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Paul Krugman Is Right About Swampcare

By  |  March 13, 2017, 04:00am  |  @stevengberman

Paul Krugman opined in the New York Times that the GOP health care plan is “so bad it’s awesome.” Coming from him, this is high praise indeed. Normally Krugman is catastrophically wrong about the government running things, but in this case, he’s right (for all the wrong reasons).

He said everything he needed to say in two paragraphs. The rest was just preening.

Given the rhetoric Republicans have used over the past seven years to attack health reform, you might have expected them to do away with the whole structure of the Affordable Care Act — deregulate, de-subsidize and let the magic of the free market do its thing. This would have been devastating for the 20 million Americans who gained coverage thanks to the act, but at least it would have been ideologically consistent.

But Republican leaders weren’t willing to bite that bullet. What they came up with instead was a dog’s breakfast that conservatives are, with some justice, calling Obamacare 2.0. But a better designation would be Obamacare 0.5, because it’s a half-baked plan that accepts the logic and broad outline of the Affordable Care Act while catastrophically weakening key provisions. If enacted, the bill would almost surely lead to a death spiral of soaring premiums and collapsing coverage. Which makes you wonder, what’s the point?

I do wonder, what’s the point?

There’s a point to ideological consistency and the presuppositions implied by the ideology. Take Krugman’s statement “[Market-based health insurance] would have been devastating for the 20 million Americans who gained coverage thanks to the act” as an example.

Certainly, 20 million uninsured Americans gained coverage thanks to Obamacare. They enrolled in Medicaid. But millions of working Americans saw their premiums increase by double-digits, saw their benefits decline, and their deductibles rise to pay for that. And the “coverage” those formerly-uninsured received didn’t alter the quality or availability of their health care one iota.

It did, however, reduce the quality and availability of health care for all but the rich or those union members with exempted Cadillac plans. It did, however, line the pockets of large hospital chains whose administrators milked the plans for every penny. It did, however, saddle doctors, employers, and health insurance carriers with onerous and insane regulations. It did, however, limit choice for most Americans.

As President Trump is wont to say, Obamacare was a disaster. It not only didn’t work, but it could never work. Even if all 50 states joined the exchanges and enthusiastically supported the program, it would have failed.

The “death spiral” Krugman referred to was happening regardless of what Republicans did to Obamacare. The only option was (and is) to fully repeal the ACA and allow a completely free-market-based approach to work its “magic.”

Swampcare is terrible because it keeps the basic premise of Obamacare: that risk pools and subsidies need federal government assistance so that Americans will receive a minimum level of health care. This simply isn’t true. It wasn’t true in 2010 when Obamacare was forced down the country’s throat, and it’s not true now.

The only argument to even consider swampcare as a starting point is political. Certain senators don’t want to face the withering ads and the wrath of angry entitlements voters who believe that they simply must have a government-provided Medicaid plan or they’ll have to vote for someone who will give it to them. This means that as long as any Medicaid expansion or subsidy (whether it’s paid to the insurance carriers or the IRS) exists, these senators won’t accept any cuts until after 2020.

Krugman is partially correct in his assertion that Republicans were all lying, all along. They were fine trying to repeal Obamacare for show when Obama was in office and they were unable to override his veto. It makes great election-year fodder. But when Republicans actually have the power to do something real, they get cold feet. (Kind of like Democrats and gun control.)

The answer to Obamacare is exactly the opposite of what Krugman wants, which makes sense given that Krugman is frequently 180 degrees wrong about government and economics because he’s wrong about human nature. The answer is to allow state and local governments to take care of the truly indigent, and allow citizens the liberty of buying or not buying health insurance.

Health insurance carriers, if not limited by in-state plan silos, hospital and drug company lobbyist hegemony, and government interferences, could design plans to meet every American’s needs. And unless you assume these companies are evil to the core, you can be sure that if there’s a market for a high-deductible, cheap premium catastrophic care plan to avoid medical bankruptcy, they’ll offer one. If there’s a market for totally-managed health care with or without abortion coverage, they’ll offer it.

In order to assume health insurance companies are evil, you would also have to assume car insurance, flood insurance, homeowner insurance, and life insurance companies are evil. They’re not evil, they’re capitalists who manage financial risk. Civilized society would be a mess without them.

Ever since government started conflating financial risk and consumer financial decisions with actual health care, large hospital corporations and drug manufacturers have been allowed to run free and make huge windfalls, while insurers have had to withdraw from markets.

Swampcare’s fatal adherence to the Democrats’ principles of “insurance for everyone,” has made the GOP plan untenable, because the problem has never been about insurance. It’s about health care. And now Republicans have walked right into the same trap. Even the name “Affordable Care Act” has been a lie all along. The cost of care has skyrocketed.

Krugman is right. The “G.O.P.’s policy-making and policy analysis capacity has been downgraded to the point of worthlessness. There are real conservative policy experts, but the party doesn’t want them, perhaps because their very competence makes them ideologically unreliable…”

For once, we should listen to the man. If someone claims he’s “right about everything” enough, eventually he’ll actually get one right. Krugman got this one right.