Walla walla, bing bang.
Paul Krugman’s column today is about voodoo economics as applied to healthcare reform
It’s about time someone said that and, more generally, made the case that Mr. McCain’s approach to health care is based on voodoo economics — not the supply-side voodoo that claims that cutting taxes increases revenues (though Mr. McCain says that, too), but the equally foolish claim, refuted by all available evidence, that the magic of the marketplace can produce cheap health care for everyone.
I believe that’s completely true—at least as the magic of the marketplace is construed these days which means reducing demand. However, as if to demonstrate that two can play at the voodoo game Dr. Krugman continues:
Insurance companies do try to hold down “medical losses” — the industry’s term for what happens when an insurer actually ends up having to honor its promises by paying a client’s medical bills. But they don’t do this by promoting cost-effective medical care.
Instead, they hold down costs by only covering healthy people, screening out those who need coverage the most — which was exactly the point Mrs. Edwards was making. They also deny as many claims as possible, forcing doctors and hospitals to spend large sums fighting to get paid.
Even if you remove the insurance companies from the healthcare picture entirely and reduce the cost of administration to zero (which is impossible) that’s not going to produce cheap health care for everyone. The slice of the healthcare pie taken by insurance is something like 30%. At the present rate of increase in healthcare costs a cut of 30% will be absorbed in a couple of years.
We’ve got to reform the way in which healthcare is provided. Anything else is voodoo. Or posturing.