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Krugman Consumes His Own Tail

Saturday, April 23rd, 2011

Cross-posted from the other site.

Paul Krugman has written a bizarre op-ed in opposition to the GOP Medicare plan. Let’s have some fun with it.

Here’s my question: How did it become normal, or for that matter even acceptable, to refer to medical patients as “consumers”? The relationship between patient and doctor used to be considered something special, almost sacred. Now politicians and supposed reformers talk about the act of receiving care as if it were no different from a commercial transaction, like buying a car — and their only complaint is that it isn’t commercial enough.

It’s acceptable to call them consumers and providers because that’s what they are. The only reason this language strikes Krugman as odd is because he, like many liberals, has becomes used to thinking of healthcare as a “right” — something akin to Freedom of Speech. But any time there is a voluntary exchange of services, the relationship is one of consumer to provider. There’s nothing repulsive or sinister about this. Teachers, fireman, cops, doctors, clergy — none of these people work for free. All of them provide services that we consume.

Note also that Krugman is engaging in the “I’m On Your Side” tactic. He praises the doctor-patient relationship as something sacred. But, as we will see, he does this on the way to severing and controlling that bond.

We have to do something about health care costs, which means that we have to find a way to start saying no. In particular, given continuing medical innovation, we can’t maintain a system in which Medicare essentially pays for anything a doctor recommends. And that’s especially true when that blank-check approach is combined with a system that gives doctors and hospitals — who aren’t saints — a strong financial incentive to engage in excessive care.

I agree. One way we can do this is to put more responsibility on the consumers who have shown the ability to make complex and difficult decisions about homes, cars, schooling, computers and other supposedly opaque disciplines. We could, or example, adopt David Goldhill’s proposal of moving back to a major medical system where the first few thousand dollars of healthcare — the most discretionary part — is controlled by the consumer and employers or government provide a voucher for a $5000 deductible. It’s difficult to imagine such a system now because we’ve gotten so used to first dollar coverage. But that’s what we used to have when our healthcare spending wasn’t so out of line. That’s what we have in non-insured regions like lasik surgery or fertility treatments, where price guarantees are normal.

Alternatively, we could move toward something like the Australian system. In Australia, there is a socialized insurance system that provides basic care and pays a basic fee. If you’re poor, you can go to lower-tier hospitals that accept those fees. If you have more money, you can buy additional insurance or pay out of your own pocket to get better care. But the key is that you pay the bills and are then reimbursed. So the consumer is decidedly in the loop. (My understanding of the Aussie system is based on talking to my wife and her family; blame any errors on them.)

So certainly Krugman, an economist, is going to suggest something along … oh.

Hence the advisory board, whose creation was mandated by last year’s health reform. The board, composed of health-care experts, would be given a target rate of growth in Medicare spending. To keep spending at or below this target, the board would submit “fast-track” recommendations for cost control that would go into effect automatically unless overruled by Congress.

Dr. Krugman, please send a nice package of whatever it is your smoking to my house. Have you been watching the budget debate? We endured weeks of rending of garments and gnashing of teeth over the cutting of unspent budget authority. Do you think Congress is going to stand up to seniors and tell them they can’t get care? Even assuming this board makes some tough choices — do you really think Congress will let unpopular ones stand?

We don’t even need to ask these questions — we’ve already seen what will happen. When PPACA was being debated, a study came out claiming routine mammography should start at 50, not 40. Congress immediately moved to prevent this from being acted on, whether the result was valid or not. Their previous mandate on unproven CAD technology led to a huge surge in this expensive procedure. One of the reasons Republicans want insurance sold across state lines is that state governments have become incredibly pliable in mandating coverage, including “alternative medicine”. During the PPACA debate, several senators tried to get alternative medicine like therapeutic touch and prayer therapy into the bill (these being fringe guys like um, … the 2004 Democratic nominee for President). Any government board is going to be controlled by special interests (who are solidly behind the idea) and overridden by a spineless Congress.

Where is this sudden surge of political courage going to come from? This seems like an inverse of the “starve the beast” theory. I’ll call it “gorge the beast”. The idea is to let government healthcare spending get so out of control that Congress will have to act.

Now, what House Republicans propose is that the government simply push the problem of rising health care costs on to seniors; that is, that we replace Medicare with vouchers that can be applied to private insurance, and that we count on seniors and insurance companies to work it out somehow. This, they claim, would be superior to expert review because it would open health care to the wonders of “consumer choice.”

Notice the two-step here. Krugman has spent his time running down consumer-controlled healthcare. But now he’s running down a very different proposal on privatizing Medicare. These are not the same things, unfortunately.

“Consumer-based” medicine has been a bust everywhere it has been tried. To take the most directly relevant example, Medicare Advantage, which was originally called Medicare + Choice, was supposed to save money; it ended up costing substantially more than traditional Medicare. America has the most “consumer-driven” health care system in the advanced world. It also has by far the highest costs yet provides a quality of care no better than far cheaper systems in other countries.

You know, it must be nice to be a Nobel Prize Winner. It apparently means you never have to bother with facts anymore and can just pull things out of your ass.

Because this is pulled out of Krugman’s ass. RAND has studied consumer-controlled healthcare and shown considerable savings, a result that has held up under some scrutiny. And we are most decisively not the most “consumer-driven” healthcare system in the world. According to the OECD’s 2008 data, out of pocket spending accounts for 12.1% of healthcare spending in the US. That’s less than Switzerland (30.8), Sweden (15.6), Japan (14.6 in 2007), Australia (18% in 2007), Canada (14.7% in 2007) and just about every country except France (7.1%). Decisions might be consumer controlled; spending is not. And any economist — any economist not talking out of his ass that is — can tell you what happens when consumers have no restrictions on spending other people’s money. The Kaiser Foundation has specifically identified the decline in patient responsibility (from 40 to 10%) as one of the reason for rising healthcare costs.

Medical care, after all, is an area in which crucial decisions — life and death decisions — must be made. Yet making such decisions intelligently requires a vast amount of specialized knowledge. Furthermore, those decisions often must be made under conditions in which the patient is incapacitated, under severe stress, or needs action immediately, with no time for discussion, let alone comparison shopping.

This is a straw man made of red herrings. Under consumer-controlled plans, no one would be comparison shopping when they are incapacitated, under sever stress or need action immediately. Such situations would be well into the insurance-controlled regime. Additionally, the idea that healthcare spending is “involuntary” or that patients are incapable of making difficult choices is ridiculous and arrogant. Two thirds of healthcare spending occurs in non-emergency situations. Patients make decisions about healthcare every God-damned day, including about the most expensive and wasteful of care — end of life management. Medical procedures, by law, have to be explained to the patient who then has to be told of his prospects and alternatives. They almost always do everything he provider says. But is that, at least in part, because they’re not paying the bills?

The idea that all this can be reduced to money — that doctors are just “providers” selling services to health care “consumers” — is, well, sickening. And the prevalence of this kind of language is a sign that something has gone very wrong not just with this discussion, but with our society’s values.

No. This is reality. It’s not repulsive to describe patients and doctors and consumers and providers. That’s precisely what they are. We’ve just forgotten because of our diseased system. All economic transactions — all goods and services — take place between consumers and providers. Describing that relationship as “sickening” is like the describing the Law of Gravity as “sickening”.