Krugman Flunks Health Econ 101
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By John Goodman,
from NCPA,

It’s painful to read Paul Krugman when he writes about health care. Makes you wonder how he ever won the Nobel Prize. Previously, he made the absurd claim that in repealing health reform Mitt Romney would allow “tens of thousands” of people to die. In his latest venture into the field, about which he knows embarrassingly little, he has this to say:

Mitt Romney, as president, would make “savage cuts” in Medicaid.
This is unfortunate because “Medicaid has been more successful at controlling costs than any other major part of the nation’s health care system.”
Medicaid achieves this efficiency (a) “partly by having much lower administrative costs than private insurers” and (b) because “Medicaid is much more effective at bargaining with the medical-industrial complex.”
Romney wants to slash Medicaid, in part because of Republicans’ “general hostility to anything that helps the 47 percent — those Americans whom they consider moochers who need to be taught self-reliance.” (Some Republicans? No. Apparently, all Republicans!)

What evidence is there that Medicaid outperforms every other part of the health care system in holding down costs? Krugman tells us that:

According to the best available estimates, the average cost of health care for adult Medicaid recipients is about 20 percent less than it would be if they had private insurance. The gap for children is even larger.

But isn’t that because Medicaid pays less than every other payer? Of course. On average, Medicaid pays physicians who treat Medicaid patients only about 59 percent of what a private insurer would pay for the same service. In New York, Medicaid pays even less — about one-third of what private insurers would pay.

Don’t Medicaid enrollees have to wait longer to get care because it pays less? You bet they do. In fact when you add the time price of care to the money price of care, Medicaid may be the most expensive health plan around. Also, health care delayed is often health care denied.
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