By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Health Works CollectiveHealth Works CollectiveHealth Works Collective
  • Health
    • Mental Health
    Health
    Healthcare organizations are operating on slimmer profit margins than ever. One report in August showed that they are even lower than the beginning of the…
    Show More
    Top News
    bowl of vegetable salad
    Raw Foods: benefits and harms
    November 9, 2021
    pros and cons of the keto diet
    Read This Before You Follow the Keto Diet
    May 18, 2022
    spinal cord injuries
    4 Potential Causes of Spinal Cord Injuries (and How to Seek Compensation)
    May 25, 2022
    Latest News
    Grounded Healing: A Natural Ally for Sustainable Healthcare Systems
    May 16, 2025
    Learn how to Renew your Medical Card in West Virginia
    May 16, 2025
    Choosing the Right Supplement Manufacturer for Your Brand
    May 1, 2025
    Engineering Temporary Hospitals for Extreme Weather
    April 24, 2025
  • Policy and Law
    • Global Healthcare
    • Medical Ethics
    Policy and Law
    Get the latest updates about Insurance policies and Laws in the Healthcare industry for different geographical locations.
    Show More
    Top News
    4 Reasons Why Medical Device Compliance Matters
    May 22, 2020
    What To Know About The Importance Of Healthcare Marketing
    November 23, 2019
    healthcare courses
    6 Supplemental Courses in Healthcare to Support Your HR Degree
    August 20, 2021
    Latest News
    Building Smarter Care Teams: Aligning Roles, Structure, and Clinical Expertise
    May 18, 2025
    The Critical Role of Healthcare in Personal Injury Recovery: A Comprehensive Guide for Victims
    May 14, 2025
    The Backbone of Successful Trials: Clinical Data Management
    April 28, 2025
    Advancing Your Healthcare Career through Education and Specialization
    April 16, 2025
  • Medical Innovations
  • News
  • Wellness
  • Tech
Search
© 2023 HealthWorks Collective. All Rights Reserved.
Reading: What Paul Krugman Doesn’t Know About Health Reform
Share
Notification Show More
Font ResizerAa
Health Works CollectiveHealth Works Collective
Font ResizerAa
Search
Follow US
  • About
  • Contact
  • Privacy
© 2023 HealthWorks Collective. All Rights Reserved.
Health Works Collective > Policy & Law > Health Reform > What Paul Krugman Doesn’t Know About Health Reform
Health ReformPolicy & LawPublic Health

What Paul Krugman Doesn’t Know About Health Reform

JohnCGoodman
Last updated: June 4, 2013 8:10 am
JohnCGoodman
Share
8 Min Read
health reform
SHARE

Writers sometimes worry if a day will come when they have nothing more to say. As long as Paul Krugman is around, I will never have that worry.

Writers sometimes worry if a day will come when they have nothing more to say. As long as Paul Krugman is around, I will never have that worry.

Boston University professor Lawrence Kotlikoff has suggested that Krugman return his Nobel Prize. I hope he doesn’t. As long as someone with Krugman’s professional status gets his facts wrong in column after column, and does so in an arrogant and pompous manner, attacking the integrity and hurling insults at all who disagree with him…well, there will always be a market for a writer who is able to show that the scourge of sensible people everywhere has written one more erroneous editorial.

Krugman may not always be wrong. On some economic issues he may actually be right. But when it comes to health care, he almost never misses. He is wrong 100% of the time.

More Read

MRI sedation options
MRI Sedation Options: What You Should Know Before Screening
What Happens When Doctors Sue Unhappy Patients? It’s Not Pretty
It’s Time to Measure Patient Outcomes
Five Tips for Folding FDA’s New Medical App Oversight into Your Business Strategy
Medicare Advantage: The Coming Tsunami

In last week’s New York Times column Krugman pronounced ObamaCare a success before it has even been tried. Why? Because the premiums to be charged in California’s health insurance exchange are apparently lower than what the experts thought they would be:

Well, the California bids are in — that is, insurers have submitted the prices at which they are willing to offer coverage on the state’s newly created ObamaCare exchange. And the prices, it turns out, are surprisingly low. A handful of healthy people may find themselves paying more for coverage, but it looks as if ObamaCare’s first year in California is going to be an overwhelmingly positive experience.

I did a quick check and discovered that if a 25 year old in Los Angeles chooses the least expensive plan offered on the California health instance exchange, the premium will be $142 a month. Yet the cheapest plan offered on eHealth today is only $92 a month.

health reformAah…let’s see…Everybody thought health insurance premiums would be 100% higher. In fact, they are only 60% higher…Hooray…Break out the champagne! (BTW, Avik Roy concludes that the new premiums will be effectively double what people are now paying.)

I’ll come back to these price comparisons in a minute. For the moment, I would ask: what kind of an economist would celebrate an expected price decline without asking what happened to quantity or quality? This is an Econ 101 mistake.

As it turns out, the health insurance to be sold in the California exchange excludes some of the best hospitals and the best doctors. Also, the fees paid to providers will not be the same as commercial insurance are paying. They will be somewhere between the commercial rates and Medicare rates. This means that people with exchange-acquired insurance will be less desirable to providers from a financial point of view than people in orthodox plans. As the Los Angeles Times explains:

People who want UCLA Medical Center and its doctors in their health plan network next year, for instance, may have only one choice in California’s exchange: Anthem Blue Cross. Another major insurer in the state-run market, Blue Shield of California, said its exchange customers will be restricted to 36% of its regular physician network statewide.

And Cedars-Sinai Medical Center, one of Southern California’s most prestigious and expensive hospitals, said it’s not included in any exchange plans at the moment.

Krugman points to the experience of health reform in Massachusetts in predicting how wonderful health reform is going to be:

Massachusetts has had essentially this system since 2006; as a result, nearly all residents have health insurance, and the program remains very popular. So we know that ObamaCare — or, as some of us call it, ObamaRomneyCare — can work.

But what has really happened in the Bay State? Insurance sold in the Massachusetts exchange pays doctors and hospitals only about 10% more than what Medicaid pays.And for reasons that are not entirely clear, doctors are less willing to see the newly insured (with exchange subsidies) than Medicaid patients.

The Massachusetts reformers believed that once everyone was insured, patients would go to the doctor’s office for primary care rather than to the hospital emergency room. But in expanding the demand for care, they (just like ObamaCare) did nothing about supply. The newly insured can’t go to doctors’ offices for their primary care if there aren’t any more doctors’ offices.

Here is what is happening on the ground. Traffic to hospital emergency rooms in Massachusetts is higher today than before health reform. Traffic to community health centers is almost one-third higher than it was before reform. Yet, the time it takes to get care is growing. The wait to see a new doctor in Boston today is two months ― the longest wait in the entire country.

On balance, the only thing that seems to have changed in Massachusetts is that patients are waiting longer. They are going to the same places to get care that they went to before. They are getting the same care from the same providers. In the process, more money is being moved around. A lot more money.

Let’s return to the subject of California premiums. Krugman links to a Jonathan Cohn New Republic column claiming that premiums on the newly created health insurance exchange will actually be lower that they are today. Yet this assertion is based on comparing premiums in today’s small group market with expected individual premiums on the health insurance exchanges. That’s not the right comparison. Small group premiums are significantly higher than individual premiums in most states. The relevant comparison is today’s individual insurance premiums versus the individual premiums in the exchange. Exchange premiums are going to be higher.

With health reform, California premiums will be higher than they are today, but the sticker shock will not be as severe as in other states. The reason: California already has unisex rate requirements. As a result the age differential for males (60 year old versus 20 year old) is already close to the 3 to 1 band required by ObamaCare. In states without unisex regulation, the age differential would be 6 to 1.

Still, middle class families in California should brace themselves. The surprises in ObamaCare are going to be just as arbitrary and unfair on the West Coast as they will be in the rest of the country.

P.S. The folks at InsureBlog have discovered more Krugman errors.

(Health reform errors / shutterstock)
TAGGED:paul krugman
Share This Article
Facebook Copy Link Print
Share

Stay Connected

1.5kFollowersLike
4.5kFollowersFollow
2.8kFollowersPin
136kSubscribersSubscribe

Latest News

Do You Grind Your Teeth at Night? Here’s How Night Guards and TMJ Treatments Can Help
Do You Grind Your Teeth at Night? Here’s How Night Guards and TMJ Treatments Can Help
Dental health
May 21, 2025
The Secret To A Confident Smile: Top Tips For Better Teeth
The Secret To A Confident Smile: Top Tips For Better Teeth
Dental health
May 21, 2025
Clinical Expertise
Building Smarter Care Teams: Aligning Roles, Structure, and Clinical Expertise
Health care
May 18, 2025
Grounded Healing: A Natural Ally for Sustainable Healthcare Systems
Grounded Healing: A Natural Ally for Sustainable Healthcare Systems
Health
May 15, 2025

You Might also Like

Workplace Wellness Meets in the Middle of the Aisle

June 14, 2011

Earthquake Publications for Businesses and HealthCare Providers

December 30, 2011

Tablets in Healthcare

September 1, 2011

Wal-Mart provides evidence Obamacare is working

August 20, 2015
Subscribe
Subscribe to our newsletter to get our newest articles instantly!
Follow US
© 2008-2025 HealthWorks Collective. All Rights Reserved.
  • About
  • Contact
  • Privacy
Welcome Back!

Sign in to your account

Username or Email Address
Password

Lost your password?