Friday, March 12, 2010

Krugman on Health Care Myths

Paul Krugman had a good op-ed in yesterday's NYT.

He rails against what he deems the three big "myths" about the health care bill, namely: that it's a government take-over of the the health care sector, that it does nothing to control costs, and that it's fiscally irresponsible.

I agree with the first two points, but the third is kind of a bait-and-switch. It's true that the bill would not be anything like a "government take-over." And certainly there are some cost-control measures in the bill, even though it's unclear whether the most important measures will really be inserted into the final version.

In regard to fiscal responsibility, Krugman argues that even some of the more cynical projections show that reform would only raise total health care spending by about one percent, while expanding coverage to tens of millions of Americans. This, he suggests, is a "good deal."

Covering tens of millions of Americans while only adding one percent to total health care spending does sound like a pretty amazing bargain. The problem is that, if the projections are even remotely accurate, we're already on an unsustainable path. What we need to do is bend the cost curve down dramatically.

One percent would be fine if health care spending weren't expected to envelop the federal budget and substantially weaken our economy over the next several decades. According to CBO's intermediate projections, health care spending could reach nearly 50 percent of GDP by 2080.

Telling people that, after reform, health care spending would only reach 50.5 percent of GDP is not very comforting.

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