The Health of Nations

[Guest guest]

http://www.nytimes.com/2004/02/17/opinion/17KRUG.html?th

 

February 17, 2004OP-ED COLUMNIST The Health of NationsBy PAUL KRUGMAN

 

The Economic Report of the President, released last week, has drawn criticism on

several fronts. Let me open a new one: the report's discussion of health care,

which shows a remarkable indifference to the concerns of ordinary Americans —

and suggests a major political opening for the Democrats.

 

According to a recent Gallup poll, 82 percent of Americans rank health care

among their top issues. People are happy with the quality of health care, if

they can afford it, but they're afraid that they might not be able to afford it.

Unlike other wealthy countries, America doesn't have universal health insurance,

and it's all too easy to fall through the cracks in our system. When I saw that

the president's economic report devoted a whole chapter to health care, I

assumed that it would make some attempt to address these public concerns.

 

Instead, the report pooh-poohs the problem. Although more than 40 million people

lack health insurance, this doesn't matter too much because " the uninsured are a

diverse and perpetually changing group. " This is good news? At any given time

about one in seven Americans is uninsured, which is bad enough. Because the

uninsured are a " perpetually changing group, " however, a much larger fraction of

the population suffers periodic, terrifying spells of being uninsured, and an

even larger fraction lives with the fear of losing insurance if anything goes

wrong at work or at home.

 

The report also seems to have missed the point of health insurance. It argues

that it would be a good thing if insurance companies had more information about

the health prospects of clients so " policies could be tailored to different

types and priced accordingly. " So if insurance companies develop a new way to

identify people who are likely to have kidney problems later in life, and use

this information to deny such people policies that cover dialysis, that's a

positive step?

 

Having brushed off the plight of those who, for economic or health reasons,

cannot get insurance, the report turns to a criticism of health insurance in

general, which it blames for excessive health care spending.

 

Is this really the crucial issue? It's true that the U.S. spends far more on

health care than any other country, but this wouldn't be a bad thing if the

spending got results. The real question is why, despite all that spending, many

Americans aren't assured of the health care they need, and American life

expectancy is near the bottom for advanced countries.

 

Where is the money going? A lot of it goes to overhead. A recent study found

that private insurance companies spend 11.7 cents of every health care dollar on

administrative costs, mainly advertising and underwriting, compared with 3.6

cents for Medicare and 1.3 cents for Canada's government-run system. Also, our

system is very generous to drug companies and other medical suppliers, because —

unlike other countries' systems — it doesn't bargain for lower prices.

 

The result is that American health care, which at its best is the best in the

world, offers much of the population a worst-of-all-worlds combination of

insecurity and high costs. And that combination is getting worse: insurance

premiums are rising, and companies are becoming increasingly unwilling to offer

insurance to their employees.

 

What would an answer to the growing health care crisis look like? It would

surely involve extending coverage to those now uninsured. To keep costs down, it

would crack down both on drug prices and on administrative costs. And it might

well cut private insurance companies out of the loop for some, if not all,

coverage.

 

But the administration can't offer such an answer, both because of its

ideological blinders and because of its special interest ties. The Economic

Report of the President has only negative things to say about efforts to hold

down drug prices. It talks at length about insurance reform, but it mainly

complains that we rely too much on insurance; it says nothing about either

expanding coverage or reducing insurance-company overhead. Its main concrete

policy suggestion is a plan for tax-deductible health savings accounts, which

would be worth little or nothing to a vast majority of the uninsured.

 

I'll talk more about alternatives for health care in future columns. But for

now, let's just note that this is an issue the public cares about — an issue the

administration can't address, but a bold Democrat can.

 

Copyright 2004 The New York Times Company

 

 

 

 

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