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Paul Krugman and Medical Central Planning


Not surprisingly, Paul Krugman is excited, and so is the Obama administration. The government, with the help of the medical industry, is going to contain health care costs. Wow! I’m shocked! Why hasn’t anyone thought of that before?!?

The Great Nobel Laureate lays out the plan:

In his previous job, as the director of the Congressional Budget Office, Mr. Orszag argued that America spends far too much on some types of health care with little or no medical benefit, even as it spends too little on other types of care, like prevention and treatment of chronic conditions. Putting these together, he concluded that “substantial opportunities exist to reduce costs without harming health over all.”

Sure enough, the health industry letter talks of “reducing over-use and under-use of health care by aligning quality and efficiency incentives.” It also picks up a related favorite Orszag theme, calling for “adherence to evidence-based best practices and therapies.” All in all, it’s just what the doctor, er, budget director ordered.

Gee, why hasn’t anyone else thought of this? I mean, I don’t recall my doctor telling me, “Bill, we are going to have you overuse and underuse (simultaneously) the healthcare system.”
Of course, as Krugman does not point out, the devil always is in the details. Doctors today often require a number of tests, many unnecessary in hindsight, for two reasons:

1. They can be sued for malpractice if that one-in-a-million situation actually comes to fruition and they had not ordered a test to cover that one-in-a-million situation, they can be put through the legal wringer, something Krugman does not address, since his political party is a wholly-owned subsidiary of the American Trial Lawyers Association.

2. Government often requires overkill on tests and other procedures. For example, we are in the process of adopting a child and have had to undergo a number of costly medical procedures to meet the government standards that would permit us to be approved for adoption.

We have seen how the “single payer” systems “cut” costs: they deny care. What Krugman fails to point out is that he wants the entire medical system to be controlled by risk-averse bureaucrats. This will “cut” costs, no doubt, as healthcare will shift from being oriented to consumers (or at least semi-oriented) to being oriented to bureaucrats and the suppliers of care. The ramifications are obvious, but Krugman also knows he won’t have to worry about being subject to the rules that the rest of us will face when KrugmanCare comes into being.

Bill Anderson is a professor of economics at Frostburg State University in Frostburg, Maryland.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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