I (More or Less) Agree With Krugman
By David Henderson
Paul Krugman had a blog post last week that I agree with most of. (Pardon the preposition at the end of the sentence.) He criticized a bill, the Preserving Access to Targeted, Individualized, and Effective New Treatments and Services (PATIENTS) Act of 2009, put forward by Senators Jon Kyl (R-AZ), Mitch McConnell (R-KY), and Pat Roberts (R-KS). According to Krugman, the bill would prohibit Medicare or Medicaid from using “comparative effectiveness research” to deny coverage. I’ll assume that Krugman has stated correctly the main provisions of the bill.
If so, his criticism is mainly correct. Below I quote his four comments and comment on each in turn.
1. Krugman writes, “Politicians who rail against wasteful government spending are taking action to prevent the government from reining in … wasteful spending.”
I agree. The idea with comparative effectiveness research is to bring at least some crude cost-benefit analysis to government spending on health care. Spending on procedures that do not pass the bar would not be done.
2. Krugman writes: Politicians who warn that the burden of entitlements is killing the federal budget are stepping in to block … the single most painless route to reducing the growth of entitlements.
I don’t know that it’s the single most painless route, but it’s certainly a route.
3. Krugman writes: They’re doing it in the name of avoiding “rationing of health care” … but they’re specifically addressing taxpayer-funded care. If you want to go out and buy a medically useless treatment, Medicare won’t stop you.
Overstated but true. Medicare won’t stop you even if you find it medically useful. Implicit in his claim is the idea that Medicare would say no only to treatment that is useless. In fact, it would probably say no to useful treatments whose benefit it computes to be below the cost. It could also say no to treatments for which someone’s benefit exceeds the cost. Krugman seems to have forgotten what I call the 7th pillar of economic wisdom: The value of a good or service is subjective. But that’s alright because in all the above cases, a person who valued a medical treatment more than the value the government placed on it would be free to buy it. This seems like a small move away from welfare-state socialism and I’m glad to see Krugman embrace it.
4. Krugman writes: These same politicians are, of course, opposed to efforts to expand coverage. In other words, it’s evil for government to “ration care” by only paying for things that work; it is, however, perfectly OK, indeed virtuous, to ration care by refusing to pay for any care at all.
This is too involved to comment on tersely. For one thing, I doubt that the authors of the bill used the word “evil.” Putting that aside, Krugman does seem to be onto a basic contradiction in the thinking of Messrs. Kyl, McConnell, and Roberts.
Krugman’s comments above clearly suggest that he is in favor of letting people, even people on Medicare, pay for medical care if they value it enough. I guess we can look forward, then, to a New York Times column, or at least a blog post, by Krugman in which he advocates:
1. Letting people out of Medicare who want out.
2. Letting people pay doctors and hospitals more than the Medicare-set rates. (It’s now illegal for doctors and hospitals to bill Medicare beneficiaries even a penny more than the rates set by Medicare.)
H/T to Scott Sumner.