“The Health Care Crisis and How to fix it” or “What to do about it”

This is—or rather, these are the titles of a must-read article by Paul Krugman and Robin Wells in the March 23, 2006 issue of The New York Review of Books. [Note: excerpts from this article are also posted on the Angry Bear blog] While not known for sensationalism, the cover title does suggest that Krugman and Wells will tell readers how to fix our broken health care system. The inside title is more realistic, promising only what we can “do about it.” And, indeed, while the authors do conclude that universal health coverage would “cover those now uninsured, and that it would be cheaper than our current system,” they go on to argue that the “political obstacles remain daunting” as they were more than a decade ago. In 1993 Clinton’s advisors knew that a single payer system would be the “least expensive way to provide universal coverage.” But Clinton rejected the single payer proposal for political reasons—and then got sideswiped anyway by insurers and a “baffled” public. Krugman and Wells regretably conclude that current compromise plans by political reformers would run into the same political problems as Clinton’s plan.

[I]t would be politically smarter as well as economically superior to go for broke: to propose a straightforward single-payer system, and try to sell voters on the huge advantages such a system would bring. But this would mean taking on the drug and insurance companies rather than trying to co-opt them, and even progressive policy wonks, let along Democratic politicians, still seem too timid to do that.

So what will really happen to American health care? Many people in this field believe that in the end America will end up with national health insurance, and perhaps with a lot of direct government provision of health care, simply because nothing else works. But things may have to get much worse before reality can break though the combination of powerful interest groups and free-market ideology.

But read the article yourself. Using as a vehicle a review of three new books on the American health care system, Krugman and Wells do an excellent job reviewing the three health policy crises that make up an overall crisis in medical costs:

First is the increasingly rapid unraveling of employer-based health insurance. Second is the plight of Medicaid, an increasingly crucial program that is under both fiscal and political attach. Third if the long-term problem of the federal government’s solvency, which is . . . largely a problem of health care costs.

In their article, Krugman and Wells review the inefficiency (and injustice) of our fragmented public/private system. They explain the “80-20 rule,” which describes how roughly 20 percent of the population account for 80 percent of health expenses (“half the population had virtually no medical expenses; a mere 1 percent of the population accounted for 22 percent of expenses”) and the impact of that rule on the peculiarly American phenomenon of employer-based health insurance. Until now, providing health insurance to workers has benefited the employer, but health costs are now so high that employers cannot cut benefits enough to stay competitive (recently announced attempts by GM to buy out a significant portion of their workforce illustrates this crisis).

Read the article for a good overview of Medicaid and Medicare, which account for the roughly half of our health care spending that comes from the government. Interestingly, Medicare—an extremely popular and efficient (only 2% overhead) program--IS universal coverage—but only for those 65 and over. Many of us would argue, as Krugman notes, that expanding Medicare to cover the whole population would give us a Canadian-like (also called Medicare) single-payer health insurance system. [Interestingly an NPR ad for the Medicare Rights Center today used the tag-line, “Medicare for All.”] And Krugman and Wells include the always convincing international health comparison table, comparing Canada, France, the UK and the US on a number of economic, health status, and health services parameters. But rather than summarize or site more, get the article yourself and hold onto it. It’s as good a review of the current economic status of the health care system, and as compact an argument for a single payer system (and ultimately a government health service that can actually ration care fairly and efficiently, as the VA is doing so well in the US today) as you are likely to find.