Krugman has been a must-read during the past few months, and he has certainly established himself as not simply a raving fan-boy of the Obama administration. In brief, his main critique is that the White House hasn't been bold enough, either in terms of the size of the stimulus or their willingness to take the appropriate steps to shore up the financial system, i.e. nationalize Citi & B of A.
His most recent blog post, however, seems to take the foot of the throttle in terms of criticism of the Obama approach. While he's been warning that the current Obama approach will lead to zombie banks, as Japan did in their lost decade, he now says:
Well, I’m sure I’m not the only person to notice this: Japan doesn’t look so bad these days.I'm sure today's talk will hit on a lot of issues, as the health of health care plays a big role in the health of the overall economy. Looking forward to it...
3:51 - Krugman is in the building, and happened to be standing right next to me. I asked if he was nervous. He replied that he's done a few talks before. He is shorter and rounder in person that I would have thought. Also seemed to have a decent amount of perspiration going. I also see that he has changed the title of his talk to "Whither health care?"
3:55 - I'm really enjoying the looks on peoples' faces as they walk in 5 minutes before a major public figure is about to speak and are shocked, shocked, that there are no more seats.
3:58 - Previous George W. Gay lecturers include Joshua Lederberg (1983), E. O. Wilson (1980), Margaret Mead (1960), and lots of names that now can be found on streets and buildings in the Longwood area, such as Sears, Peabody, Ruggles, & Shattuck, going all the way back to John Blake in 1922.
4:07 - "I'm not a real health care economist, I just play one on the OpEd page"
4:08 - "No area of the economy works worst under a market economy than health care." "Health care reform is a values issue... it is wrong for people not to be getting health care because they can't afford it." In Jindal's response to Obama: "No American shoould have to worry about losing their health care coverage, period. We stand for universal access to affordable health care coverage."
4:11 - "Our chance to get it right comes from the fact that things are falling apart." Health care spending as a share of GDP: from 5% in 1965 to ~14% now. "Bulk of increase in cost is a result of progress... being able to treat new things." "CBO has been very good on this issue" (meaning he buys their numbers).
4:15 - "In US system, insiders get everything and outsiders get nothing." "Certainly possible that medical progress kills people, as it reduces the number of people who have effective coverage." Since 1999, health care premiums are up 119% while earnings only up 34% (inflation 29%). What can we do? "Until we had regime change in November...push was to find a market solution... argument, not entirely wrong, was that patients don't have incentive to reduce costs... what was missing from all of that was any real examples of any medical cases that people would spend less on; the overwhelming fact about health care is that the minor expenses, where people might not do something, costs next to nothing... it is the major things that cost so much... 5 % of population has half the nation's health care costs."
4:23 - "Immediate problem we face is the insider/outsider issue... growing risk to Americans of not having coverage or inadequate coverage." "Probably, this recession will be worse in terms of uninsurance, soaring rates." "How hard would it be to have everyone covered?" "Opportunity for reform is as good now as, possibly, ever." "Wouldn't covering everyone be really expensive?...Distinguish between budgetary costs and the nation's overall health care bill... there is really no question that universal coverage would be cheaper than current system... why? first, uninsured are by and large relatively young, so insuring them will cost less than most think (i.e. don't just extrapolate from what it costs to insure the other 85%)... second, don't underestimate the amount of effort that goes into insurance underwriting and how much that costs, i.e. denying people coverage, etc. -- we have huge administrative costs... Medicare admin costs are 3%, private insurance is 14%. Costs of denying people coverge is just about enough to give coverage to everyone, from a national perspective. We spend almost twice as much on health care as any other system, and see no increase in better outcomes. This is not a controlled experiment (comparing countries): lifestyle, "we eat more cheeseburgers"
4:32 - Does economic crisis make it easier or harder to make major health care reform? Historically, should make it easier, expansion of social safety net (FDR); but then again, Medicare/Medicaid under Johnson took place during a time of affluence. There are no safe havens, everyone is hit by this economic slump, even Germany. Amount of sheer human misery, however, will be higher here than in Europe b/c they have a stronger safety net -- as many as 10 million Americans might lose health insurance. Kaiser Found. poll: 2 - 1 people say it is more important than ever to reform health care in light of current crises than we cannot afford to take on health care reform right now.
4:37 - 1993 Dems were much looser coalition than now (lots of conservative Southerners). This time around, while there is not unity, it is much more ideologically cohesive. So, what form should health care reform take? Lotsa people say single-payer is the way to go, and people who say that American won't go for it are missing that Medicare is single-payer. While most Americans get their coverage from private companies, public spending on health care is 45%, because that's where most of the expensive cases are. Even a full single-payer will be at most 75% public spending, with rest consumer out of pocket. But Medicare for all is not going to happen now.. what might happen in something a lot more complicated.
4:43 - Single payer is, essentially, each according to his abilities to each according to his needs (good laugh from the audience on that). But this isn't feasible now, Congress would not pass Medicare for all. Jacob Hacker (of Yale) plan: a) community rating, same health care plan available to everyone, no underwriting, etc. b) subsidies, for lower income families to afford health care premiums c) mandates - during Dem primary Obama v. Clinton, but now agree that mandates are needed - we need healthy people in the system - maybe they'll call it something else d) public plan available to all. (d) is needed in order to keep private insurers possibly on board; without (d), insurance companies will campaign vigorously against it, e.g. Harry & Louise. Why feasible now? Comfort zone, for people who like what they have now. Can't tell people that, trust me, you'll be happy with the new public plan -- president needs to able to say you can keep the insurance you now have. Some people will say plans like this are better than single payer, but "I don't consider those arguments serious... very weak arguments." "This is an argument about political feasibility."
4:51 - Hackerish plan won't be as efficient as single-payer, will be substantial more beaurocratic, to regulate insurance companies, enforce mandates, etc. A serious cost issue is the ability of bargain with essentially monopolistic produces, i.e. drugs and medical devices, and bargaining is more effective with single payer. So do you wait for political will for single payer, or do you strike now with a Hacker plan? Brilliance of Hacker is (d), public plan available to all -- it could spontaneously evolve to single payer, and the hisory of Medicare suggests that this will happen. Extra layers of middlemen in private plans made them more expensive than Medicare. Gratifying to see >$600 billion in Obama budget for health care reform, although it is not enough (need twice that, although that is openly acknowledged in the budget).
4:58 - Notably lacking in Obama's plan is a clear statement on a public plan. "Private becomes a good word in and of itself" in this debate. All of this is about covering the gap, getting us to where other developed countries are. Even if we do this, we still have problems. Tendency of health care to grow faster than GDP is remarkably consistent, so it will likely continue in the future. Health care should be a system where "what you get out isn't necessarily what you put in... don't have to be a right=winger to see that a time where health care is 50% of GDP is a bad thing, certainly from an incentive standpoint." Reducing costs buys some time on the health care/GDP/time curve, and also by not paying for things that don't work, are pointless, etc. (see Orszag). Eventually we need to learn to say no, it will cost too much. How do we do that? "In the long run we'll all be British... the government will not just be the payer but the provider."
5:06 - Q&A time (i.e. hear my crazy idea!!!) First guy is making a statement (he is clearly a medical doctor), pontificating, there is no question in sight, jebus, shut up already. Okay, Q2 sucks too, enough of this.
Krugman was good. Thinks health care reform can and should happen now. While he certainly supports single payer, his tone suggests that a full Hacker plan would be fine with him. It'll be interesting to see if his column strike the same mood.