[Mb-civic] NYTimes.com Article: America's Failing Health

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America's Failing Health

August 27, 2004
 By PAUL KRUGMAN 



 

Working Americans have two great concerns: the growing
difficulty of getting health insurance, and the continuing
difficulty they have in finding jobs. These concerns may
have a common cause: soaring insurance premiums. 

In most advanced countries, the government provides
everyone with health insurance. In America, however, the
government offers insurance only if you're elderly
(Medicare) or poor (Medicaid). Otherwise, you're expected
to get private health insurance, usually through your job.
But insurance premiums are exploding, and the system of
employment-linked insurance is falling apart. 

Some employers have dropped their health plans. Others have
maintained benefits for current workers, but are finding
ways to avoid paying benefits to new hires - for example,
by using temporary workers. And some businesses, while
continuing to provide health benefits, are refusing to hire
more workers. 

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. 

The fact is that the mainly private U.S. health care system
spends far more than the mainly public health care systems
of other advanced countries, but gets worse results. In
2001, we spent $4,887 on health care per capita, compared
with $2,792 in Canada and $2,561 in France. Yet the U.S.
does worse than either country by any measure of health
care success you care to name - life expectancy, infant
mortality, whatever. (At its best, U.S. health care is the
best in the world. But the ranks of Americans who can't
afford the best, and may have no insurance at all, are
large and growing.) 

And the U.S. system does have very high overhead: private
insurers and H.M.O.'s spend much more on administrative
expenses, as opposed to actual medical treatment, than
public agencies at home or abroad. 

Does this mean that the American way is wrong, and that we
should switch to a Canadian-style single-payer system?
Well, yes. Put it this way: in Canada, respectable business
executives are ardent defenders of "socialized medicine."
Two years ago the Conference Board of Canada - a who's who
of the nation's corporate elite - issued a report urging
fellow Canadians to bear in mind not just the "symbolic
value" of universal health care, but its "economic
contribution to the competitiveness of Canadian
businesses." 

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. 

http://www.nytimes.com/2004/08/27/opinion/27krugman.html?ex=1094635076&ei=1&en=4f4d892073a21c7d


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