Saturday, February 04, 2006

Man bites dog and economist discovers free lunch

In his January 27 op-ed, Paul Krugman delivers his "Health Care Confidential".

"... I know about a health care system that has been highly successful in containing costs, yet provides excellent care. And the story of this system's success provides a corrective to anti-government ideology. For the government doesn't just pay the bills in this system -- it runs the hospitals and clinics."

He likes our VA as a model for health care provision. And here is one of the secrets: "... the veteran's health system bargains hard with medical suppliers, and pays far less for drugs than most private insurers."

This is very cool. I imagine that nearly everything could be obtained cheaply if only the federal government were put in charge to "bargain hard."

Silly me. I fear that the government is an expensive middleman. I fear that it is a highly politicized middleman. And I fear that with enough hard bargaining, suppliers will leave the industry -- as many have ever since Medicare and Medicaid began to "bargain hard."

Think of the many readers of the NY Times op-ed page, many predisposed to this silliness, who get their public policy economics from Krugman.

Thanks to Teri Burgess for the pointer.