- The Foundry: Conservative Policy News from The Heritage Foundation - http://blog.heritage.org -

Paul Krugman's Health Care Fantasies

Posted By Conn Carroll On July 31, 2009 @ 1:25 pm In Obamacare | Comments Disabled

Paul Krugman just can’t stop spreading misinformation about Medicare and health insurance. Today he writes [1]:

In the individual insurance market, where people buy insurance directly rather than getting it through their employers, so much money goes into underwriting and other expenses that only around 70 cents of each premium dollar actually goes to care.

This is just plain deceptive. The latest government figures available, from 2007 [2] (see Table 12), show that 87.8 cents of every private health insurance premium dollar went to personal health care bills. And that remaining 12.2 cents? In addition to underwriting, administration, advertising, and (gasp!) profit, that 12.2 figure also includes some patient care that insurance companies provided themselves, like disease management and on-call toll-free nurse consultations. Krugman continues:

Today, Medicare — which is, by the way, one of those “single payer” systems conservatives love to demonize — covers everyone 65 and older. And surveys show that Medicare recipients are much more satisfied with their coverage than Americans with private insurance. Still, most Americans under 65 do have some form of private insurance.

But what Krugman fails to tell readers, or perhaps doesn’t even know, is that many Americans OVER 65 also have some form of private insurance. In other words, Medicare is not quite the “single-payer” paragon that Krugman holds it out to be. The latest government figures available, from 2005 [3] (see Chart 6-3), show that Medicare pays only 51% of Medicare beneficiaries’ health care costs. The rest is made up by the beneficiaries themselves and … those evil health insurance companies. [4]

Krugman is in touch with one key reality: the federal government does play a huge role in our current health care system, controlling more of the spending in the health sector than in any other area of our economy. And that role has been accelerating rapidly. [5] If our health care system is in such bad shape now with so much government control, then why on Earth does Krugman believe even more government control is the answer?


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2009/07/31/paul-krugmans-health-care-fantasies/

URLs in this post:

[1] writes: http://www.nytimes.com/2009/07/31/opinion/31krugman.html?partner=rssnyt&emc=rss&pagewanted=print

[2] 2007: http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf

[3] 2005: http://medpac.gov/documents/Jun09DataBookEntireReport.pdf

[4] The rest is made up by the beneficiaries themselves and … those evil health insurance companies.: http://www.foundry.org/2009/07/30/the-medicare-cost-control-myth/

[5] And that role has been accelerating rapidly.: http://www.foundry.org/2009/01/26/fast-tracking-government-control-of-health-care/

Copyright © 2011 The Heritage Foundation. All rights reserved.