In his most recent column, Paul Krugman tries to enlighten the dwindling readership of the New York Times on the subject of health care. The usual Krugman incoherence is quite apparent in the column, but truth is nowhere to be found.
Parroting a recent Obama administration talking point, Krugman tries to credit the Obama health plan with imposing “rules that would prevent insurance companies from . . . dropping your coverage when you get sick.” But such regulation has been in place for decades — and rightly so. Insurance that can be cancelled once you get sick is not insurance against health costs at all. We don’t need a government takeover of health care to accomplish that.
Krugman’s main point in the column is to criticize the Blue Dog Democrats for their failure to support Obamacare. He suggests that “maybe they’re just being complete hypocrites” and “they’re nothing but corporate tools, defending special interests.”
He scorns in particular Blue Dog concerns over the new entitlement subsidies for health insurance in the plan for the middle class and above. The House plan provides new subsidies for the purchase of health insurance for families earning up to $88,000 a year. The plan that passed through the Senate HELP Committee (here in PDF) goes over $100,000.
There is no reasonable justification for such an extensive new entitlement burden. We can’t pay for the vast future entitlement promises we already have made for Social Security, Medicare, and Medicaid — the latter two of which are already supposed to provide a health-care safety net for the poor and for seniors. Adding another entitlement burden on top of those existing over-promised programs would not just be fiscally imprudent — it would be fiscally insane.
Krugman also scorns the Blue Dog opposition to the so-called “public option” government health insurance plan, saying “a plan without a public option to hold down insurance premiums would cost taxpayers more than a plan with such an option.” But hundreds of private insurers are already competing today. If one more plan operating under the same rules — a government-run plan — were added, it would not make any significant difference.
But the public option is not going to operate under the same rules. Under the pending legislation, it will start out under paying doctors and hospitals at Medicare rates, which are almost 20 percent below market rates for doctors, and over 30 percent below market rates for hospitals. And it will have authority to slide down to Medicaid rates, which are another 30 to 40 percent lower. This will provide an enormous illegitimate advantage over the private competitors. New taxes imposed on the private plans would add to this illegitimate advantage, as would likely eventual taxpayer subsidies for the public option.
President Obama likes to say that the public option is needed “to keep the insurance companies honest.” But as the illegitimate advantages of the public option drive the private plans out of the market, who is going to keep the government honest?
— Peter Ferrara is director of Entitlement and Budget Policy for the Institute for Policy Innovation, among other posts. He served in the White House Office of Policy Development under President Reagan, and as associate deputy attorney general of the United States under the first President Bush.