Posted 10:02 AM by Robert

Herr Doktorprofessor, Heal Thyself

Herr Doktorprofessor Paul Von Krugman has been cherry picked.

He says that he has enough money to count himself as very comfortable. So he can probably afford to purchase private medical insurance. He also works for Princeton University, and the faculties of most such universities are amply provided with medical insurance and are notoriously long-lived.

In short, like most people with sufficient incomes and good statistical health profiles, he will never have to rely on Medicare. He has been cherry picked.

But Herr Doktorprofessor Paul Von Krugman thinks that it would be an absolutely terrible idea - indeed, the dreaded "cherry picking" - if the government were to provide subsidies allowing people with less money than he has to purchase private medical insurance. He's in quite a huff over it - even to the point of referring to the idea as a "Trojan horse" and a "bait-and-switch," an illegal retail practice:

Meanwhile, another proposal - to force Medicare to compete with private insurers - seems intended to undermine the whole system.

This proposal goes under the name of "premium support." Medicare would no longer cover whatever medical costs an individual faced; instead, retirees would receive a lump sum to buy private insurance. (Those who opted to remain with the traditional system would have to pay extra premiums.) The ostensible rationale for this change is the claim that private insurers can provide better, cheaper medical care.

But many studies predict that private insurers would cherry-pick the best (healthiest) prospects, leaving traditional Medicare with retirees who are likely to have high medical costs. These higher costs would then be reflected in the extra payments required to stay in traditional fee-for-service coverage. The effect would be to put health care out of reach for many older Americans. As a 2002 study by the Kaiser Family Foundation judiciously put it, "Difficulties in adjusting for beneficiary health status . . . could make the traditional Medicare FFS program unaffordable to a large portion of beneficiaries."

These objections, together with Herr Doktorprofessor's willingness to accept his own privileged position accompanied by his outrage, alarm and quasi-paranoid suggestion that the proposal seems intended to undermine the whole system should be familiar to the reader. Indeed, the passage could have been created with a rapid cut-and-paste from Herr Doktorprofessor's objections to school vouchers. That makes sense, because the "premium support" idea is simply a kind of medical insurance voucher. Indeed, he had directly and expressly linked the two areas, as when he complained that the administration continues to believe that "financialization" is the way to go on just about everything, from school vouchers to Social Security. Here are some representative Krugmaniacal passages on school vouchers:

[P]roposals for school vouchers should be critiqued not only on educational or cost-efficiency grounds but also because they raise the risk of a collapse in the political support for public education. (If upper-middle-class families are allowed to "top up" their vouchers with their own money, they will soon realize that it is in their interest to cut the size of the vouchers as much as possible). And-dare we say it?-we should in general oppose privatization plans if they are likely to destroy public sector unions. After all, people on the right tend to favor privatization for exactly the same reason.

Many conservatives and even a few liberals are in favor of issuing educational vouchers and allowing parents to choose among competing schools. Let's leave aside the question of what this might do to education and ask what its political implications might be. Initially, we might imagine, the government would prohibit parents from "topping up" vouchers to buy higher-priced education. But once the program was established, conservatives would insist such a restriction is unfair, maybe even unconstitutional, arguing that parents should have the freedom to spend their money as they wish. Thus, a voucher would become a ticket you could supplement freely. Upper-income families would realize that a reduction in the voucher is to their benefit: They will save more in lowered taxes than they will lose in a decreased education subsidy. So they will press to reduce public spending on education, leading to ever- deteriorating quality for those who cannot afford to spend extra. In the end, the quintessential American tradition of public education for all could collapse.

These two Krugmaniacal samples appear to date from the mid-1990's - before publicly financed school vouchers programs had got started. Such publicly financed school voucher programs have now existed for a while in several places - and the evidence so far is that those programs have benefited education generally in the places where they have been tried. But then, didn't Herr Doktorprofessor build himself an escape hatch for this objection? Why, yes, he does build an escape hatch. He comforts us: Let's leave aside the question of what this might do to education and ask what its political implications might be.

Isn't it nice of Herr Doktorprofessor to spend all that intellectual energy on a putative analysis of an education proposal that "leaves aside" the most overwhelmingly important question - in fact, the only really important question: what this might do to education? I leave it to the reader to determine for herself whether this is a little intellectual "bait-and-switch" on Herr Doktorprofessor's part.

In his most recent column, Herr Doktorprofessor also seems inclined to leave aside the question of what vouchers (or "premium support") might do to medical care and instead asks what its political implications might be. (Answer: Medicare, "undermined.")

As is so often the case with Herr Doktorprofessor's rants, he buries most of his sources even as he purports to rely on their august credentials:

But many studies predict that private insurers would cherry-pick the best (healthiest) prospects, leaving traditional Medicare with retirees who are likely to have high medical costs.

Yes, and many studies predict that private schools would cherry-pick the best (smartest, best behaved) prospects, leaving traditional public schools with less talented, emotionally impaired children who are likely to have high educational costs and low performance. So far, those educational studies appear to have been wildly wrong. That is not too surprising, since many of those many studies were prepared by people with seriously vested interests in maintaining the status quo and there were also many studies saying the opposite and even arguing that "cherry picking" is a cost worth paying. Do we order Stanford University to close because it's "cherry picking" from the University of California or "undermining" public support for the public university system? Of course not - because what we care about is the general quality of education. The competition between the public and private sectors benefits the public - it is not important that a particular competitor is benefited either in education or medical care.

Similarly, that "traditional Medicare" might be "undermined" by some reform is completely irrelevant if the net effect is an increase in the quality of medical care. And it appears to be no problem for Herr Doktorprofessor that the government already provides huge subsidies through the tax system to employers to offer medical insurance to their employees.

But Herr Doktorprofessor spends not a word on those topics. He would prefer to - and does - leave aside the question. He's once again too eager to get down to the ephemera of Bush-and-Republican bashing to actually address any really important questions. In fact, his political biases are so urgent for him that they again seem to preclude him from even asking or thinking of the right questions.

Steve Antler has a word on the bias evident in the work of Kaiser Family Foundation, the outfit that produced the one study Herr Doktorprofessor almost (but not quite) actually identifies - and from which he quotes (Incompletely? Out of context? How could anyone tell?). And even that lonely quote from that suspect source does not really support the position that Herr Doktorprofessor says it supports. The quote is: "Difficulties in adjusting for beneficiary health status . . . could make the traditional Medicare FFS program unaffordable to a large portion of beneficiaries." Yes, they could ... and, then again, they might not ... and "traditional Medicare" could become unsustainable if it is not reformed, harming everyone who depends on it ... - and the earth could be struck by a meteor next week! If that KFF quote represents the strongest position his "many studies" have taken against "premium support," then Herr Doktorprofessor has proved that Congress would be well advised to enact such a program right away.

UPDATE: Herr Doktorprofessor's objection to the bill he discusses (I do not know if this proposed bill is included in or consistent with the deal Congress has reportedly just reached on Medicare), that Congress in 2003 is somehow "ruling out" possible responses by the Congress in 2010 or 2011, frankly just seemed too ridiculous (and too obviously column inch-filler), to even warrant an answer. But I was wrong. Kausfiles provides a good answer - one really worth reading.

MORE