Krugman's Got a Point, But I've Got a Better One
By Bryan Caplan
Arnold Kling remarks:
All I can think of is the public digesting Paul Krugman’s argument that we spend more money on health care than countries with socialized medicine, we have the same longevity as those countries, therefore socialized medicine is more cost-effective.
In fact, we spend $2000 more per capita than other countries. Taking David Cutler’s value of a life-year as $100,000, the critical value for whether that $2000 is cost-effective is whether it increases our longevity by one week. (UPDATE: see the comments for a valid criticism of this arithmetic) If you want to try to find that week by controlling for all the other factors that affect longevity (genetics, homicide rates, traffic fatality rates, etc.), go ahead. But I think it’s like trying to call balls and strikes from a helicopter.
Then it sounds like Krugman makes a good point. We know we’re spending $2000 more per year, and by your own admission, you have no confidence that we’re getting anything for it.
I’d add, however, that if there is little evidence that health care improves life expectancy by much (or other measures of health, for that matter), then we have every reason to abolish Medicare and Medicaid.
Never mind whether the rich deserve better health. Either way, there is simply little evidence that these enormously expensive programs do much to improve the health of the poor. So why not pull the plug?