from the V.A. if going to the closest provider, and I also know of people who drive further to get to a V.A. facility they believe is of a higher quality than the closest.

John McCain is right. Let the veterans go where they choose. If the V.A. system is really the Mecca that many liberals believe it is, they will have no problem maintaining keeping patients coming. Paul Krugman believes that the V.A. system will collapse if patients have a choice to go elsewhere. Isn’t this a confession that the V.A. isn’t really providing the best care available?

John McCain is right on this one, but this is an easy issue. Changing health care for those who already have coverage is the easy part. The hard part is helping those who cannot afford health care coverage and who want to receive coverage. That’s where Barack Obama has an advantage over John McCain since McCain’s plans will do very little to help these people. Krugman once again objects because Obama’s plan includes choice. Those who both need and want his plan can take advantage of it, but everyone has a choice. Krugman writes:

Worse yet, Mr. Obama attacked his Democratic rivals’ health plans using conservative talking points about choice and the evil of having the government tell you what to do. That’s going to make it hard — if he is the nominee — to refute Mr. McCain when he makes similar arguments on behalf of such things as privatizing veterans’ care.

In other words, by supporting choice Obama gives cover to John McCain in a case where he is right. Partisan Democrats (many of whom probably should have stopped with my second paragraph) might see some logic to this if their primary goal is for Republicans to always be wrong. For those of us who want to solve problems regardless of partisanship, there’s no problem here. If it makes liberal blog readers feel better, remember that this isn’t only a Republican proposal. Bill Richardson proposed the same thing.

Paul Krugman gives conservatives quite a bit of help by spreading the fallacy that conservatives support choice and liberals support “having the government tell you what to do.” If these were the real differences between liberals and conservatives, I’d rather be a conservative, and so would the majority of Americans. Conservatives, who are hardly the supporters of choice and personal freedom which Krugman would portray them as, have benefited in many elections by portraying themselves in this manner, with the help of some such as Paul Krugman.

The reality is that Republicans talk about choice, but they seldom deliver on their rhetoric. They have no qualms about pushing the agenda of the religious right to pick up a few more votes(even though many Republicans don’t think much of their allies). Liberalism is at a cross roads after having been out of power. Some, such as Krugman and Clinton, are reactionary supporters of failed big government liberalism. Others of us stress civil liberties and favor individual choice as much as possible. We don’t know for certain what Barack Obama will do in office but, in contrast to Clinton, he has shown signs of understanding the limitations of a top-down government approach. His health care plan is just one example of this.

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  1. 1
    Wayne says:

    I find it interesting that Krugman would buy into the concept that that the VA system is such a great health care system, given the problems at Walter Reed, and other VA hospitals due to returning war vets. I am far more conservative than the bulk of the readers of this blog, but I do think that something needs to be done with the health care system. However, going to a system of single provider could potentially give us a rationed care system like in Canada and Great Britian. When people talk about how great the Canadian system is I point them to the identical quadruplets born to a Canadian couple in August 2007. There wasn’t a SINGLE hospital in Canada that could provide the care required. So the Canadian health officials looked for a suitable American hospital. They found one in Great Falls Montana, I mean, Toronto, Calgary, Quebec City didn’t have the means, but Great Falls Montana did? And this wasn’t an isolated incident, it was the fifth time in 9 months that neo-natal patients from Alberta had to be treated in the US! Now this tells me 2 things. 1 – The Canadian system is putting far too great of controls on the types of services that hospitals can provide, and 2 – that the US system puts far too little control, and we end up with hospitals with expensive equiptment that is idle too much of the time. There needs to be a middle ground!

  2. 2
    mothermaven says:

    I have nothing against individual choice, but when we are talking about the health care system, it becomes problematic in practice. An individual consumer cannot negotiate or use their dollars to change the market. Right now we are in a system of choice, but the ability to choose is determined by how much money one has. The only way to bargain for health care is to have a large pool of consumers either on the state level or national level. An individual can say that a medical plan cannot have their dollars unless they reduce costs, but it will fall on deaf ears. An entire state or country can say we will not do business with you unless you reduce costs, and business cannot ignore that.

    Individuals in the US are limited how much choice they have by the fear that if they change the new company may find something to make their coverage more expensive or worse end up with no coverage at all. Individuals have no power and giving them their own accounts, does not change the power equation.

    Canada may not have the same capabilities as the US in high end care, but they pay for care for all their people. In the US people go without basic care and not very many can afford the high end care that the US likes to brag about. Americans go bankrupt trying. Canadians do not have to worry about going bankrupt paying for health care.

    So there is rationing in this country by ability to pay. The uninsured and the under insured are under severe rationing.

    The wealthy will always have choice and will drive innovation. I do not believe that medical innovation just dry up.

    For starters, we should go back when pharma couldn’t advertise on television. I believe that such advertisement only serves to drive up unnecessary purchases and appointments and do not add any real information to benefit health.

    I like the idea of a single payer system modeled after Kaiser, a non-profit organization that emphasizes prevention, but gives terrific care and puts money back into facilities.

  3. 3
    Ron Chusid says:


    The problem is not that choice is bad (as Krugman makes it sound) but that under McCain’s plan many people will not really have a meaningful choice (as you have described). I prefer Obama’s plan because he both respects choice and realizes that in some areas it is necessary for the government to get involved for those who do not have access to health care coverage. Reforms are definitely needed in health insurance, but this can be accomplished with a system where people have a choice about participating.

    It really is a headache when pharmaceutical companies advertise direct to patients. Many doctors don’t like it and many of us will avoid drugs which advertise heavily when there are other (usually cheaper) choices available. Still, there is little doubt that the overall effect is to increase sales of those drugs which are advertised.

    On paper single payer makes a lot more sense. However things are often different when dealing with people (and we respect their choices). In the health care debate often neither side understands the other. Republicans who have good coverage (or believe they do because they haven’t faced denials after developing problems) see no problem and many are adamant that they want to keep their plan as opposed to a government plan. On the other hand, Democrats are more likely to understand that there is a problem for many people, but fail to understand or respect the views of those who are happy with their coverage and want to keep it.

    What I like about Obama is that he shows evidence of understanding both points of view. He’s stated that if we were to start from scratch it would make more sense for a single payer system. He also understands that we are not starting from scratch and that we must respect the views of those who oppose losing their current coverage.

    Your argument with Kaiser gives a good example. I don’t have any personal experience with Kaiser but I have heard many good things about them and for the sake of this discussion will assume that they do provide excellent, cost effective care.

    If we went to a single payer system there is the possibility it would be such an excellent system and perhaps in the end most people would be happy. Unfortunately there is no guarantee that the best system would be the one we have. If the system turns out to be significantly worse than Kaiser then those who have Kaiser will have good reason to object to a single payer system. There is certainly some waste in having multiple private insurance companies, but this also does provide a variety of choices and protects against the problems of being faced with only one plan which might not turn out to be good.

  4. 4
    Lex says:

    Wow. I’m glad that i’m not a knee-jerk liberal, because then i might have stopped reading after the second paragraph.

    Having lived as a legal resident of countries with socialized medicine and being one of America’s uninsured (currently, though i have had excellent coverage in America previously), i may have a much different take on all of this than some.

    We will not rid the nation of insurance companies, so we’ll need to find a way to improve our current situation. I’m not even close to an expert on this subject, so my theory may be full of holes.

    Perhaps we’d be best served by using a government program to provide the most basic care: preventative and catastrophic. Such a system would keep the bureaucratic level low and premiums fairly low as well, especially if those premiums were offset by modest co-pays. Additional coverage could be purchased privately (or provided by employers), which would keep us from falling into the situation of nations like Canada.

    In other words, have the government provide a safety net only (and perhaps cover children’s health care). Perhaps this would bring premiums for supplementary care down, and would at least stop the insured from paying a backdoor subsidy to cover the uninsured.

    In all the European countries i’ve spent significant time in, people buy supplementary private insurance just as soon as they can afford it. Korea is similiar, and they keep costs down by not covering absolutely everything with the government program and other facets…like the fact that the patients family is supposed to feed the patient while he/she is in the hospital.

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