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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Krugman: Ignore Bad Ideas of Myopic Medicare Critics

GOP Rep. Paul Ryan has provided an instructive lesson in the folly of advocating the privatization of Medicare, the latest form of self-mutilation for his party. Now comes a new wave of Medicare critics, who hope to appease the knee-jerk Republican ideologues with more modest, but equally ill-considered “reforms.”
Fortunately, New York Times columnist and Nobel Prize laureate Paul Krugman eviscerates the latest version of the raise-the-age-of-Medicare-entitlement proposal in his Sunday column, “Medicare Saves Money”:

Every once in a while a politician comes up with an idea that’s so bad, so wrongheaded, that you’re almost grateful. For really bad ideas can help illustrate the extent to which policy discourse has gone off the rails.
And so it was with Senator Joseph Lieberman’s proposal, released last week, to raise the age for Medicare eligibility from 65 to 67.
Like Republicans who want to end Medicare as we know it and replace it with (grossly inadequate) insurance vouchers, Mr. Lieberman describes his proposal as a way to save Medicare. It wouldn’t actually do that. But more to the point, our goal shouldn’t be to “save Medicare,” whatever that means. It should be to ensure that Americans get the health care they need, at a cost the nation can afford.

Krugman’s lazer-like analysis will leave Medicare-slashers sputtering predictable government-bashing drivel, which convinces almost no one outside the wingnut choir. As Krugman explains further:

…Medicare actually saves money — a lot of money — compared with relying on private insurance companies. And this in turn means that pushing people out of Medicare, in addition to depriving many Americans of needed care, would almost surely end up increasing total health care costs.
The idea of Medicare as a money-saving program may seem hard to grasp. After all, hasn’t Medicare spending risen dramatically over time? Yes, it has: adjusting for overall inflation, Medicare spending per beneficiary rose more than 400 percent from 1969 to 2009.
But inflation-adjusted premiums on private health insurance rose more than 700 percent over the same period. So while it’s true that Medicare has done an inadequate job of controlling costs, the private sector has done much worse. And if we deny Medicare to 65- and 66-year-olds, we’ll be forcing them to get private insurance — if they can — that will cost much more than it would have cost to provide the same coverage through Medicare.
By the way, we have direct evidence about the higher costs of private insurance via the Medicare Advantage program, which allows Medicare beneficiaries to get their coverage through the private sector. This was supposed to save money; in fact, the program costs taxpayers substantially more per beneficiary than traditional Medicare.

We pause here to allow privatization ideologues a few moments to squirm. Krugman then notes the global evidence, which clearly shows the U.S. performing poorly in terms of cost and quality, compared with other industrial nations, and explains, “…High U.S. private spending on health care, compared with spending in other advanced countries, just about wipes out any benefit we might receive from our relatively low tax burden.”
Then there is the thorny problem of many 65-67 cohorts being unable to qualify for or afford private insurance coverage, delaying needed and preventative health care and becoming more expensive Medicare recipients later, when they do qualify.
Krugman acknowledges that “major cost-control” measures are needed, exactly “the kinds of efforts that are actually in the Affordable Care Act.” He concludes, however, that “…If we really want to hold down costs, we should be seeking to offer Medicare-type programs to as many Americans as possible.”
The partial privatization proposals of Sen. Lieberman and others are as economically untenable as they are morally regressive. Krugman’s simple, but compelling analysis of the true costs of even partial privatization should be noted and mastered by Democrats, who want to hold the white house and take back congress next year.

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