Saturday, August 28, 2004

Krugman comes out for Single Payer

He's absolutely right that a government health system would make U.S. businesses tremendously more competitive. One easy example? Every GM car you buy costs you an extra $1400 to cover GM's health insurance obligations.

Is there anyone who would seriously argue that GM would not do better against foreign competition if it could cut prices $1400 per car or pocket an extra $1400 per car?

Krugman rightly notes that the U.S. spends far more per year on health care per capita than any other industrialized nation. I think some of the scare stories about Canadian single payer are overblown, but even if we accept the worst tales of delays and rationing, spending more than double what Canada spends per capita should really mitigate the worst delays.

The last point, and one unaddressed by Krugman, is medical malpractice. It's a complicated issue, to be sure. Capping damages or making it more difficult to sue is not the answer -- malpractice cases are already tremendously expensive to pursue and tremendously difficult to win, and caps on punitive damages only hurt those who are most egregiously hurt by the bad behavior of their physician.

What's more, malpractice is currently the only effective mechanism for removing bad doctors. Currently, around 5% of doctors account for about 50% of malpractice damages. If we had a more efficient regulatory regime for physician licensing, we could minimally reduce the number of doctors and vastly reduce the amount of damages (and thus the premia). A robust doctor-licensing agency would make it easier for 95% of doctors to practice medicine.

Another solution would be for insurance providers to rate doctors based on their records, rather than their practice area. Currently, cardiologists in a certain geographic region pay one amount, proctologists another amount, and so on. If I crash my car, even if it isn't my fault, my insurance rates go up. Why doesn't it work the same for doctors? Let the good drivers pay less, I say.


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