Krugman’s Blog, 3/3/13

Three posts yesterday.  The first was “Government and Medical Costs, Continued:”

I’ve spent some more time going through Steven Brill’s magnum opus on medical prices, and am even more amazed at (a) the quality of the reporting (b) his weird refusal to draw the obvious conclusion.

Throughout the piece, Brill highlights the extent to which Medicare is able to get better deals than private insurers, who in turn get much better deals than individuals. Somewhat puzzlingly, he says almost nothing about Medicaid, which does even better at bargaining because of its greater ability to say no. The best available research says that Medicaid — if provided directly — is way cheaper than private insurance:

So the obvious answer is to expand public insurance, and give Medicare more bargaining power.

But somehow Brill veers off at the last minute. He gets all politically realistic about the prospect of expanding Medicare; I’m all for realism, but shouldn’t the overwhelming message of his piece be that what passes for realism in American medicine is disastrous? And he argues that

trying to cut the deficit by simply lowering the fees Medicare and Medicaid pay to hospitals will not work. It will only cause the hospitals to shift the costs to non-Medicare patients in order to maintain profits — which they will be able to do because of their increasing leverage in their markets over insurers.

This is, from everything I’ve read, a highly dubious proposition — and everything Brill has said up to this point reinforces that position. After all, the argument that hospitals will raise fees if they make less on Medicare patients only works if hospitals are currently charging less than the traffic will bear — and Brill has just spent 20,000 words telling us that they squeeze every dime they can out of patients.

Anyway, read his reporting, but turn to health-care economists for the analytical implications.

The next post was “Today In Well, Duh,” which Mr. Keller should have read before he put out his wretched op-ed today:

Ezra Klein mans up and admits he was wrong. He had written a piece suggesting that if only Republicans knew how much Obama has been willing to offer, they might be willing to make a deal. Jonathan Chait set him straight, informing him that no matter what Obama put on the table, Republicans would find a way to say that it’s not enough. And sure enough, a Twitter exchange lets Klein watch that process in real time, as a top Republican consultant, confronted with evidence that Obama has already conceded what he said was all that was needed, keeps adding more demands.

So Klein admits that Republicans just don’t want to make a deal. Their objections to the deals on the table aren’t sincere; if convinced that Obama has met their demands, they just make more demands.

I think it’s important here to understand the broader implications.

The whole push for a Grand Bargain has been based on the notion that we can reach a fiscal deal that takes the whole fight over the budget off the table. What Klein has belatedly learned is how unlikely such a Bargain really is; but the same logic tells us that any Grand Bargain that might somehow be struck, via Obama’s mystical ability to mind-meld Star Trek and Star Wars or something, wouldn’t last. In a year — or more likely in a minute or two — Republicans would be back, demanding more tax cuts and more cuts in social programs. They just won’t take yes for an answer.

Meanwhile, it’s not just Republicans who refuse to accept it when Obama gives them what they want; the same applies, with even less justification, to centrist pundits. As people like Greg Sargent point out time and again, the centrist ideal — deficit reduction via a mix of revenue increases and benefits cuts — is what Obama is already offering; in fact, his proposals have been to the right of Bowles-Simpson. Yet the centrist pundits keep demanding that Obama offer what he has already offered, and condemn both sides equally (or even place most of the blame on Obama) for the failure to reach a deal. Again, informing them of their error wouldn’t help; their whole shtick is about blaming both sides, and they will always invent some reason why Obama just isn’t doing it right.

Anyway, props to Ezra — and is the use of Twitter exchanges to document political hypocrisy a new frontier in reporting?

Unfortunately, probably…  The last post of the day was “Who Should We Listen To?”

Dean Baker is feeling dyspeptic — not for the first time — over a WaPo piece suggesting that slow growth is the new normal. Dean wonders why we should listen to people who have been wrong about everything so far. But it’s actually worse than he says.

In the article, the case for slow growth forever is mainly made by quoting Kevin Warsh, a former Fed governor. And Warsh is indeed someone who has been wrong about everything; a bubble denier who spoke of strong capital markets before the crash, a hawk who has been warning about the risk of inflation for three years, an invoker of invisible bond vigilantes who somehow managed to describe the supposed threat from these vigilantes as somehow both a certainty and unknowable.

If there is a special distinction to those of Warsh’s speeches and articles I’ve read, it’s this: he has had a habit of saying and writing things that are supposed to be profound, but say nothing at all. Can anyone tell me the point, if any, of this WSJ op-ed?

But wait: who is Kevin Warsh, anyway? Well, he’s a lawyer turned investment banker turned Bush appointee to the Fed turned Hoover fellow — not an economist at all. Now, I hate credentialism: there are plenty of fools with Ph.D.s, some fools with fancy prizes, and a fair number of first-rate economic thinkers without formal qualifications. Still, if someone is going to make pronouncements about how the whole nature of the business cycle has changed, you’d like some sign that somewhere in his life he has thought hard about, well, anything.

So why pay any attention at all to this guy on these matters? I guess it’s a different kind of credentialism — the Beltway notion that because somebody was once appointed to a policy position, he must be an expert. But that is, of course, ridiculous — and people at the Washington Post, who get to see former officials all the time, surely must know better.



One Response to “Krugman’s Blog, 3/3/13”

  1. Future Says:

    With regard to Krugman’s masterpiece on capitalization of federal taxes by Governor Scott the twist should be tied tighter noting his company presumably his thumb is in the mince pie, can spend no more than Medicaid and must deliver the same quality and quantity of returns or reimburse the Federal government for losses due to malfeasance. To wit.

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