Krugman on Mooching MedicaidPosted by Jim Newman on March 5th, 2013 – 1 Comment – Posted in Economy
Paul Krugman points out some inconsistencies in the Conservative response to entitlement issues. First, my grandfather, owner of Dakota Business College, was adamant against social security–he hated FDR for signing this act in 1935. He was absolutely sure that if people knew they didn’t have to save for themselves they wouldn’t. Like many conservatives he believed that the threat of death and economic impoverishment motivated people; they would simply never even try to rise above the worst kind of poverty if they could survive on a hand out. He was unable to see through the disparity of resources divided by number of people and thought somehow wealth would always be gained in proportion to effort. Finally, he felt those who did well should not be fettered by those who weren’t “willing to try.” His entire moral from the bible was if you keep at it, never give up, you will win. What he lost from the bible was that in spite of David and Goliath the reward was usually in another world.
When Medicaid came out in 1965 he was against that as well for the same reason. People will not save for emergencies, even for their own health, unless they feel they will die unless they do. This kind of base negativism was backed by his admonishment that every person in any job at all times should put 10% in savings and not touch it.
When, because of his refusal to follow the rules of accreditation, and his advancing age, he decided to close the college, he withdrew social security. We all laughed at the tough guy who would partake in what he hated. Without it he would have lost his house, his college building, and the farm, and ended up living in a nursing home as none of his children made enough for their parents care. Should he have? I don’t know. He was lucky. Many people are simply unable to build up the assets needed for illness or old age and it’s not because they have a moral failing.
There is another reason why conservative don’t like these programs. They are certain that without competition they will not thrive; balanced against their hate of antitrust laws and patent laws you have to wonder. They also see that profit could be made by the private sector. These services could be monetary. For me this is like charging someone when you rescue them as a good samaritan–yeah, I’ll pull you out of the ditch but it’ll cost you a hundred–don’t like it, call a wrecker, see that snow falling.
Conservatives like to say that their position is all about economic freedom, and hence making government’s role in general, and government spending in particular, as small as possible. And no doubt there are individual conservatives who really have such idealistic motives.
Yes, if they hate government why do they hate anarchism which has classically tried to reduce governmental support in repressing people, e.g, farm and labor in the early 1900s. When anarchism was for the people they hated it. When anarchism is for the rich and powerful they rename it libertarianism, and quoted Austrians, the Europeans they hated before.
When it comes to conservatives with actual power, however, there’s an alternative, more cynical view of their motivations — namely, that it’s all about comforting the comfortable and afflicting the afflicted, about giving more to those who already have a lot. And if you want a strong piece of evidence in favor of that cynical view, look at the current state of play over Medicaid.
Some background: Medicaid, which provides health insurance to lower-income Americans, is a highly successful program that’s about to get bigger, because an expansion of Medicaid is one key piece of the Affordable Care Act, a k a Obamacare.
There is, however, a catch. Last year’s Supreme Court decision upholding Obamacare also opened a loophole that lets states turn down Medicaid expansion if they choose. And there has been a lot of tough talk from Republican governors about standing firm against the terrible, tyrannical notion of helping the uninsured.
Now, in the end most states will probably go along with the expansion because of the huge financial incentives: the federal government will pay the full cost of the expansion for the first three years, and the additional spending will benefit hospitals and doctors as well as patients. Still, some of the states grudgingly allowing the federal government to help their neediest citizens are placing a condition on this aid, insisting that it must be run through private insurance companies. And that tells you a lot about what conservative politicians really want.
Profit. Not freedom or compassion.
Consider the case of Florida, whose governor, Rick Scott, made his personal fortune in the health industry. At one point, by the way, the company he built pleaded guilty to criminal charges, and paid $1.7 billion in fines related to Medicare fraud. Anyway, Mr. Scott got elected as a fierce opponent of Obamacare, and Florida participated in the suit asking the Supreme Court to declare the whole plan unconstitutional. Nonetheless, Mr. Scott recently shocked Tea Party activists by announcing his support for the Medicaid expansion.
But his support came with a condition: he was willing to cover more of the uninsured only after receiving a waiver that would let him run Medicaid through private insurance companies. Now, why would he want to do that?
Don’t tell me about free markets. This is all about spending taxpayer money, and the question is whether that money should be spent directly to help people or run through a set of private middlemen.
The addition of middlemen is a brilliant means to make products more expensive and extract more money. The best way is to incorporate the middlemen within the company so it’s still part of a corporation. It doesn’t spread the wealth, it concentrates it. The farmer, for example, still gets crap for his products, and relies on a huge infrastructure, but now must have big capital to make just a little more. Without enormous potential profits there can be no middlemen.
And despite some feeble claims to the contrary, privatizing Medicaid will end up requiring more, not less, government spending, because there’s overwhelming evidence that Medicaid is much cheaper than private insurance. Partly this reflects lower administrative costs, because Medicaid neither advertises nor spends money trying to avoid covering people. But a lot of it reflects the government’s bargaining power, its ability to prevent price gouging by hospitals, drug companies and other parts of the medical-industrial complex.
For there is a lot of price-gouging in health care — a fact long known to health care economists but documented especially graphically in a recent article in Time magazine. As Steven Brill, the article’s author, points out, individuals seeking health care can face incredible costs, and even large private insurance companies have limited ability to control profiteering by providers. Medicare does much better, and although Mr. Brill doesn’t point this out, Medicaid — which has greater ability to say no — seems to do better still.
Yes, conservatives claim Medicaid is lousy care and many decry Canadian socialized care as poor care but to some poor bastard that doesn’t know better than to not walk into the emergency room with the flu or a cold, they don’t need Dr Brilliance with his latest technology and his smile-perfect assistants; they need someone to tell them to screw the antibiotics and go rest with liquids and some anti-symptomatic drugs, but they can’t skip their work even if it is an avocation and seek impossible to obtain perfect wellness just like their rich counterparts that can’t skip work because it is a loved, money-making avocation.
You might ask why, in that case, much of Obamacare will run through private insurers. The answer is, raw political power. Letting the medical-industrial complex continue to get away with a lot of overcharging was, in effect, a price President Obama had to pay to get health reform passed. And since the reward was that tens of millions more Americans would gain insurance, it was a price worth paying.
It would be better to have more people cared for minimally than for some to have the most amazing care in the world and others to not have any care at all. The idea that people get sick for a reason and can pay for their care appropriately because they somehow deserved their lot in life is hateful economics.
But why would you insist on privatizing a health program that is already public, and that does a much better job than the private sector of controlling costs? The answer is pretty obvious: the flip side of higher taxpayer costs is higher medical-industry profits.
The ultimate privatization cost would be poor care. Pharma-Medic companies could legitimately produce tainted drugs, nonworking drugs, and support idiot practices like homeopathy (charge even more than utility) as long as they made the people believe they worked. They could charge huge prices for years because it takes people, individuals, huge amounts of education, social structure, and monetary capital to compete with companies that can spend their resources on considering how to make the most money any way possible and easily win by sheer size. This isn’t small-scale economics where tribal concepts of fair competition relate. These are city-state corporations going after individuals and small social tribes.
How is a company going to form sufficient size if its profit is to tell people not to use an ineffective drug? Their best bet would be to make another near-placebo and advertise it as the best and charge more.
So ignore all the talk about too much government spending and too much aid to moochers who don’t deserve it. As long as the spending ends up lining the right pockets, and the undeserving beneficiaries of public largess are politically connected corporations, conservatives with actual power seem to like Big Government just fine.
Jim Newman, bright and well