The health-care war

The health-care war

: I am no fan of Paul Krugman’s; rarely make it all the way through a column. But today’s is a winner, for it rationally sets out the current choice in what I believe is one of the big two issues facing us the election (after the war on terrorism).

In other words, rising health care costs aren’t just causing a rapid rise in the ranks of the uninsured (confirmed by yesterday’s Census Bureau report); they’re also, because of their link to employment, a major reason why this economic recovery has generated fewer jobs than any previous economic expansion.

Clearly, health care reform is an urgent social and economic issue. But who has the right answer?

The 2004 Economic Report of the President told us what George Bush’s economists think, though we’re unlikely to hear anything as blunt at next week’s convention. According to the report, health costs are too high because people have too much insurance and purchase too much medical care. What we need, then, are policies, like tax-advantaged health savings accounts tied to plans with high deductibles, that induce people to pay more of their medical expenses out of pocket. (Cynics would say that this is just a rationale for yet another tax shelter for the wealthy, but the economists who wrote the report are probably sincere.)

John Kerry’s economic advisers have a very different analysis: they believe that health costs are too high because private insurance companies have excessive overhead, mainly because they are trying to avoid covering high-risk patients. What we need, according to this view, is for the government to assume more of the risk, for example by picking up catastrophic health costs, thereby reducing the incentive for socially wasteful spending, and making employment-based insurance easier to get.

A smart economist can come up with theoretical justifications for either argument. The evidence suggests, however, that the Kerry position is much closer to the truth….

My health-economist friends say that it’s unrealistic to call for a single-payer system here: the interest groups are too powerful, and the antigovernment propaganda of the right has become too well established in public opinion. All that we can hope for right now is a modest step in the right direction, like the one Mr. Kerry is proposing. I bow to their political wisdom. But let’s not ignore the growing evidence that our dysfunctional medical system is bad not just for our health, but for our economy.

You can debate his conclusion, of course — and I’d far rather see you debating that than all this Swiftie crap. That is what we should be spending our breath and bandwidth on, not mud.