He wrote,

Your federal government is basically an insurance company with an army.

You and I would read that as an insurance company backed by coercion. Frances Woolley took it that way, and started into the pros and cons of introducing coercion into the provision of insurance, concluding

Christian churches have never been able to raise more than a tithe, or 1/10th, of people’s incomes, even when they were the major providers of social security. Taxes are the only feasible means of paying for the public services required with current levels of life expectancy,

Of course, if you go back to read Krugman in the original context, he meant to say that the federal government is basically an insurance company plus an army, not an insurance company with an army. The last thing he meant to do was call attention to the coercion behind the insurance function.