How to Build on Obamacare

By Paul Krugman
The New York Times, March 27, 2017

“Nobody knew that health care could be so complicated.” So declared Donald Trump three weeks before wimping out on his promise to repeal Obamacare.

But put politics aside for a minute, and ask, what could be done to make health care work better going forward?

One important answer would be to spend a bit more money. A report from the nonpartisan Urban Institute argues that the A.C.A. is “essentially underfunded,” and would work much better — in particular, it could offer policies with much lower deductibles — if it provided somewhat more generous subsidies.

What about the problem of inadequate insurance industry competition? Better subsidies would help enrollments, which in turn would probably bring in more insurers. But just in case, why not revive the idea of a public option — insurance sold directly by the government, for those who choose it?

There are other more technical things we should do too, like extending reinsurance: compensation for insurers whose risk pool turned out worse than expected. Some analysts also argue that there would be big gains from moving “off-exchange” plans onto the government-administered marketplaces.…


NYT Reader Comment:

By Don McCanne, M.D.
San Juan Capistrano, CA

Paul Krugman had it right: “I would argue that good economics is also good politics: reformers will do best with a straightforward single-payer plan, which offers maximum savings and, unlike the Clinton plan, can easily be explained” (NYT, 6/13/05).

Studies have shown that the most expensive model of health care financing is a fragmented, multi-payer, public and private system such as we have in the United States. Incremental patches increase costs even more and always fall short on universality, equity, and access while increasing the profound waste of administrative inefficiency (currently over $500 billion per year in recoverable waste – Annals of Internal Medicine, 2/21/17).

We should not accept bad policy because the politics of change is hard. We should support good policy and change the politics. That is happening. There is a surge of support for a single payer improved Medicare for all which would meet our goals of reform at a cost that each of us could afford.

Remember the words of Nobel laureate Paul Krugman, “good economics is also good politics.”

It’s too bad that those debating Obama’s ACA versus the Trump/Ryan AHCA didn’t listen to the surge of voices demanding Medicare for all. AHCA was defeated and now the other side wants to fix ACA. Paul Krugman, formerly a single payer supporter, is now in the latter camp.

But look at his proposals to fix ACA. He would pour more money into our costly, inefficient system in order to compensate for the high deductibles that the private insurers use to keep their premiums competitive. That passively perpetuates the profound administrative waste of our system.

He brings up the old saw about private insurer competition, as if over half a century of seeing how ineffective that would be hasn’t taught us anything. Further, he would try to entice more insurers into the market by, yes, pouring in more taxpayer money in in the form of subsidies.

He suggests bringing back the idea of a public option even though the last effort resulted in vitiation of the concept before it was dumped on the trash heap of failed policy politics. The general concept was briefly resuscitated in the form of co-ops – another effort that the insurance industry lobbyists were able to vitiate. Regardless, a public option would be only one small player that would have very little impact in cleaning up the highly flawed, fragmented infrastructure of our health care financing system.

He suggests reinsurance – the taxpayers taking over the role of insuring risk while continuing to richly reward the private insurers for selling us an abundance of superfluous administrative services.

Finally he suggests moving off-exchange plans into ACA exchanges. Wow! Think of all the ways that would provide a major impact in addressing the serious problems we have in health care financing…I can’t think of any either.

The policy debate is over. Tweaking ACA is the most expensive approach we could take, and it would still fall far short of the goals of reform. AHCA would have only made things worse. Single payer is not only more efficient, it also would actually achieve our goal of providing essential health care services to absolutely everyone in a system that is funded equitably so that each of us could afford it.

We have the policy, based on sound economics. Now let’s get the politics right. As Paul Krugman says, good economics is also good politics.