Health Care: When Krugman is Right …

In “Mooching Off Medicaid,” (New York Times, March 3), Nobel economist and “liberal” columnist Paul Krugman exposes the real Republican “health care” agenda. They’re not for free markets, they’re for faux “privatization.”

“[W]hy,” asks Krugman, “would you insist on privatizing a health program that is already public, and that does a much better job than the private sector of controlling costs? The answer is pretty obvious: the flip side of higher taxpayer costs is higher medical-industry profits. … As long as the spending ends up lining the right pockets, and the undeserving beneficiaries of public largess are politically connected corporations, conservatives with actual power seem to like Big Government just fine.”

At issue: In the ramp-up to “ObamaCare,” several Republican governors announced they would reject attendant expansions of Medicaid, a government-run health plan for the poor, in their states. Now some of them — in particular, Governor Rick Scott of Florida — are changing their tune, so long as the program is administered through the offices of “private” insurance companies.

Krugman has it exactly right: The point of “privatizing” Medicaid isn’t to cut costs, it’s to funnel money from taxpayers’ pockets into the bank accounts of powerful, privileged, politically connected companies.

Where Krugman goes off the rails is in conflating the politically defined American “private sector” with free markets. Modern American capitalism, especially in the area of health care, is largely an exercise in half-baked socialism. The half that’s baked is the risks, which are socialized. The profits, well, not so much.

While most industries benefit from state privilege to one degree or another, health care companies in particular are the equivalent of mafia “made men.” They’re untouchable. They get anything they want from the government, from licensing rackets and medical school quotas to depress the supply of doctors, to state-granted monopolies not just on the production of particular medicines but on the definitions of medicine itself (can it be grown on your window sill? — not medicine, and if we see it you’re going to jail) to protection from lawsuits by customers who don’t get what they pay for (Republican President Richard M. Nixon and Democratic Senator Edward M. Kennedy set that little gem in the ring of the Health Maintenance Organization Act of 1973).

“Privatization” is one of those Humpty Dumpty words that means just what the political class chooses it to mean, neither more nor less. And what they choose it to mean — whether we’re talking about “privately operated” prisons or “privately administered” Medicaid or any of the other schemes sold under the label — is that the state’s primary function is to corner, capture and cage customers for its corporate cronies (and, using regulation, to crush prospective competitors).

Real privatization would require government to actually get entirely out of the enterprises in question so that buyers and sellers approach each other on an equal, rather than politically gamed, footing. It’s been more than a century since anything resembling such a situation has prevailed in American health care.

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