Krugman's Health Care Sell-Out: The Health Care `Reform' Bill is Worse than Nothing

29 December 2009

By Dave Lindorff

Paul Krugman, one of the few liberal columnists writing for the New York Times, claims that at some point in the hoary past when he “began writing a lot about health care,” he was in favor of a Canadian-style single-payer health care system. He adds that even today if he thought there was “any chance of creating Medicare for All any time in the next decade,” he would be “pushing for single-payer now.”

But on Christmas, Krugman threw in the towel, calling on progressives to support the Senate’s version of health care legislation. Suggesting that the so-called Senate Health Reform Bill, if it had been the law back in Dickens’ time in England, would have saved Tiny Tim without any need for the belated charitable intervention of Ebenezer Scrooge, Krugman says progressives should recognize that the Senate bill is the best they can hope for, and that they need to accept that politics is “the art of the possible.”

Krugman goes on to say that despite some “flaws and limitations,” which he leaves unexplained, the Senate bill is “a big win” for progressives--"and for America.”

But is it?

Certainly the Senate bill, and the only slightly less cruddy House version, with which it must be reconciled (let’s be clear here that the ultimate act, when passed, will much more closely hew to the Senate version than the House version, given the number of conservative Democrats in the Senate), does a few good things, such as increasing funding for community health clinics, expanding Medicaid, the health insurance system for the poor, and banning the current insurance industry practice of denying coverage to people with pre-existing medical conditions. But these small positive steps pale in comparison to the truly noxious things this bill does, and the things it fails to do.

The most outrageous thing the health “reform” bill does is further consolidate the death grip that the insurance industry has over health care access and delivery in America. It does this by mandating that everyone buy health insurance, on pain of being slapped with a heavy fine by the IRS. Since most of the 47 million Americans without health insurance are younger and healthier than average (63% of them are under the age of 34 and 21% are under 18), what this measure does is hand the private insurance industry a huge captive customer population who will be stuck with high-cost, low-benefit insurance that will generate huge profits for the industry. The industry will be further enriched by nearly half a trillion dollars in subsidies needed to help low-income people or small businesses buy their mandated health insurance--subsidies which will end up going directly to insurance companies, which will be offering in return wretched bare-bones plans that will only cover some 60% of actual medical costs. (And that's not counting the inevitable proliferation of scam insurance policies that, as with mandated auto insurance plans, will really be simply dummy plans offering no real coverage, but only a piece of paper to allow people to dodge government fines for non-coverage.)

Supporters say that mandating that everyone have health insurance is akin to mandating that every driver of a car buy liability insurance, but there actually is a huge difference. Driving is a matter of choice. If a person doesn’t want to buy car insurance, she or he can decide not to own a car. That reality at least forces auto insurers to compete in offering low-cost minimal insurance plans. Nobody can decide not to buy health insurance under this plan though. It is a historic first: a law requiring American citizens to buy a service from a private company.

Adding insult to injury, the bill does almost nothing to limit costs. This is why doctors, hospital and drug companies and the insurance industry, all of which spend millions of dollars lobbying for this law, love it (health insurance company shares jumped on word of Senate passage). Indeed, the government’s own Center for Medicare and Medicaid Services (CMS), predicts that the law, if enacted, will cause US health care costs--already the highest in the world on a per capita basis and as a share of GDP by a factor of almost two--to rise faster than ever. Furthermore, to keep the projected costs of this bill at an alleged $871 billion over ten years, a huge amount of money is stolen from important existing programs, including $43 billion from payments to safety-net hospitals (mostly public institutions in urban centers which serve poor populations), and from cuts in Medicare funding that could for the first time lead significant numbers of physicians to stop seeing elderly patients on Medicare.

The reform plan is terrible for other important reasons too. In order to sell it to one lone hold-out Democrat, Sen. Ben Nelson of Nebraska, Senate leaders allowed strict limits to be put into the bill making it almost impossible for low-income women or families to buy insurance that includes payments for abortions. The bill also undermines trade unions by taxing, at a rate of as much as 40%, those health plans which, through years of negotiations, offered quality care to workers. As the group Physicians for a National Health Program (PNHP) points out, group health insurance costs are also largely driven by geographical and demographic considerations, and thus this penalty tax actually targets workplaces that employ more women, or that have older workers, or which are located in higher-cost regions such as New York or California.

But surely the worst thing about this bill is that far from putting the US on a course towards some eventual humane national health system like those that exist in the rest of the developed world, and even in many countries in the less developed world, it actually locks in the power of the insurance industry even more solidly, making achieving true health reform an even more difficult challenge than it has been.

Krugman is wrong. If the health plan envisioned by Congress had been the law of the land in Dickens’ time, Tiny Tim’s survival would still have been dependent upon Scrooge’s largesse. If his parents did manage to buy some subsidized insurance policy (and under the Senate version, over 20 million Americans would still be left uninsured!), the deductibles and co-pays would be so high that they still would not be able to get him treated for his deadly disease, and the dark future predicted by the Ghost of Christmas Yet to Come would still have befallen him and his family.

Krugman is also profoundly wrong in his gloomy prediction that there is no chance for true health care reform (as defined by expanding Medicare to cover everyone in America), any time in the next ten years.

As the insurance industry continues to rake in obscene profits, as America’s health statistics continue to plummet, and most importantly, as the huge population of baby boomers hits retirement age and sees their health coverage under Medicare gutted and their children and grandchildren struggling to pay for care, the stage will be set for a radical political realignment, with socialized medicine as one of its key demands.

The liberal attitude expressed by Krugman, of urging progressives to accept a tenth of a loaf, only works to push off the day of that political revolution.

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