Paul Krugman: Harry, Louise and Barack

Paul Krugman is pleased with developments in health care reform: Harry, Louise and Barack, by Paul Krugman, Commentary, NY Times: Is this the end for Harry and Louise?

Harry and Louise were the fictional couple who appeared in advertisements run by the insurance industry in 1993, fretting about what would happen if “government bureaucrats” started making health care decisions. The ads helped kill the Clinton health care plan, and have stood, ever since, as a symbol of the ability of powerful special interests to block health care reform.

But … this time the medical-industrial complex … is offering to be helpful. Six major industry players … sent a letter to President Obama sketching out a plan to control health care costs. What’s more, the letter implicitly endorses much of what administration officials have been saying about health economics.

Are there reasons to be suspicious about this gift? You bet… But … on the face of it, this is tremendously good news.

The signatories of the letter say that they’re developing proposals to help the administration achieve its goal of shaving 1.5 percentage points off the growth rate of health care spending. That may not sound like much, but … that … would save $2 trillion over the next decade.

How are costs to be contained? There are few details, but the industry has clearly been reading Peter Orszag, the budget director.

In his previous job,… director of the Congressional Budget Office, Mr. Orszag argued that America spends far too much on some types of health care with little or no medical benefit, even as it spends too little on other types of care, like prevention and treatment of chronic conditions. Putting these together, he concluded that “substantial opportunities exist to reduce costs without harming health over all.”

Sure enough, the health industry letter talks of “reducing over-use and under-use of health care by aligning quality and efficiency incentives.” It also picks up a related favorite Orszag theme, calling for “adherence to evidence-based best practices and therapies.” All in all, it’s just what the doctor, er, budget director ordered.

Before we start celebrating, however… Is this gift a Trojan horse? After all, several of the organizations that sent that letter have in the past been major villains when it comes to health care policy. … Remember that what the rest of us call health care costs, they call income.

What’s presumably going on here is that key interest groups have realized that health care reform is going to happen no matter what they do, and that aligning themselves with the Party of No will just deny them a seat at the table. …

I would strongly urge the Obama administration to hang tough in the bargaining ahead. In particular,… on cost control…: giving Americans the choice of buying into a public insurance plan as an alternative to private insurers. The administration should not give in on this point.

But let me not be too negative. The fact that the medical-industrial complex is trying to shape health care reform rather than block it is a tremendously good omen. It looks as if America may finally get what every other advanced country already has: a system that guarantees essential health care to all its citizens.

And serious cost control would change everything, not just for health care, but for America’s fiscal future. As Mr. Orszag has emphasized, rising health care costs are the main reason long-run budget projections look so grim. Slow the rate at which those costs rise, and the future will look far brighter.

I still won’t count my health care chickens until they’re hatched. But this is some of the best policy news I’ve heard in a long time.


Originally published at the Economist’s View and reproduced here with the author’s permission.

One Response to "Paul Krugman: Harry, Louise and Barack"

  1. Anonymous   May 15, 2009 at 10:42 am

    Yeah. The government is so good at cost control. A public health plan will be another black hole for borrowed or printed money, a leviathan of waste and inefficiency and graft and corruption, one more stick of dynamite that finally once and for all blows the dollar and our way of life to kingdom come.