Krugman’s blog 1/18/17

There was one post yesterday, “Health Care Fundamentals:”

Another week of complete chaos on the health reform front. Dear Leader declares that he’ll give everyone coverage; Republicans explain that he didn’t mean that literally. CBO says the obvious, that repealing the ACA would lead to immense hardship for tens of millions; Republicans declare that this is wrong, because they will come up with an alternative any day now — you know, the one they’ve been promising for 7 years.

I’ve written about all of this many, many, many times. The logic of Obamacare — the reason anything aiming to cover a large fraction of the previously uninsured must either be single-payer or something very like the ACA — is the clearest thing I’ve seen in decades of policy discussion. But I don’t know if I’ve ever written out the fundamental principles that lie behind all of this.

So here we go: providing health care to those previously denied it is, necessarily, a matter of redistributing from the lucky to the unlucky. And, of course, reversing a policy that expanded health care is redistribution in reverse. You can’t make this reality go away.

Left to its own devices, a market economy won’t care for the sick unless they can pay for it; insurance can help up to a point, but insurance companies have no interest in covering people they suspect will get sick. So unfettered markets mean that health care goes only to those who are wealthy and/or healthy enough that they won’t need it often, and hence can get insurance.

If that’s a state of affairs you’re comfortable with, so be it. But the public doesn’t share your sentiments. Health care is an issue on which most people are natural Rawlsians: they can easily imagine themselves in the position of those who, through no fault of their own, experience expensive medical problems, and feel that society should protect people like themselves from such straits.

The thing is, however, that guaranteeing health care comes with a cost. You can tell insurance companies that they can’t discriminate based on medical history, but that means higher premiums for the healthy — and you also create an incentive to stay uninsured until or unless you get sick, which pushes premiums even higher. So you have to regulate individuals as well as insurers, requiring that everyone sign up — the mandate, And since some people won’t be able to obey such a mandate, you need subsidies, which must be paid for out of taxes.

Before the passage and implementation of the ACA, Republicans could wave all this away by claiming that health reform could never work. And even now they’re busy telling lies about its collapse. But none of this will conceal mass loss of health care in the wake of Obamacare repeal, with some of their most loyal voters among the biggest losers.

What they’re left with is a health economics version of voodoo: they’ll invoke the magic of the market to somehow provide insurance so cheap that everyone will be able to afford it whatever their income and medical status. This is obvious nonsense; I think even Paul Ryan knows that he’s lying like a rug. But it’s all they’ve got.

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