Krugman, on ObamaCare, Gets the Wrong Worm

By Lambert Strether of Corrente.

Krugman’s latest — “The Obamacare Worm Turns” — is homer-esque even by the tribal Democrat standards of “Conscience of a Liberal.” But sadly, Krugman’s got the wrong worm. Let me explain. I can best do this in the form of a table:

dune_worm tapeworm
WRONG. Contra the image in Krugman’s column, the turning worm of ObamaCare is not like the Dune Sandworm (Shai’ Hulud). RIGHT. ObamaCare is like a tapeworm (Taenia solium), turning or not; notice the crown of hooks and the suckers through which the worm attaches itself to the intestine of its unhappy host.

There’s little point analyzing Krugman’s column in detail; it might as well have been ripped from a West Wing blast fax as part of the latest, greatest public relations offensive.[1] Heaven only knows why Krugman picked the Dune sand worm image to accompany his column; I mean, it can’t possibly be that Krugman regards Obama as a charismatic, messianic, prescient, master strategerist with the God-like powers of Paul Atreides, the hero of Dune, right? Because that would be over the top.

Anyhow, why do I say that ObamaCare is like a tapeworm, a parasite that exists for no other reason than to extract nourishment from its host? Because it is, that’s why. This chart (again) tells the story:

Figure 1


We are blessed, on this continent, with the closest thing you can get to a controlled experiment in the real world on how to do health care right, and how to do it wrong. We have two countries, of continental scale, both from the English political tradition, each with a Federal system of government, and similar economies. The two countries are similar enough culturally that their citizens can move with ease from one country to another. Canada has a single payer system; the United States has a private health insurance system. And Canada “bent the cost curve” in the mid-70s, when it adopted single payer, and the United States did not.

What the chart shows is that the our private health insurance system is purely parasitic; it is useless; it exists solely for the purpose of rental extraction from its host, the body politic. Abolish it, and you bend the cost curve to look like Canada’s. If single payer had been adopted in 2009, and given a year to implement (like Medicare) the country would already have saved a trillion dollars, and several thousand people would not be dead. That is the cost, the harm, of the tapeworm that is the health insurance industry. Not science fiction; sober fact. (Because Canadians are always sober!) And ObamaCare seeks to fasten that tapeworm’s hooks and suckers to our body politic’s gut. Forever.

So you can understand when I hear people saying “Well, what we need to be doing is keeping our tapeworm healthy and happy, and maybe buffing it a little” I get annoyed. Here are two fine examples of how to make a tapeworm happy from yesterday’s Washington Post. Ezra Klein:

The next challenge for the law, as the White House knows, will be the outreach challenge of signing up enough young-and-healthy people to balance out its risk pools.

And Sarah Kliff amplifies:

“One of the things I’ve been curious about is any demographic information about who is and isn’t signing up, so we can get a sense of how to best adjust and tailor our public efforts,” Chris Abele [a country official from Milwaukee] asked.

No dice. “Chris, at this point we hope to add that to our statistics very soon but we don’t have the breakdown by age and zip code and area,” Sebelius responded. As to how to focus outreach efforts, Sebelius directed Abele to “focus on the general population in terms of likely uninsured but also young and healthy individuals.”

So here we have yet another insane, sociopathic statement from the political class, and everybody who hears it nods and smiles away as if everything is perfectly normal. And it is! It is!

Did you hear what the Secretary of Health and Human Services really, actually said? She said her first priority was not health. Rather, her first priority is the actuarial soundness of the ObamaCare pool. For example, if every sick person in the United States who doesn’t have insurance signed up, and nobody else did, that would be a disaster. (Not to the sick people, of course.) And why? Because the insurance companies would lose money. In other words, the tapeworm couldn’t fatten itself![2] Contrast single payer’s “Everybody in, nobody out” philosophy. And do note that with single payer, our body politic would be healthy and strong enough to do that, because we wouldn’t be feeding the tapeworm any more, and giving all our energy to parasites. That trillion dollars freed up by single payer would have bought a lot of care!

As with any disease, the first step to a cure is admitting you’re sick. It would be helpful — especially to the many thousands who will lose their lives even after ObamaCare is fully implemented — if Krugman would take that first step. 

And if you want to “clear the room” at your Thanksgiving dinner table… Try comparing ObamaCare to a tapeworm!


[1] Though I cannot forbear to quote this howler:

And in any case, insurance with restricted networks is hardly something new to Obamacare.

Careful NC readers — many of whom are far more likely to be personally affected by ObamaCare than Krugman, which explains why they are careful — know that the insurance companies can manipulate thin networks to price people out of the market for care they need (and that’s before we get to balance billing). Krugman, good Democrat that he is, throws them under the bus with an “in any case” aside, with an oh-so-casual “hardly.” Single payer, with its “Everybody in, and nobody out” philosophy, is far less casual, and doesn’t toss people aside.

[2] At this point, Obots tend to mutter about living “in the real world.” (Next stop: “The best is the enemy of the good.” Next stop: “Purist!” Next stop: “Racist!”) No. Look at the chart. The real world is the rest of the world, including Canada’s single payer system. In this country, we live in a bizarre neo-liberal fantasy world — a world that Obama, and his enablers and apologists (like America’s favorite quasi-Nobelist) have done nothing to combat, and much to reinforce because free markets. For shame!

NOTE I’m not a tapeworm expert, so if I’ve given the name of the wrong species to the tapeworm image, please correct me.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. Ben Johannson

    Aren’t you afraid pet progressives will use this post to label you “the tapeworm guy”, thereby discrediting you for all time or until the next news cycle?

    Come on John Cole and company, run with it!


    I have been told throughout my life that people cannot tell when I am making a joke, so FYI my above comment was not serious.

    1. CB

      You may not be but the believers and belittlers will be. Both the genuinely enthralled and the rewards seeking, the deluded and the careerists.*

      * see DKos

        1. susan the other

          You most definitely got somewhere with your revelation of Sibelius’s inadvertence: about promoting the economics of the insurance industry’s Rosetta Stone for profit – actuarial tables. Great stuff. Thank you Lambert.

    2. quixote

      Important info, Lambert, now that you’re the “tapeworm guy.” (:D!) Tapeworms don’t actually get fat. The more they feed, the more they reproduce. It would be as if Big Insurance spawned masses of small competitors instead of growing more and more Jabba the Hutt on us. Which — I know: shock! horror! — means tapeworms are actually one moral rung above the InsureCos.

    3. Sidney Fudd

      Regarding your PS.

      I have heard the same thing my whole life also. You have any idea what the hell is the matter with everyone?

      1. NotTimothyGeithner

        This is a fake church. Its a parody sight, but a few years ago, Ricky Gervais, an intelligent man and a comedian, brought this website up on his podcast in his discussion about America. Europeans tend to not grasp the scope and size of the U.S., and much American behavior mystifies them when they meet Americans who travel. Gervais was describing this reality, and he brought up this website.

        Gervais started to read from the website on his podcast, but he thought it was a real website.

        The crazies take pride in being the craziest, and the crazies seek to outdo each other when confronted with someone crazier which happens all the time in this internet age. The motivation behind the crazy is far more energetic and fierce that what was once perceived as parody/hyperbole/snark/whatever can no longer be distinguished from the actual crazy without clear signs. Obvious cognitive dissonance is not a sign anymore because the crazy sees cognitive dissonance as commitment to a cause.

        In a way, dead pan delivery is dead.

  2. trish

    This is an excellent column.

    And doesn’t matter the species. We know (in our gut) a tapeworm when we see one (and this one’s gargantuan) and I wonder does Krugman have some brain-eating parasite that feeds on the conscience or something…he’s too smart not to not know he’s shilling for the insurance industry, the sucking sound’s too great…

  3. scott

    It’s actuarial math that insures that Obamacare won’t work.

    Let’s say you have 100 people in your pool and there’s a 1% chance per year, on average, that a person in your group needs $200,000 treatment for something really bad, or one person per year, ON AVERAGE. Even if the other 99 didn’t get sick at all, you’d need a $2000 premium just to break even, right?

    Well, there’s this thing called the Poisson distribution. It says that there’s a 37% chance NOBODY gets sick in a given year (yay profit of $200K), a similar chance that one person get’s sick (break even), but there’s this:

    Chance of 2 of your hundred getting really sick in the same year: 18% (shareholders aren’t going to like this)
    3 times: 6% (bankruptcy)
    4 times: 1.5%!

    That means if you want 95% probability you won’t go bankrupt, you need to charge a premium of $6000 on everyone, UNLESS you can OFFLOAD that risk onto the taxpayers or cancel people when they get sick and need that $200K treatment.

    I’m sure Canada the the rest of the world did this thought experiment a generation ago.

      1. NotTimothyGeithner

        Canada was interesting. One of the western provinces did it first, but at the time, the provinces were much more powerful vis a vis Ottawa.

        The last Dominion Act was 1956/7 (I’m not Canadian) which is modern Canada, but a couple of the provinces already had single payer by this time because they copied Sasketchawan or B.C. The population at large saw the success there, and they demanded it for the whole country.

        The States here are not as powerful as the Canadian provinces were when single-payer was being introduced in Canada. The States don’t have the resources to raise and allocate the funds, considering our wealth extraction economy and fungibility of money.

        Canada just didn’t do it as a national exercise, so I think the Canadian experience would be a bit difficult to replicate.

        1. McKillop

          Tommy Douglas, a premier of Saskatchewan -and much admired even now- was chiefly responsible for Canada’s first single payer health care. Even now, the provinces are constitutionally mandated as the governing bodies in charge of health, and education, and other jurisdictions.
          The federal government plays a secondary role.
          Do not be fooled into thinking that Canadian health care sprang into being without opposition – or that it is homefree and safe even now.
          Those who admire the avaricious (or ‘prudent”) health care delivery of the U.S.A. seek to change the single payer system administered by the provinces to the more efficient medically better+ (non-socialist)rapine experienced south of the border. The battle is constant.

    1. TheBellTolls

      You are ignoring the law of large numbers here. In aggregate your claims costs will look mostly normal. Your 95th percentile will be more constrained by the pooling of members. Increasing the pool which is ultimately what obamacare does will ultimately give another upside to the insurers since it will only help to reduce risk assuming they have a proper sense of the risk characteristics.

  4. Robert R

    Let’s see if I have this right. I wanted single payer, but didn’t get it. Admittedly, the reason was that many Democrats were afraid to fight for it (Max Baucus anyone?), and Republicans were against the idea from the beginning. And I would have loved for the president to show some backbone and at least stand up for the public option. But he didn’t, and we didn’t get what we wanted. So your point is that we should root for continued failure, leaving people with no way to pay for healthcare at all? And if we don’t see it that way, you now have carte blanche to ridicule us and call us “Obamabots” or worse? Exactly how are you contributing to the discussion?

    1. Lambert Strether Post author

      It’s like a law of nature that any comment that deploys the “Let me [lemme] see if I’ve got this right” trope mischaracterizes the comment to which it purport to respond.

      Look, it’s really, really simple: Just start advocating for a sane, humane, proven health care policy that saves trillions of dollar and thousands of lives.

      That’s it. Just a simple good faith effort. How hard is that, really?

      1. diggoryvenn

        Its something like a law of nature that a blogger challenged on his or her premises responds by ridiculing the commenter. You supply irony quotes around the “real” world inhabited by non-mythological creatures like Max Baucus, Joe Godhelpus Lieberman, Mary Landrieu to show that political reality is a false construct of “Obots” who will reflexively call your criticisms racist, and then make fun of the guy that calls you on it. I read Green Lantern comics when I was a kid, but I outgrew the notion that I could bend the will of others to my way of thinking by the strength of my moral rectitude a while back.

        1. Lambert Strether Post author

          Ah, “reality.” I had thought that the point of politics was to change reality. But you educate me that the point of politics is to engage in reflexive tribalism. The door to Kos is that way. Did the orange confuse you?

        2. NotTimothyGeithner

          Is Joe Lieberman the same Joe Lieberman from Connecticut? Why do you think pointing out Joe’s status as a member of the Democratic caucus is a defense for Democratic behavior? The Democratic cast him out, but our illustrious dunce in the White House rode to his rescue and made sure Joe not only remained in the Democratic caucus but maintained his oversight position as Chair of Homeland Security which is riddled with profiteering and abuses.

          Imagine what Ron Wyden would do in that seat.

        3. Lambert Strether Post author

          Let me translate that “Green Lantern” trope for reader who may not be familiar with it.

          Translation: I take no responsibility for advocating for policy because my tribal leaders will tell me what I need to know and what I should do.

  5. Ziad K Abdelnour

    The Greenspan led Federal Reserve created two epic bubbles in the space of six years which burst and have done irreparable harm to the net worth of the middle class. Rather than learn the lesson of how much damage to the lives of average Americans has been caused by creating cheap easy money out of thin air, our Ivy League self-proclaimed expert on the Great Depression, Ben Bernanke, has ramped up the cheap easy money machine to hyper-speed. There is nothing normal about the path this man has chosen. His strategy has revealed the true nature of the Federal Reserve and their purpose – to protect and enrich the financial elites that manipulate this country for their own purposes.

    1. Procopius

      His strategy has revealed the true nature of the Federal Reserve and their purpose – to protect and enrich the financial elites that manipulate this country for their own purposes.

      Off topic, but your point is…? Is this something that is supposed to surprise/shock us? If there’s no overall inflation why should we care if stock and bond prices are “inflated?” And why don’t the all-powerful all-knowing markets do something about it? I go with Charles Pierce, “Fk the deficit. People got no jobs, got no money.”

  6. Mike

    For what it is worth, Krugman has always stated that the US would be much better off it it went with a single payer system but it was never going to happen because of the crony capitalism on the left and no way the right would accept a single payer system because it has to do with gov’t being involved.

    1. Joe Firestone (LetsGetitDone)

      I don’t think it’s worth much, since Krugman’s view that Medicare for All couldn’t be passed is just rationalization for Obama’s actions in 2009. It was Obama who took it off the table. Had he gotten Reid to remove the legislative filibuster then and insisted on passing Medicare for All in February of 2009 as part of a second New Deal along with a stimulus package in the neighborhood of $1.6 – $2 Trillion, and a rise in the minimum wage to an average of $16.00 per hour, all justified by the need to end the Great Recession and to restore full employment, he could have gotten it through. He wasted the crisis, at least from the point of view of fulfilling the needs of the 99%. Of course, as many frequently point out, he did just fine for the 1%.

      1. REDPILLED

        Exactly! But Obomber was a ‘bought’ tool of Wall Street by the time he became the Dem nominee in 2008, so none of the sensible steps you outlined were going to be taken by him, or any other Dem or Rethug, all of whom are beholden to Wall Street, corporations, and war profiteers. This entire economic-political system works ony for the top 5%, further enriching them, especially the top 0.1%. Unless and until there is a different system – call it democratic socialism – we are doomed.

      2. Aaron Layman

        He wasted the crisis in more ways than one. His betrayal of the nation was completely contrary to the “hope and change” platform on which he ran.

        There was a mandate for both a single payer healthcare option and a complete reform of the banking sector. What we received instead was royal raping and a botched reach-around.

        1. NotTimothyGeithner

          I can’t stand the President, but lets be honest, “hope and change” was nothing more than branding. Obama’s campaign platform was always “I agree with Hillary now that she has said it except she shouldn’t be President.”

          Kucinich, Edwards, Biden, Dodd (even that MPAA POS), and probably Richardson had far more liberal and leftier platforms than Obama.

          No one listened (very few anyway). They saw a young mixed raced, educated man who reinforced self-images the young and trendy people felt about themselves, but the real Obama (the real Hillary too) was out stumping for Joe Lieberman in 2006. No one was betrayed by Obama except for his constitutional oath, but as far as voting, Obama always was a shallow, brand and nothing more. Go back and read his glorious speeches. Its rah rah crap with sledgehammer of rhetorical devices to con the rubes and people who wanted to be conned.

      3. NotTimothyGeithner

        A few minor quibble concerning the filibuster:

        -Reid and the Democrats reauthorized the filibuster. It has to reauthorized every two years. They chose to bring it back along with Joe Lieberman.

        -The Supreme Court already ruled on the validity of the filibuster in 1892 because legislation would routinely be passed without the filibuster framework being followed and people challenged this.

        The Supreme Court of the United States has already ruled that the only constitutional requirement is 50 (they weren’t 100 Senators; but the point is the same) plus the Vice President which is why the Constitution mentions ties. 50+1 has as much authority as 100 Senators doing all the legislative acumen and tradition they could muster.

        The nuclear option is adding a layer of voting to merely use the Constitutional option. “Mr. Smith goes to Washington” besides being a crummy movie is also factually inaccurate.

        1. Joe Firestone (LetsGetitDone)

          The Democrats did re-authorize the filibuster and have done so every two years since the big victory in 2009. If they hadn’t authorized it in 2009; they would have been under much greater pressure to pass progressive legislation. On the Supreme Court, they have ruled that 50+ 1 votes are all that’s necessary constitutionally. But they also refuse to intervene in the Senate’s own rule-setting. So, if the Senate insists on re-authorizing the filibuster every two years, I doubt that the Court will ever interfere with their business or grant standing to a citizen who wants to sue on grounds that the Senate use of the filibuster has harmed them through blocking or passing legislation that was harmful to them, or through denying them the equal protection of the laws, which in my view it, in fact, does.

      4. Bloix

        Krugman opposed Obama and supported Clinton precisely because Obama did not have a commitment to single-payer. Obviously, some people choose not to remember that.

        To take one example that I found in about 30 seconds:

        “The Edwards and Clinton proposals actually include a public option — that is, people can buy into a Medicare-type plan administered by the government. They are not forced to go to private insurance companies…

        The Obama plan includes a public option for everyone as well — but thereby hangs a tale. You see, when it was first announced, it didn’t: the public option was there only for selected groups — others would have to go with private insurance companies. It was only after several days of hectoring from progressive health care wonks that the Obama people said, in effect, “OK, we’ll make it available to everyone.” I was told that they really hadn’t thought about that — which is amazing, considering how important the public option is…

        This was one of the episodes that led health wonks I talk to to conclude that Obama may just not be that committed to universal care.

        This gets once again at what I keep trying to tell people: on health care, Obama is consistently running to the right of his rivals.”

        Also this:

        And this:
        “If Mrs. Clinton gets the Democratic nomination, there is some chance — nobody knows how big — that we’ll get universal health care in the next administration. If Mr. Obama gets the nomination, it just won’t happen.”

        1. Lambert Strether Post author

          What a farrago of bad history, false claims, and straw men.

          1) Your comment conflates the public option and single payer. Will the bait-and-switch operation “progressives” ran for the public option magic zombie sparkle pony never die? Here are more “days of hectoring” for your reading pleasure. In any case, Obama even betrayed his supposedly savvy, pragmatic public option supporters very early in the process to cozy up to Big Pharma, even though they kept pushing it, though whether they were unwitting (stupid) or complicit (evil) in doing to, I’ve never been able to decide.

          2) Your comment conflates universal health care with single payer. Even ObamaCare is putatively (though not in practice) universal; that is the policy goal the mandate is designed to achieve.

          3) Krugman (correctly) slammed Obama for running Harry and Louise ads against Clinton, since Clinton’s plan had a mandate, and Obama’s did not. (Naturally, Obama reneged on this when elected.) That’s not at all the same as Krugman supporting Obama because Obama supported single payer. You provide no evidence of that. I’d like a link.

    2. NotTimothyGeithner

      Isn’t that kind of like how George W. Bush would pray for peace? Do you forgive George W. Bush or Obama for their hawkish behavior?

      Its nice to say one would like something then turn around and advocate for a radically different proposal.

  7. Joe Firestone (LetsGetitDone)

    Congratulations! This is a perfect example of a masterful, and brilliant, multiple skewering of some of our leading “progressive” neoliberal ideologists. The tapeworm with its suckers is almost as a good a meme as the justly famous “vampire squid” metaphor, and the title referencing the wrong worm is a play on ““Oy vey, have you got the wrong vampire.” from Roman Polanski’s “The Fearless Vampire Killers,” which, in turn, was a play on the Jewish Vampire in Richard Matheson’s 1954 novel I Am Legend.

    As I said, just a brilliant embedding of our basic critique in our popular culture framework. It makes Krugman’s effort look not only wrong; but feeble in comparison.

    1. Doug Terpstra

      Yes, Lambert’s tapeworm is perfect the metaphor for ObamaCare, aptly capturing the painful, gut-wrenching parasitism of individuals as well as the national economy. It’s like a mandatory, ongoing colonoscopy without anesthesia.

      This, I suspect, is what the morally-bankrupt Obama wants to propagate globally using the TPP (although details are secret), because severing healthcare from employment or single-payer ensures the ultimate corporate power over labor.

  8. DakotabornKansan

    “The dream of reason – the dream was that reason, in the form of the arts and sciences would liberate humanity from scarcity and the caprices of nature, ignorance and superstition, tyranny, and not least of all, the diseases of the body and the spirit – did not take power into account.” – Paul Starr

    I have been re-reading one of the best books on my bookshelf, The Social Transformation of American Medicine (published in 1982) by Harvard sociologist Paul Starr. It survives not only as a great history of medicine and sociology; it remains completely relevant today after three decades. If you want to understand more about the forces that shaped our nation’s health care and what is wrong with America’s health care system, I recommend reading this book.

    Starr writes in his Preface:

    “I have divided this history into two books to emphasize two long movements in the development of American medicine: first, the rise of professional sovereignty; and second, the transformation of medicine into an industry and the growing, though still unsettled, role of corporations and the state. Within this framework I explore a variety of specific questions, such as:

    •why Americans, who were wary of medical authority in the early and mid-nineteenth century, became devoted to it in the twentieth;
    •how American doctors, who were bitterly divided and financially insecure in the nineteenth century, became a united and prosperous profession in the twentieth;
    •why hospitals, medical schools, clinics, and other organizations assumed distinctive institutional forms in the United States;
    •why hospitals became the central institutions in medical care;
    •why public health did not;
    •why there is no national health insurance in the United States;
    •why Blue Cross and commercial indemnity insurance, rather than other types of health plans, dominated the private insurance market;
    •why the federal government in recent years shifted from policies that encouraged growth without changes in the organization of medical care to policies that encouraged reorganization to control growth;
    •why physicians long escaped from the control of the modern corporation, but are now witnessing and indeed taking part in the creation of corporate health care systems.

    Who were the victims in medicine’s rise to the top? One of the victims were the poor, punished by a system that, Starr says, was “not interested” in treating people who could not pay. Starr writes that before the growth of the health insurance industry, the middle class had only slightly better access to health care than did the poor. However, by 1950, the middle class had achieved access closer to that of the wealthy, while the poor were left without access. It was this concern for access to care – the “crisis” in health care – that was the beginning of the end for medicine’s primacy. It was the perception of a crisis of need that eroded faith in the medical profession.

    The dream of power did not take reason into account.

    Prophetically, Starr wrote:

    “A corporate sector in health care is also likely to aggravate inequalities in access to health care. Profit-making enterprises are not interested in treating those who cannot pay…With cutbacks in public financing … the two-class system in medical care is likely to become only more conspicuous…

    “The failure to rationalize medical service under public control meant that sooner than later they would be rationalized under private control. Instead of public regulation, there will be private regulation, and instead of public planning, there will be corporate planning. Instead of public financing for prepaid plans that might be managed by the subscriber’s chosen representatives, there will be corporate financing for private plans controlled by the conglomerates whose interests will be determined by the rate of return on investments. This is the future toward which American medicine now seems to be headed.”

    “Because” free markets!

    For shame!!!!

    1. TimR

      Sounds interesting. I wonder how his take compares to Eustace Mullins’, who wrote some books about how Rockefeller interests corporatized that messy 19th century medicine and created the 20th century hospital industrial complex.

      I have not read those either, but James Corbett ( made a mini-doc recently on “Rockefeller Medicine” that talks about how they centralized medicine under their control, buying off all the state legislatures and setting up accrediting boards under their sway.

    2. just_kate

      Agreed. As many have commented before we need a return to the notion of ‘Commons’. It’s sickening that something so important with potential for great public benefit can be perverted so completely.

  9. Pat

    Hey, don’t miss the latest one where the states not going all in on this are missing the stimulative effect of ACA.

    Yes, there is a stimulative effect of the medicaid expansion – at least until the government takes the estates of those 55 and older enrolled in it. But personally I think they are going to find that instead of Krugman’s back of the envelope estimate of 1% of GDP added they may find at least that much stripped from the economy as people struggle to pay still unaffordable insurance premiums and tax dollars going to help them that would provide more stimulus going directly into people’s pockets or even just rebuilding some roads (and then we would get the roads and not helping to furnish a room again for some Insurance big wig).

    Seriously, the dude is in full panic mode that ACA is a disaster.

    1. NotTimothyGeithner

      “Seriously, the dude is in full panic mode that ACA is a disaster.”

      One minor clarification, Krugman and many others are worried they will be held accountable for their pro-ACA propaganda and will lose voters. The NYT is banking on the Obot-prototype to buy their paper, but for the ones who wake up, will they buy the NYT? Probably not because they are paying for increasingly unaffordable health industry tribute with part time jobs if they have those, but if they could, they would likely be unimpressed by a fawning sycophant of ACA such as Krugman.

      Look at MSNBC’s ratings on the year; although last month was decent, probably because of the shut down. People are tuning out pro-Democratic messaging at least when its defending the Democrats for pursuing non-liberal/leftish policies or kowtowing to the GOP once again as part of the unity party charade.

  10. Paul Niemi

    In all honesty, I don’t believe the participation rate in Obamacare is going to be a long-term problem. Persons who aren’t motivated to sign up sooner will eventually access a provider, be it a clinic or emergency room. They will then be presented the choice of paying cash or signing up for Medicaid or Affordable Care on the spot, with the nice lady or gentleman in the office walking them through it at the computer. If they choose to pay cash, fine, but I would suppose most will find signing up to be a good deal for them. A point is that it will be their choice, and people who are given a choice are more likely to believe in the choice they have made. I think that is potentially better than having people fret about being rounded up and forced into a universal system they may or may not like, and which could fail politically just as well on any number of points of dissatisfaction, given the history of controversy experienced by other single payer systems. We forget that these other systems have not been a panacea; they have all had ups and downs on the way to achieving a general satisfaction over the years.

    1. NotTimothyGeithner

      The real problem with Obama-care is the healthcare industry is a parasite on society at large. Premiums and so forth were unaffordable in 2007, and with a few minor tweaks which largely benefit the upper middle class who had problems with pre-existing conditions and kids who can’t find jobs in the Obama economy, the basic problem has become worse except now the Democrats and “liberal” establishment have spent three years stamping their name all over this POS legislation.

      We have a rapacious system, and the Obots have managed to convince enough people ACA was a liberal solution in the population at large. This is the real problem.

      As far as single-payer’s problems, they don’t compare to our problems. Every system has bugs, but there is a huge difference between a scheduling annoyance and being charged $5,000 for aspirin from an overworked doctor who is trying to pay off medschool bills and is prescribing you unnecessary medication for the kick back.

      1. Alexa

        It’s worse than that–the entire Democratic Party Establishment is and has been in favor of a health care system “just like our congresspersons” for several (2004, 2008, 2012) election cycles.

        I have repeated posted excerpts from the (now defunct) DLC website on this. Including the Hyde Park Declaration which called for the following:

        3. Promote Universal Access and Quality in Health Care

        That more than 40 million Americans lack health insurance is one of our society’s most glaring inequities.

        Lack of insurance jeopardizes the health of disadvantaged Americans and also imposes high costs on everyone else when the uninsured lack preventive care and get treatment from emergency rooms.

        Washington provides a tax subsidy for insurance for Americans who get coverage from their employers but offers nothing to workers who don’t have job-based coverage.

        Markets alone cannot assure universal access to health coverage. Government should enable all low-income families to buy health insurance.

        Individuals must take responsibility for insuring themselves and their families whether or not they qualify for public assistance.

        The tragedy here is that many liberal activists were not up to the task of persuading the American populace in general that the only way to go was Medicare-For-All.

        So enough of them capitulated to the “corporatist DLCers'” desire to further empower an already too powerful insurance industry. And leave millions of (especially poor) Americans uninsured.

        Hopefully, this fiasco [the ACA] will serve as a wake-up call. Time will tell . . .

    2. Crazy Horse

      That is exactly the model for the American “health care” system. Extortion!!!

      When the victim faces what he believes to be a life threatening choice, get him to sign an open-ended contract with no limitation or estimate of costs, then bill him at ten or twenty times the actual cost until you have extracted his last penny and forced him into bankruptcy.

      The best medical insurance policy you can buy is a plane ticket to a country where health care is about helping the ill.

    3. reslez

      They will then be presented the choice of paying cash or signing up for Medicaid or Affordable Care on the spot

      Haha, where did you imagine up this scenario? You only get to enroll in Obamacare during yearly open enrollment. You don’t get to electively choose to buy insurance once you get sick, unless you get sick during the magic window. Yet more “gotcha” medicine.

      Insurance companies would riot if that’s how it worked since everyone would game the system.

      1. Paul Niemi

        This is not correct. You can be enrolled in Medicaid at any time, and you can be enrolled in private coverage through the exchanges outside of open enrollment if you qualify for a special enrollment period, for example if you are pregnant or have had an address change or lost coverage through your employer.

  11. denim

    Your article seems obsessed with rent extraction. The insurance industry is legally required to limit its rent extraction to 20% of the premium money that an insured person pays out. Out of that 20% come all expenses of fraud prevention and the actual billing expenses. What is left is profitable rent. If the Federal Government is the single entity to which the premium is paid, those expenses would still need to be paid. Government employees or contractors would receive this rent. The main difference is that the insurance company wages would be privately determined, but limited by the 20% cap. Whereas the government employees wages would be Congressionally determined and under attack by the usual incumbents and their wacko supporters of no government. With out a numerical comparision link, say like Medicare, half of the story is missing.

    1. NotTimothyGeithner

      The HMO industry is one of the most profitable industries, and unlike the insurance industry, they have an actual monopoly.

      The real question is what is being spent by the HMO on care, not the insurers. Its a nice sounding thing, but as practical applications, the insurance industry was always a bit of a red herring compared to the HMOs and Big Pharma.

      1. TarheelDem

        This is exactly the argument that was dodged in the ACA because the providers were the ones who cut deals at the White House. This is the next set of political issues to force. Multi-million-dollar health system CEOs (even if they are nominally run by universities or religious institutions) are not a symbol of effective health care when those salaries come at the expense of squeezing nursing staff, maintenance, and timing “doctor encounters” to 1 minute intervals.

    2. Eureka Springs

      Well you certainly know how to squeeze a lot of straw-ponzi into one small comment.

      Perhaps it is you who are intentionally/obsessively missing far more than half of the rent extraction. Medicare overhead is about 3 percent… whilst you defend insurance at 20 percent. Nearly seven fold difference if you give privateer ponzi-schemeing bean counters complete trust which they do not deserve. And, iirc, European models which still allow private insurance hold them to about 5 percent.

      Lambert saves huge amounts of money while giving care to all. You do neither…. you don’t even intend to with your thought process. Got soul?

    3. upstater

      While the insurance companies have a supposed 20% limit on overhead under Obamacare, the is only one piece of the adminstrative costs. Look at any doctor’s front office and count how many clearks are devoted exclusively to billing and insurance.

      IIRC, a few years ago a single GP spent something like $75K just processing insurnance claims for patients. That would drop to a small fraction under signle payer.

      Then there are the extnernal costs dumped on patients that have to endlessly jump through hoops and go through phone-menu hell just to get their insurer to pay valid claims. Not an insignificant cost.

    4. Lambert Strether Post author

      When the FIRE sector is a dominant part of the economy, it makes sense to focus on rental extraction; that’s how they make their money. (Note again what the chart shows: The health insurance companies can be gotten rid of entirely.)

      As for the 20%, that reminds me of Hollywood accountung.* You can bet the health insurance companies will game that for it’s worth.

      Also, I’m not aware of an auditing function for that 20%. Are you?

      NOTE * “Accountung” is a genius typo [lambert blushes modestly]. It’s how Nazis keep the books? Note I am not going into Godwin’s Law mode here; just jotting down a joke for future reference.

    5. different clue

      Does Medicare retain 20% of the Medicare Tax Money it takes in as “rent” and only pay out 80% of its intake to the healthcare providers who bill Medicare?

    6. Glen

      You do realize that the 20% cap was trotted out the exact same year that the health insurance industry was LESS than 20%. They sorta forgot to mention that.

      Obamacare was written to allow the healthcare insurance companies to RAISE the profit margin.

      And as others have pointed out Medicare is 3% for administration. Just think what would happen to Medicare costs if you put young people in the system rather than almost all old people dealing with expensive end-of-life-issues.

      Most of us are not “rooting” for Obamacare to fail – we are certain it will fail whether we want it to or not. Asking the same companies to fix the screwed up mess they made by jamming everybody into the system is not a fix, it’s insane.

  12. TheBellTolls

    You are ignoring the law of large numbers here. In aggregate your claims costs will look mostly normal. Your 95th percentile will be more constrained by the pooling of members. Increasing the pool which is ultimately what obamacare does will ultimately give another upside to the insurers since it will only help to reduce risk assuming they have a proper sense of the risk characteristics.

  13. FT4

    This article implies that the revenue/profit of insurance companies is the reason our healthcare system is more expensive than in other countries. The comparison between Canada and the US seeks to prove this fact. It’s a convenient meme that is just not true.

    A little research will disprove your thesis easily.

    The insurance companies are both profit and non-profit providers. The market seems to be roughly split between the two. Assuming $1 trillion in total revenue (your figure seems high to me based on BC/BS and public company revenue, I’d estimate $800 billion) half that revenue goes through the companies and back out with not profit extraction (i.e. no food for the tapworm). The other half goes through a for profit tapeworm that extracts roughly 8% profit margin (United Health Care profit margin). That’s a total profit of maybe $ 40 billion (this estimate is very generous and almost double actual numbers).

    So the total tapeworm take is roughly 4% of the revenue stream. Given the government’s inclination toward inefficiency, I can’t imagine you’d be able to realize the full $40 billion in savings by going to single payer.

    The reality is you save money by doing the following:
    1. Cut pay of doctors
    2. Ration care for the elderly and really sick
    3. Cut capital expenditures (i.e. fewer CAT scanners)and fewer hospitals
    4. Delay care and appointments
    5. Cut pay for everyone in the healthcare system, not just doctors

    It’s fine to have that conversation, but don’t pretend you can save money by taking insurance out of the equation.

    1. Lambert Strether Post author

      Sure you can. That’s what the chart shows. No “pretense” about it! Pull the other one, it’s got bells on!

      * * *

      What is it with Democrats and “conversations,” anyhow? Why not an old-fashioned, knock-down, drag-out policy battle?

    2. Jeff W

      I can’t imagine you’d be able to realize the full $40 billion in savings by going to single payer.

      The NY Times health economist Uwe Reinhardt [here] in 2008 on “Why Does U.S. Health Care Cost So Much? (Part II: Indefensible Administrative Costs)” gave figures that would seem to indicate the savings would be something more like $116 billion:

      “Excess health spending” in this context refers to the difference between what a country spends per person on health care, and what the country’s gross domestic product per person should predict that that country would spend.

      The United States spends nearly 40 percent more on health care per capita than its G.D.P. per capita would predict.… After all, translated into total dollar spending per year, this excess spending amounted to…about $650 billion in 2008.

      The McKinsey Global Institute estimated that excess spending on “health administration and insurance” accounted for as much as 21 percent of the estimated total excess spending.

      The McKinsey team estimated that about 85 percent of this excess administrative overhead can be attributed to the highly complex private health insurance system in the United States.

      [emphasis in original]

      $650 billion [the total excess spending, 2008] x .21 [the fraction spent on “health administration and insurance”] x .85 [the fraction attributed to “the highly complex private health insurance system in the United States”] = $116.025 billion (in 2008)

      1. Joe Firestone (LetsGetitDone)

        I think you can look at this from a micro point or a macro point of view. When you look micro you assume that profit and non-profit providers have pricing that is independent so that the effect of profit incentives is removed from the non-profits. However, it’s not because the profit making companies are driving practices in the whole system with their monopolistic practices and control of the market. That goes both for the insurers and the providers. They get t charge what the traffic will bear with little in the way of competitive constraints.

        On the other hand when you look at this from the macro point of view what do you see? You see lower per capita costs on medical care, better outcomes and lower spending as a percent of GDP in the various single payer systems. So why is this the case? Sure profit vs. government is one factor in lower costs. But the other important cause is monoposony. A single buyer that all of the provider/sellers must deal with. That single buyer has tremendous bargaining power. Not enough to make the providers poor, given their social status and political power, but enough to constrain the excess profits and compensation for services they normally extract from the medical system. Doctors and other providers are ding fine economically in places like France, the UK, and Canada, but they definitely earn a lot less than they do in the United States, and hospitals and other providers also get to charge a lot less, because they no longer control the economics of the system.

        The result is that other comparable nations spend anywhere from 1/2 to 2/3 of what we do as a percent of GDP and have better outcomes. If we can do the same thing here under single payer, we will save not $116 B or $400 B or even $600 B per year, but we will cut our spending down to $1.9 Trillion from the current $2.8 Trillon. That’s a freeing up of dollars of $900 Billion per year, with expectations that cost increases can be held down, if necessary by fiat, to no more than the rate of inflation, 3% per year or less. To save that money we may want to increase our taxes by $900 Billion per year; but in return we would save $1.8 T we now pay privately, producing the net gain of $900 B per year for the private sector.

        Wouldn’t Doctors, hospitals, pharmaceutical companies and other providers object to the Government’s role in reducing their take either immediately or over the years? I’m sure they’d make very loud noises, and do nothing but cry poverty. However, where will they go for financial relief, Canada? Australia? New Zealand? The UK? Good luck to them! This country is the last bastion of greed in medicine. There is nowhere else for them to go.

      2. mike norris

        All due respect–your numbers are bogus…
        Roughly 58% of healthcare costs run through the government via Medicare/the VA/Fed Employees/Medicaid etc.

        The balance runs through the private ‘Health Insurance Companies’ which are largely monopolies–AnthemWellpoint, United Healthcare, Aetna, etc…
        They represent roughly $900 Billion/yr.
        The ‘Overhead Costs’ are roughly a third pushing $300Billion dollars a year, or roughly the technical Pentagon Budget…

        This is a TAX on the system which represents the costs of sales and marketing, IT and enormous C-Level compensation of roughly 300 companies large and small.

        Medicare for all would immediately save this TAX as well as produce lots of other ‘efficiencies’–this is a term that GOPers can relate to as opposed to so-called ‘Socialized Medicine.’

        So your $40Billion is close to an order of magnitude under-representing the savings associated with Medicare for All…

  14. Dromaius

    The typical defender’s argument for narrow networks is “insurance companies have been doing this all along”. Actually they did it for awhile, people rejected it back when they had the power to walk away, and insurance had to stop it. Now it’s back and mandated, and it won’t go away until a ton of people lose their lives because of it. And the height of Chutzpah is that — just watch — in a few years, Democrats will run on fixing those evil narrow networks that they have themselves are responsible for encouraging.

  15. TarheelDem

    The design of insurance is to pool risks. The larger and more diverse the pool the more the risks are shared and the lower the premiums to participate in the pool. Experience over 150 years with insurance show that when it is privatized, it invariable becomes a form of embezzlement and fraud defended by well-paid lawyers. It is not coincidence that every state saw fit to regulate the insurance industry in their states. Private entrepreneurs and CEO see that large pool of money and invariably go beyond rent-seeking to outright criminality.

    Combine that with markets, the logic of which are to ration on the basis of ability to pay, and you understand the fundamental contradiction at the heart of American healthcare if health is to be for all.

    The problem is that a whole lot of people don’t understand that nor do they believe what is before their eyes. But they know where they personally hurt and where they personally have difficulty navigating the health care finance system in the US.

    For eighty years the insurers and providers have engaged in a scare campaign about socialized medicine that proved effective because or the McCarthy-induced paranoia about the Soviet nuclear threat. Only now, are the folks more traumatized by that passing away. The rear guard of that generation were the folks sucked in by the “death panel” nonsense.

    Since Medicare, insurers and providers have been becoming members of Congress or buying members of Congress. Paul Broun, John Barrasso, Philip Gingrey all came to Congress specifically to prevent single-payer health care from happening. The insurers and providers succeeded in buying Daniel Patrick Monyihan and Max Baucus (and also Joe Lieberman and Evan Bayh). Monyihan and Baucus as chairs of the Senate Finance committee were positioned to stop or dictate legislation. Monyihan stopped Hillarycare cold. Baucus used that history to force through a bill written by WellPoint, which advantages the Blue Cross/Blue Shield operators especially WellPoint. It being that or nothing, the Democratic majority forced it through. At the moment of signing, people of means who were excluded from insurance by pre-existing conditions or who had had their insurance rescinded were able to purchase insurance. Politically, they are not going back to the old system; Obamacare will not be repealed because they will not let it be.

    In that sense, the worm has turned. The federal government’s regulation of health care insurance will not be rolled back.

    And the nature of the way forward is also clear. Medicare and Medicaid have established a single-payer system for certain classes of people and services, including long term care. The single-payer system the US could have if it finds a way to capture the tax revenues is Medicare/Medicaid for All with long term care. But then there is the very popular Veterans Administration health care system (popular until the Congress started starving it exactly as Iraq and Afghanistan veterans were swelling its workload). The VA is the closest the US has to the UK National Health System. And lots of veterans will fight to maintain it as an option.

    The Republicans want to make the 2014 election a referendum on Obamacare. It really should be a referendum on finishing reform by implementing a single-payer system. One point that single-payer advocates must address and achieve a breakthough is the tax revenue issue, which amounts to shifting from paying private insurance premiums to paying taxes. That shift will create net savings; someone needs to model out, even if using CBO-conservative methods, what that savings will be. Another point is handling the layoffs as health insurers shrink to providing supplemental coverage (which will be a big a market as Congress determines in its definition of what is “basic” healthcare). Another point is agreeing on what is and is not “frivolous” health care costs; expect lots of red herrings concerning plastic surgery and other “elective” procedures. This is a real issue politically. The last issue is how to control costs without reducing the types and scope of services or leaving out parts of the population.

    The worm needs to continue to turn. Knowing that the insurers are engaged in the same old parasitical behaviors is not a reason to stop that forward momentum. The fact that the program was written by insurers to offset the government requirement to cover everybody should not allow insurers to use the performance of the government as a red herring to cover their tracks. The fact that Congress was bought off in 2009-2010 should not stop efforts to hold them accountable in 2014 and to get forward motion on health care reform again.

    1. Alexa

      You say:

      The fact that Congress was bought off in 2009-2010 should not stop efforts to hold them accountable in 2014 . . .

      Hopefully, that is EXACTLY what we’ll see in 2014.

      According to several pieces I’ve read this week–that sentiment is exactly what has Democratic Senators in a panic.

      Numbers for Landrieu, Begich, Pryor, Hagan, and even Udall (Colorado) are dropping like a stone!

      As a former Alaskan–I say “good-bye and good riddance” to these Blue Dogs!

      Maybe with them gone, we’ll have a chance to run a true liberal politician.

      There may have to be a little short-term pain, for long-term gain.

      So be it . . .

    2. AbyNormal

      seriously appreciate the time you took to map this out…i got plenty of folks to share this with. i’d like to see those ‘paying private an tax revenue numbers too.
      As your time allows, Hope to see more post from you!

      1. TarheelDem

        What we know is that in 2009, people in the US were paying in aggregate $2 trillion for health care services including the insurance premiums that went with them. We knew that the per person cost in the US was twice the per person cost of Canada, considered the best in services for expense. A back of the envelope calculation then was that there was $1 trillion costs that could be used to help cover everyone and still save everyone money if you financed the system and operated the system like Canada does.

        The scary part for most people is that it takes employer-based health care out of the picture and changes the nature of who employees think are good employers and not so good employers. And without assurances that the care is as good or better than what they currently have, they panic and oppose. For employers, it takes away cheap golden handcuffs on their favored employees.

        But method of payment in only one part of the needed reforms. Remember we have $1 trillion to rellocate to more productive purposes, including reducing per patient costs. Subsidizing medical education makes a great deal of sense and would allow physicians to break free of the huge HMOs and medical systems and create their own practices again, which would reintroduce competitive pricing into what with single-payer be a monopsony market. The irony is that medical systems are taking huge administrative hierarchy costs out physician billings these days that those newly independent physicians in competition might actually take home more pay and be located closer to their patients.

        Then there is the pharmaceutical oligopoly that seeks to extend its power through the Trans-Pacific Partnership agreement. Not only must that be stopped but patent law must be reformed to do what patents were originally intended to do–stimulate innovation. Intellectual property law has stultified innovation in the US and Europe.

        The other reforms deal with integrating functional and alternative medicine in the health care system in a way that sorts out the helpful insights from the fads and frauds. This requires some kind of reform of medical research and clinical trials that go beyond the current quickie studies. This is a methodological problem that deserves as much attention from the federal government’s scientific research as the billions being wasted by the Pentagon.

        Right now you have a huge sample of the US population self-selecting to be guinea pigs in alternative and functional medicine because conventional medicine has either failed them or is beyond their means. As a result of that unorganized not-very-blind trial, there are some interesting results on reversing diabetes and some forms of heart disease being claimed. There is the very helpful integration of nutritionists and dieticians into medical teams. As well as physical fitness programs.

        Health care reform is not done with Obamacare even if it were living up to expectations. Time to push that notion again. Let the conservatives and the insurance industry carp about the failings of Obamacare, and we can respond, “You built that.”

        1. AbyNormal

          “The irony is that medical systems are taking huge administrative hierarchy costs out physician billings these days that those newly independent physicians in competition might actually take home more pay and be located closer to their patients.”

          so maneuvers like this will actually return competition to the field?: (Reuters) – UnitedHealth Group dropped thousands of doctors from its networks in recent weeks, leaving many elderly patients unsure whether they need to switch plans to continue seeing their doctors, the Wall Street Journal reported on Friday.

          Thanks Again Tarheel!!

        2. Jim in SC

          Great analyis, TarHeelDem.

          I believe subsidizing medical education is a great idea. The ACA needs competition, and right now one of its most far reaching but unrecognized effects is that hospitals are buying up medical practices at a blistering pace. This is good neither for doctors nor patients. We need to equip doctors with the tools to stay out of the big organizations.

          Corporate medicine is bad medicine.

    3. marym

      HR 676 addresses many of the points you raise regarding funding, coverage, provisions for insurance company employees, long term care, and cost containment in very clear language. An even more informal but clear description is at

      As far as alternatives of Medicare, Medicaid, and VA care for All:

      Medicaid is increasingly administered through privatized for-profit managed care. Unless advocacy of Medicaid expansion is dealing with this issue, it doesn’t seem like a good alternative, any more than expanded Medicare Advantage (as opposed to HR 676 expanded Medicare) would be.

      As far as a comprehensive national health plan, like VA, we need a good understanding of the current status of VA care, and be alert to any downsizing or privatizing that may be occurring, and include those issues as part of the case for retaining or expanding the program.

      While HR 676 largely addresses insurance, it includes a not-more-than 15-year plan to convert to a non-profit (non-stock issuing) national health system for doctors, hospitals, and clinics.

      1. anon y'mouse

        “While HR 676 largely addresses insurance, it includes a not-more-than 15-year plan to convert to a non-profit (non-stock issuing) national health system for doctors, hospitals, and clinics.”

        wait, what? is that really true? and is that going to be actually carried out? or will it be amended away later, as ACA is experiencing a thousand cuts with a thousand bandaids applied to make sure the sheep don’t panic in the trough?

        pardon the cynical comments, but if so that puts the thing in a slightly different light.

    4. different clue

      Maybe people could try using the word “privataxes” for the insuraco premiums. Figure out how to use “privatax” in compelling sentences and figure out how to write compelling sentences around the word “privatax”.

  16. EMichael

    I am thinking PK used the worms from Dune because he realized the tapeworms of the world would be comparing a fictional world to the US, so he might as well use ficitonal worms.

  17. Sammy Maudlin

    “[The Secretary of Health and Human Services] said her first priority was not health. Rather, her first priority is the actuarial soundness of the ObamaCare pool.” – Lambert

    This is why the whole “failure” of the rollout and the website has red flags to me. Who was motivated to sign up for the ACA as soon as humanly possible? Those with pre-existing conditions and other “uninsurables.” In other words: bad risks.

    HARP was a failure, in large part, because lenders and mortgage insurers weren’t willing to step up and take the risk of refinancing underwater homes (bad risks). So, access to the program was simply stonewalled. Were health insurers and HHS aware of an “actuarial death spiral” that was sure to occur if those most motivated to sign up were allowed to flood the system without enough “better risks” signing up as well?

    I believe that the insurers are protected by a government guarantee if there are losses due to an out-of-whack actuarial pool initially signing up. However, it would not look good politically if it were to come to light that, during this time of sequestration and other belt-tightening, the federal government was cutting checks to health insurers to cover losses or even simply lost profits due to the implementation of the ACA?

    Seems possible that the “failure” of the rollout could have been a way to delay or minimize losses due to the bad actuarial risk that the insurance companies were likely initially undertaking.

  18. Jeremy Grimm

    When I saw the headline for this commentary I thought the worm that Lambert was talking about was a worm, like the saphire worm, or one of its friends. I keep waiting to hear about a cyberattack on the Obamacare website. Actually I’m surprised that there hasn’t been one. You have a very large, and apparently buggy piece of software that offers access to personal information and probably access into some insurance company databases, and possibly access into credit agency databases. This would seem to be a tasty morsel for cyberattack from the very dark side of hacking. Denial of service attack? — The kind of attack that a target of this sort almost demands would be hidden and if well designed, might not be detected until after the malefactors have wrecked substantial damage to many innocent and some not so innocent victims.

    1. stephen

      The Russian Mafia (and others) are waiting until more people sign up, then they will hack away? Why steal financial data on the poor and un-insurable when in a few years you can steal it from millions?

      -from the ‘Think like a criminal in order to avoid criminals’ file.


    2. TarheelDem

      Ars Technica reported circumstantial evidence of a DDOS attack on the opening night.

      The credit reporting agencies and the insurance companies are the ones that would be likely targets of attack. Why should someone bother with what is just a buggy front end?

      And the attacks on credit reporting agencies and insurance companies are likely a constant risk for those companies before the ACA rollout. Likely they would only note an increase in attempts, and you can bet that for the sake of their reputation they would not disclose them, even to publications like Ars Technica.

      1. Jeremy Grimm

        I expect the Obamacare site to expose interfaces to the insurance companies and to the credit agencies that might be accessible on through their existing websites. If you’re right the risk with Obamacare is equivalent to the risks without Obamacare. Let us all hope you are right.

        1. Jeremy Grimm

          Wow! I’ll try again — I expect the Obamacare site will expose interfaces to the insurance companies and to the credit agencies that might NOT be accessible through their existing websites. Obamacare also aggregates a smorgasbord of choices for attack into one convenient buggy front-end. Whether the attacks are reported by ARS TECHNICA will hardly matter to the people whose accounts get tapped. Also — buggy software usually exposes more possibilities for exploit. A buggy front-end to the rock-solid insurance and credit agency backend interfaces you suppose doesn’t do much to protect users of the Obamacare site. So I’m not sure why an attacker wouldn’t go after a bloat of buggy software like Obamacare seems to be. I would expect the attackers to focus on stealth and that their attacks would not make the news until a sufficient number of people were harmed to make the breaches difficult to sweep under even a very large rug.

      2. Lambert Strether Post author

        I think if the DDOS attack had been substantial, we would have heard of nothing else from ObamaCare apologists; presumably the server logs are available (unless they turned off logging to boost server perfoy rmance — BWA-HA-HA-HA!!!)

        * * *

        Jeremy raises different and more subtle points; IIRC I pointed to an XSS vulnerability in Link a couple of weeks ago.

      3. Jeremy Grimm

        A further point — a denial of service attack is not the in same category of threat as the kinds of attack I’m postulating. Denial of service creates an inconvenience and helps foster the even more effective self-created denials of service implemented once the IA protect guys take action to defeat external denial of service attacks.

        What would motivate a denial of service attack on Obamacare anyway? It might accomplish user frustration and harm the reputation of a web-site but why bother once it’s clear that the Obamacare website is as it is. You don’t need to deny service on a website that provides too little service to its user load. You don’t need to waste energy fostering bad delivery of service on a site that already fails to deliver service. In fact you’d want to leave the site alone so it might show off the full extent of its failures. So — I’m not sure what importance to attribute to the ARS TECHNICA circumstantial indications of a possible denial of service on their Obamacare websites on their first day. I’m inclined to think that any denial of service that was made or attempted was called off once it became apparent that it was a waste of energy.

        Give less honorable motives to an attacker, and the dangers of a poorly implemented website that requires large number of users to so broadly expose their digital identity should be apparent.

      1. sherparick

        I can’t just let this stupidity passed uncommented on. Yes, the Clinton-Gore period was terrible for the working class, although it turns out that 1996-2000 was the last period of time that median wages increased (I admit probably in spite of Clinton’s, Rubin’s, and Summers’ policy decisions on NAFTA, WTO, East-Aisan Financial Crisis, and financial deregulation), but Nader does not get out help making George W. Bush and Dick Cheney President (and really, at least until 2006, they were co-Presidents) by helping Florida, New Hampshire, and Ohio, flip to their way. Also, we should not let the elite Village Media off the hook for their attack on Gore as an upper class twit, which again really worked out for the working classes, Black, Brown, and White, has it not? But for our Village media elite and upper class Left that liked to snark at “stiff Al Gore” its been a great 14 years. See

        Finally, this “heighten the contradictions arguement” works in the U.S. as well as it did in 1928-1933 Germany, since hard times and a narrowing pie sends peopld into the comfort of the their tribal racial and religious identities, and not into a realization of their common working class status. Hence why the white working class is now 70% Tea Party Republican in the South, or why 40% of the working class votes Tory in the England (but not Scotland – their they vote SNP over Labor – because of the tribe).

        1. NotTimothyGeithner

          You missed the point about Nader. Its about the lack of accountability for Democratic elite from Democrats. Instead they choose to blame outsiders for daring to suggest that an advocate of corporate governance and a signer of PNAC letter may not be the best best for liberalism in America.

          Can you demonstrate Nader cost Gore the election?

          There were more non-Cuban Hispanic and youth votes for W. down in Florida than Nader. Why aren’t they at fault? The answer is the political process is nothing more than a sports league for most partisans. The essence of Nader’s message was a reminder that the Democratic Party was merely nothing more than Team Blue. Its fitting the country became red states and blue states that night in 2000.

          1. sherparick

            Its very comforting to keep telling yourself that fable. It was the people who actually voted who decided the election, and if it is a close election, then every vote tends to be important. Also, it is not the “either/or” you try to pose with this strawman. Those 160,000 some votes that whent for Nader rather than Gore turned the election in Florida, New Hampshire, and Ohio.

            Nor have you proffered a political coalition that could exist in the current United States, with a Senate and House, would pass a single payer/national health insurance system in the face of opposition from the AMA, Pharmaceuticals, Medical Device Manufacturers, Hospital Association, and the private insurance industry – the whole Medical-Industrial-Congressional complex. Even the ACA, with co-option of some of that opposition, barely was enacted and still faces ferocious opposition, an opposition that finds the redistributionist aspects of the ACA and its empahsis of improving health care for the poor and working class, particularly Black and Brown poor and working class, as enraging. All I see in your argument is 1. Single Payor is ratioanally the superior system 2.???? 3. ???? 4. Will elect congressional majorities to enact it. Somehow FDR, HST, and LBJ could not get close to what BHO has done might not be a political accident given that the U.S. has its rather bizarre system, and not a parliamentary one.

            1. Lambert Strether Post author

              Don’t you have a bridge you need to be under, Sherpatrick? (And how comforting to hear “straw man” tossed out by somebody who doesn’t actually know what it means; it remind me of the trenches of Kos in 2008.) I agree every vote is important; however the votes that actually lost the election for Gore were Democrats; never mind the hypotheticals in other states. And in Florida, if every single Nader voter had voted for Gore, their votes still would have been swamped by Democrats voting for Bush, as the article shows (and you do not deny). Democrats lost the election for Gore, and hence those Democrats are also directly responsible for the Bush administration that followed, not Nader.

              As for proffering a political coalition, first: I’m not a rotisserie inside baseball player; I don’t post for Kos. It’s my job, as citizen and voter, to change politics by bringing good policy forward, not simply to accept what the “experts” tell me is possible. However, as Firestone’s link shows, had Obama and the Democrats sought to exercise leadership — as FDR in his 100 days, and Obama did not — the political possibilities were there for the truly progressive change Obama had the mandate to bring and avoided.

              Say, here’s an idea: How about you and me, we’ll form a mini-coalition. We’ll advocate for a policy that saves trillions of dollars and thousands of lives, and forget about the hacks and the partisans and the wannabe insiders. “Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has.” — Margaret Mead

          2. Banger

            I believe Gore won Florida. If all the votes had been counted Gore would have won. The 00 election was flat-out stolen and there’s a good argument for the fact the 04 election was stolen in Ohio as well. RP revenge for stealing Texas in 1960.

            1. NotTimothyGeithner

              It was close enough to steal which shouldn’t happen against a candidate so addled by coke, and W. did well among a number of populations who had no business voting for W. except that the GOP bothered to campaign and Democrats demanded tribute for being wonderful.

              The chants of “Nader” have nothing to do with elections results. Nader drives Democratic partisans up the wall because he points out that the Democratic elite are not the liberal beatniks their voters believe they are, and for the element who consider politics to be a sports league, Nader is like any team from Tampa Bay or towns like Memphis to this element of partisans who don’t really care about policy outcomes.

            2. Jim in SC

              So you believe Gore won Florida, despite the USA Today, Miami Herald, and Knight Ridder study which showed the contrary? To be precise, it showed Bush winning by three standards, including the one Gore wanted to use, and Gore winning by a tiny margin on the last criterion.

              I also don’t know how you get around the fact that the Panhandle counties didn’t vote in as high percentages as the rest of Florida after all the networks called Florida for Gore and gave an incorrect time for poll closings in Western Florida. These counties tend to be more Republican, so the Network monkey business, even if it was inadvertant, definitely was a positive for Gore. If it hadn’t happened, Bush would have won by 5,000 to 7,500 votes in Florida.


  19. JGordon

    This why I’ve been rooting for Obamacare to fail all along (not that it needs much help). Entrenching the parasites in the national income stream is exactly the wrong way to go; although thankfully those parasites are so glutonous that they’ll block the stream altogether. And then there’ll be nothing left to do but get rid of them. Or Mad Max.

    1. sherparick

      If the ACA is repealed after 2016 because Christie and a Republican Party ride to power on that horse, I don’t think they will replace it with single payer. Insteed it will be health savings account, medical malpractice (also known as Dalkon Shield Immunity Act), and interstate health insurance, if that.

      And I am also just certain that when Patricia Owens Brown joins Scalia, Roberts, Alito, and Thomas on the Supreme Court they will find such a law constitutional along with New Deal and progressive legislation since 1914. Along with abortion and contraceptioin when Roe and Griswold are placed on the ash heap of history.

      Sadly, the United States Congress, under Article I, has the power to enact laws and the Supreme Court under Article III has the power to determine their Constitutionality, not the Green Lantern, I mean, President Obama. I don’t think single payer has ever had more than 100 votes in the House and perhaps 10 votes in the Senate, Obama or sans Obama.

      If the ACA does suceed and improve the level of those insured, their financial security as well as health security for the mass of Americans, perhaps a Democrat President and a Democratic Congress could be pushed to make further reforms and expansoins if some of you Naderites would go out start doing some grass roots organizing in the precients of Texas and Georgia. But that would be work, wouldn’t it. Much nice to snark.

      Speaking of snark, I did enjoy Scott Lemieux’s comment on your piece snarking at Krugman (who of course never critizes Obama except about in every column the last six years he has written on the man.)

      Well, Somebody’s Unprincipled Here
      [ 71 ] November 27, 2013 | Scott Lemieux

      Shorter Lambert: That Paul Krugman is such an unprincipled hack. Everyone knows that Hillary Clinton’s health care reform plan is acceptable only when it’s proposed by Hillary Clinton. And he’s so ill-informed about American politics he doesn’t understand that Joe Lieberman, Evan Bayh, Mary Landrieu, and the many other staunch liberals in the Senate were desperate to support single payer, and Obama DIDN’T. EVEN. TRY!

      1. Lambert Strether Post author

        LeMieux displays even more ignorance than I would have expected; so hats off to him! If loyalists like LeMieux would spend half the time on policy that they spend on flexing, displaying their tribal tatoos, and mutual grooming behavior, the world would be a much better place and we might even have single payer today.

        Clinton didn’t support single payer either. Clinton explicitly supported the principle of universal coverage with a mandate to back it up; Obama didn’t have a mandate, a really dishonest position that Krugman rightly called him out on.

        However, at least Clinton supported the right principle, which would have left the single payer advocate with better “field position” for advocating humane health care policy, instead of health care policy optimized for rental extraction.

      2. EMichael

        They’re helping the team that has no intention whatsoever of dong anything but maintaining the status quo prior to the ACA, but somehow that doesn’t sneak into their thoughts.

        And they ignore the vast powers given to the individual states to improve the system. Vermont is planning to start the public option in 2017. If it works others will follow.

        Think the ACA failing for whatever reason might change that? Y’know, like the direction these quislings are taking?

        1. Lambert Strether Post author

          One would assume that if the career “progressives” and ObamaCare apologists — for example, America’s favorite quasi-Nobelist — were in good faith in their desire for ObamaCare to be improved, they’d be all for abolishing the requirement for states like VT (and OR, and PA, and CT) to wait four frickin’ years before getting a waiver to experiment with single payer. But n-o-o-o-o-o!

          1. EMichael

            I always thought you were just driven for good healthcare reform for the US. Even when I called you a quisling, I believed it was because you honestly thought your process was the best way(though you ignore the entire history of legislation in the US to think that).

            Now I believe you are a wolf in sheeps clothing. Your comments are reprehensible, and unthinkable for anyone who actually believes in what you say you believe.

            Disappointed in this blog giving you a forum for your diatribes.

            Have a nice Thanksgiving. Give my regards to Avik Roy when you sit down for dinner.

      3. weffer thin

        The signature mental infirmity of Dem apparatchiks like sheparick is their baseless confidence in the power of the notion that Republicans are worse.

        The supercilious waiters hand me the menu in their expensive restaurant and it has two entrees, the Shit Sandwich and the Shit Sandwich Supreme. They think I have to choose. But maybe I leave the restaurant. Maybe I burn it down. Break the owner’s kneecaps. Bring back the R&W to stomp on everybody’s neck. Don’t confuse your menu with my choices.

        No party represents me. Neither party meets minimal standards. Get it through your thick skulls. I will sit and watch you lose without batting an eye. I will help you lose, if it might destabilize the polity and permit the upheaval that your pustulent parties cannot. I’m going to destroy your fake democracy. The first casualties will be Dems. Boo hoo hoo.

        1. ThroxxOfVron

          “I’m going to destroy your fake democracy.”

          You misspelled WE’RE.

          WE ARE going to destroy their fake democracy.

      4. bobh

        Lemieux is certain that decent people root for the blue team no matter what, and he is angered by those who ought to root for the blue team but don’t, which he sees as “leftier than thou” silliness. He insists that Obama has done the best he could, given political realities, and he is contemptuous of arguments to the contrary, including these arguments:

        1) That from the first days of his post-election transition in 2008, Obama started putting pro-corporate, pro-banking, anti-reform people into positions of power in his administration (names provided on request), rejecting people who might have advanced the issues and ideas that led to his election (names provided on request) and squandering momentum from his election and from recent bank failures that might have produced meaningful reform, including constructive health care reform.

        2) That Obama could have done much more than he did, despite political realities, to introduce progressive arguments into the 2009 health care reform debate.

        3) That Obama went beyond anything required by political realism to solicit and embrace compromises developed and advanced by pharma, insurance and hospital industry lobbyists.

        4) That, as a result, Obamacare has entrenched and amplified the worst elements of our dysfuncional health care system and accelerated that system’s progress toward an eventual financial collapse.

        5) That, when this breakdown occurs, U.S. voters will be told and will likely believe that “progressive health care reform” and other populist approaches to governance have been tested and thoroughly discredited, causing them to move to the right and to embrace “free-market,” corporate approaches, not only in health care delivery but in other areas where progressive governance might have made for a better society.

        6) That, if and when the above scenario unfolds, it may become possible for progressives to look back and see that it would have been better to fight (and even lose) a 2009 battle for real health care reform than to win the battle for Obamacare. Also, depending on how severe and prolonged the swing to the right is, it might become clear that Obama’s re-election in 2012 was not in fact the lesser of two evils.

        These arguments seem compelling enough that they shouldn’t be summarily dismissed by people who claim to be trying to understand politics. Lemieux’s scorn for those who disagree with him seems to grow as it becomes increasingly clear that his blue team has dropped the ball. It will probably get worse.

  20. gabos

    It’s “shai-hulud,” with a hyphen. Or, alternately, shai’ hulud. It’s actual Arabic, and the hyphen or apostrophe is necessary. I wouldn’t want this egregious error to damn your entire piece.

  21. Daragh McDowell

    Every time I read this piece, I just keep hearing ‘this bathwater is unacceptable! Turf it out, the baby be damned!’

    1. Lambert Strether Post author

      Hmm. In what sense is replacing an insanely complex and lethal Rube Goldberg device designed for rental extraction with a simple, rugged, and, first world-quality single payer system like Canada’s single payer system throwing the baby out with the bathwater?

        1. anon y'mouse

          continuing from my dysfunctionally abusive family analysis yesterday, in truth, the first one that points out what’s wrong with the drunken headbreaker in the living room usually earns the ire of all of their broken companions.

          “shut up!” “don’t make waves!” “you don’t know what you’re talking about!” “if you hadn’t been stupid enough to do xyz, you wouldn’t be suffering now.” “if you keep on with this, all of us will suffer even more.”

          it’s much like the Emperor with No Clothes phenomenon. just (symbolically, or verbally) stone the child who points out the nakedness.

          1. AbyNormal

            Anon, i tried 3x last night to reply to your post…i appreciate your courage. i was raised by a physically dangerous narcissist. i spot your message(s) clearly.
            your not alone and thanks for reminding me im not either.

            1. anon y'mouse

              survival is the best revenge.

              those posts were not meant as a ‘poor, poor pitiful me’ thing. I honestly believe that the lessons taught in those times have allowed me to see other abuses going on, big and small, around me. I think our econo-corporatic-gov’t system is stuck in this phase, of dysfunctional abuse and that’s where we get a lot of the kick-down on those who probably deserve it least.

              also, that was not a tooting my own horn thing, either. the character traits and habits of behavior/mind that one learns in that environment do not necessarily suit one as they enter the wider world very well. although in analyzing this crap, I think they do.

              in other words, I try to make some lemonade.

              be well~Aby. it’s probably where you got your very developed sense of humour from!

  22. William Letendre

    Well, no question, single payer would have been better than the ACA. But, magic ponies would have been better still, and every bit as likely to be enacted into law…

    1. Lambert Strether Post author

      How true! First, and very unfortunately for Obot revisionist history, in 2009 the Democrats had the Presidency, the Senate, the House, a mandate for “change,” and the Republican were completely discredited. Had the Democrats made a good faith effort to pass single payer then, they surely could have. Second, you’re assuming good faith. Had the Democrats — and above all, the progressive nomenklatura — made a good faith effort to “hold Obama’s feet to the fire,” and at least allow single payer advocacy, we and the country would be in a much better position today to improve ObamaCare. They did not such thing. Instead, they imposed a news blackout on single payer stories, and censored and banned single payer advocates. So, no magic ponies required; merely good faith efforts by Democratic partisans, apologists, and Obots.

      You yourself could do your little bit for humane health care policy by advocating for it. Eh? Better to light one candle….

      1. ThroxxOfVron

        The Democrats held both Houses and the Presidency: They could have done EVERYTHING they had ever claimed they wanted to do and they could ‘soaked the rich’ to do it.

        What exactly stopped the Democrats from:

        1. Imposing 90% ( 1940’s style ‘war-time’ ) taxes on the super-wealthy, or even simply harmonizing the taxation rates of unearned and earned income?
        2. Forcing Corporations to repatriate ‘off-shored’ profits and jobs via tax and labour policy and/or tariffs?
        3. Passing immigration reform and strenuously enforcing it?
        4. Works Progress/Jobs Program 2.0?
        5. Punish and reform the Banking and Accounting sector?
        6. Provide a Single Payer/National Health Care option?

        I could go on and on.
        I don’t agree with much of the Neo-Socialist agenda; but, I know a pack of lying corrupt Kleptocrats when I see them.

    2. Banger

      The whole “couldn’t be done” argument on the part of much of the “left” is bogus. Quite simply Democrats do not believe that if you carefully lay out the facts (the chart above was never part of the “debate”) to the American people are capable of, eventually, understanding them. Yes, I’m always the first to assert the deliberate ignorance and cultural tendency towards idiocy in American culture–but on a matter with this sort of price tag I think Americans would have come around. The facts are painfully obvious and it would have take perhaps 9 months of relentless messaging to get the ideas across, i.e, the rest of the developed world has solved the problem of delivering health-care and her are the options!!!!!!! We are the only country with an Alice-in-Wonderland system and if the Administration had insisted on delivering that fact even the lamestream media would have covered it despite all the grumbling in the board rooms.

  23. kevinearick

    Sadly, Canada is not the example you want to employ…it’s running its herd in the same direction now. Small-Town Canada is the place to be on Veteran’s Day. America has become a joke, on itself.


    You have to learn to look at the data for your self. The majority always chooses stupid, until it can’t, seeking security in self-serving numbers, exploiting each other. All you have to do to blow up the system is set your distance. Don’t waste your time. Life is not a leisure activity.

    If you look, you will see that we are going to reboot with a 24 hour workweek, transparent government and the means to your privacy. Educate your self. Multiply your God-given talents and you will prosper.

    Your fate will be determined by how you discount money and property among yourselves, not by majority vote. Government fiscal and monetary policy nets out to legacy capital, so what? Monetary policy in and of itself is a reductive process, irrelevant to labor except as the ground.

    Invest beyond the horizon of capital and collect your return when capital grows and contracts its middle class to meet it. Always work two bridges ahead, so you have a motor ready to go. For labor, democracy is about enabling your children to make their own choices, not certifying their outcomes, circumscribed by replication of economic slavery in a ponzi entitlement economy.

    Choose a spouse that multiplies your effectiveness, timing, not your efficiency. Appreciate what you have and more will come your way, by process of addition by elimination. The saddle rotates with expansion and contraction, leaving the empire behind, working against itself until the load drops. The critters have no idea what’s going to blow up in their face next. Ruminate on that while you wire up.

    The Parable of Talents is the mirror. It takes two to climb. You have responsibilities associated with the integral development of life. You are not responsible for the decisions of others; let God sort them out. If you defer responsibility, you may only become a slave to derivatives; choice matters not. Your children belong to God, not to the State.

    Empire is not your enemy. A derivative spy education controller does not increase vision; it maps the inside of an irrelevant box. You are your only enemy, if you allow your body to tell your brain to short your spirit. Be thankful; go right when the bondsman avoiding risk goes left. It’s as simple as that.

    Don’t’ listen to stupid. You are inheriting the greatest labor advantage in history, driven by the greatest middle class implosion in history. Of course the middle class is crying crocodile tears for labor, and trying to define itself as labor or capital, as its participants throw each other under the bus. Look at the remarks. History is only a guide to the past. Always build out the kernel, by listening to your children as the first step.

    Before this is over, I will show you that I can touch anyone hiding behind the code, at the time of my choosing. Cut once: London Bridge…Silver & Gold…A Tisket a Tasket.

  24. Eli Rabett

    Why don’t you extend your graph to 2012 or 2013. There is evidence that the rate of increase in US health care costs is decreasing, thanks, in no small part to the ACA

    1. Lambert Strether Post author

      There may be evidence, but there’s also evidence that the economy being in the toilet has a lot to do with people not seeking care.

      The larger point, which you avoid, is what the chart shows is that the entire health insurance industry is not needed. Canada gets along perfectly well without it.

    2. marym

      Countries with universal healthcare contain costs by means of government negotiation of reimbursement rates to providers (doctors, hospitals, prescription drugs).

      The ACA doesn’t do that. We will need to understand the degree to which any cost savings are the result of what politicians call cost sharing – actually cost shifting (of copays, deductibles, out-of-network costs, etc.) to people who can’t afford them, and thus seek and receive less healthcare.

  25. ChrisPacific

    Sebelius directed Abele to “focus on the general population in terms of likely uninsured but also young and healthy individuals.”

    “I love children, particularly their young supple organs.” (Montgomery Burns, The Simpsons)

  26. Alexa

    You’ve nailed it, marym.

    All the programs named above have either been at least partially privatized, or are in the process of [in regards to think tank “plans”–let’s not forget the Rivlin/Ryan Medicare Voucher Plan) being proposed to be at least partially privatized.

    (I’ll have to check on the VA–but I heard on “The Press Pool” yesterday that the Pentagon has agreed to cuts to military benefits–to be announced in February 2014 during one of the fake “budget crisis.” Makes sense to me, since it is also reported that cuts to Federal Civil Service Retirement benefits are likely to come out of the Budget Conference Committee.

    All of the above are proposed, of course, in the Bowles-Simpson “Moment Of Truth” recommendations.

    And regarding long-term care. I posted a video on this months ago (at Corrente) regarding the think tank recommendation that it become a stand-alone insurance program–taken out of Medicaid completely.

    A special long-term care panel was supposed to submit its recommendations this past September. (Never heard what happened on this.)

    IMHO, the ACA FURTHERS THE PRIVATIZATION EFFORT. It doesn’t diminish it!

  27. Hugh

    This is an excellent post. It cuts through Krugman and the Administration’s BS like a clean, sharp axe.

    We have to take into account, the full range of savings that Medicare for All would have.

    1. The current Medicare system has a 3% overhead even though it is covering an older and sicker population.

    2. As others have pointed out, with a single payer, the overhead of health care providers would also be reduced.

    3. Medicare for All would effectively be a monopsony, that is the single purchaser of health care. It could use this power to reduce costs for visits, drugs, procedures, and hospital stays. It could force changes so that health care was both more broadly available and more convenient.

    4. It could redirect resources to public medicine and preventive care so that the general health of the country was improved at the same time that the need and costs of acute care for hithertofore untreated and poorly treated conditions were reduced.

    5. It could force medical schools to expand and residency programs to concentrate on producing needed general practice and internal medicine physicians as opposed to high priced specialists and sub-specialists.

    It is the totality of the change to Medicare for All which produces the great cuts in costs and the big improvement in health and well being.

  28. snowedin

    Great post Lambert, but your point about single payer making the difference is misguided. Several countries have private insurance systems that work (more or less, costs are still going up). Switzerland. Netherlands. Other countries have single payer (Denmark, UK, Singapore). Even single payer countries have some mix of private insurance and other risk pool structures. The point being, they ALL fit in the jumbled mass of cost curves under the U.S. The U.S. is a cost outlier compared to every country out there where quite wide differences exists in single payer/private insurance/hybrid mix systems.

    The reasons why other countries have health care systems that operate at lower costs can be attributed to:
    – mandatory involvement by every resident in order to generate sufficient risk pools
    – tight regulation of private insurers to offer generic service offerings without pre-existing, price controls
    – bulk purchasing of pharma, other medical equipment, re-imports allowed, cost controls
    – national administration, centralized rules and regs
    – significant limitations on malpractice payouts

    The common thread being lower-cost health care countries have more successfully tackled Big Pharma, Big Insurance, Big Heath Corp, and Big Law. They’ve used various schemes to do so (single/multiple payer). The countries haven’t won the battle – costs are still on the rise – but it’s better than the U.S.

    It means Americans are basically paying for both the oligopolies at home as well as “subsidizing” the cost pressures the oligopolies are faced with in other countries. A double whammy on the average Joe.

    A single payer system isn’t the cure . Even the Netherlands moved away from single payer to private insurance. The cure is to prevent the oligopolies from running our country into the ground.

    1. NotTimothyGeithner

      Those other countries have a host of other institutions which allow for non-single payer systems to be successful including more functional political systems.

      German companies require low level employees to serve on the board. The MBAs (I suspect the Germans have more sense than to allow the priests of corporatism to run things) sit side by side with the janitors to make decisions.

      Instituting a non-single payer system is a waste of time and resources, and only serves as an intellectual exercise given the current state of affairs and size of the country. Switzerland isn’t that big. 300 million people in a country the size of the Roman Empire isn’t manageable through regulation.

  29. bh2

    OK, so now let’s see a chart of comparative defense expenditures of the same countries.

    The US and Canada would still be as “comparable” in many ways as they are for health care, but the expenditures by each would also grossly differ. The US pays a king’s fortune to supervise the world and Canada sensibly pays relatively little to assure its own territorial integrity and generally leaves other people alone.

    It’s the cost of service delivery — not the payment method — which most matters. It’s said half the cost of US medical care (which is not the same thing as medical insurance) is ALREADY paid by government subsidy. Treatment under the VA and standard Medicare are nothing to brag about (and nobody does). If the VA hospital system represents what a single payer government medical care program looks like, it’s hard to imagine many people would prefer it.

    The Swiss use national, private market medical insurance which is flexible and highly competitive. Of course, they are a much richer country, per capita, because they don’t allow government to bleed away massive capital from ordinary citizens to support a full time war machine.

    In choices by government to buy guns or butter, history has shown trying to do both is eventually bankrupting. The US won’t be “exceptional”.

  30. GRP

    Country “saving” a trillion dollars if medicare for all has been implemented is a puzzling statement on an MMT aware blog. Since all the spending is on services within the US there can be no net saving/spending for the country. Of course, it is possible to claim that the savings would have been spent on more deserving services than healthcare administration. Sure! However unless those services are already available and can quickly expand to employ new people to generate additional services to the tune of US$ 1 trillion (that lost in healthcare administration services), the US economy would have contracted significantly, not something anyone would have wished for in 2009.

    If Obamacare subsidised insurance premiums by the government agreeing to foot at least part of the premium regardless of the premium amount, that would have made insurance cheaper for the individuals, healthcare available to all and insurance sector remaining profitable. A perfect MMT solution to the problem.

    1. NotTimothyGeithner

      No, its not confusing. Much of the money is wasted in the healthcare sector and largely exists on balance sheets for the purposes of dick measuring or to put it more simply hoarded.

      You might try reading Ike’s farewell address where he points out every extra dollar spent on unnecessary defense means a school isn’t built. Its the same thing.

      The money wasted on healthcare would largely be directed. Its similar to how if the NFL was banned local economies would largely be unaffected as the entertainment industry would still receive those dollars.

      Admittedly, there is an element which might best be described as Neo-Keynesian who are largely neo-liberals, but much of the money is being effectively destroyed under the current system. Ending the system will mean the money is spent on other more deserving industries.

      1. GRP

        What is important is where the real resources are going, not the financial resources. Spending on military means diverting real resources away from private consumption and into military hardware, not a productive approach. However, spending on healthcare administration means transferring the purchasing power from the one spending to the ones employed in healthcare administration. If the spending is from an individual’s pocket it becomes a zero sum game. However if the spending, at least part of it, comes from the government, it is not a zero sum game any longer. As per MMT, the government has unlimited financial spending power, constrained only by real resource availability. There is a huge surplus of human resources available. If purchasing power of the population is increased, real resources consumption increases.

        So the question is are there enough real resources available in the US economy for increased consumption? If the answer is yes, the healthcare administration costs are not in conflict with any other services, as long as the government can support at least part of it. If the answer is no, then the US economy cannot grow any further and everyone should be prepared to consume less with each passing day.

    2. Calgacus

      Yes, you are basically right. Look at James Galbraith’s Predator State or his Keynesian Devolution paper for such arguments. He and Paul Samuelson are the main ones who got this aspect, the macroecon of health right. (Dean Baker gets it horribly wrong for instance) The superior social technology, Single Payer, has a Domar effect, technological unemployment type flaw. The hard part has been (politically, in Europe) / would be to keep healthcare spending up enough, not down, why on earth should we want to do that? There’s no reason to have any ceiling for health care / GDP.

      NotTimothy: You might try reading Ike’s farewell address where he points out every extra dollar spent on unnecessary defense means a school isn’t built. Its the same thing. See Abba Lerner’s critique of that well-meant part of the speech. in his “the Burden of the debt” IIRC, somebody just posted a link to it here. Ike is absolutely right during a WWII economy. But is absolutely wrong during an Ike’s presidency economy – which the current mess is a lot worse than!

      much of the money is being effectively destroyed under the current system. Ending the system will mean the money is spent on other more deserving industries. Only the gubmint can destroy its own money. Mindlessly “saving” a trillion will mean the money is not spent at all, and would be a catastrophe, as Galbraith points out.

  31. Banger

    Interesting discussion. Sorry I missed it though I have little to say other than what I always say. I don’t think the issue is single-payer or no single-payer but, rather, reason or insanity. The U.S. simple isn’t just wasteful it is, as a system insane and it has been deliberately created to be insane so that thousands of grifters have an opportunity to get rich. As Ross Perot would say, “it’s that simple.”

    Obamacare is just a movement from howling at the Moon while tearing our hair out to cringing in a corner sucking our thumb, i.e, one form of insanity for a more manageable one.

    As someone who has been around Washington and power all his life I can tell you that a coherent argument for sanity in health care would have been heard by the American public and, eventually, steps would have been taken towards sanity. Why do I say that? As corrupt as the American lamestream media is (and it is about as fundamentally corrupt as any state-controlled media) if the Democratic Party and the Administration had announced that it would present to the public the facts and nothing but the facts about health care we would be on the way to a system much like others in the developed world. The whole single-payer or bust movement on the part of some elements of the left was foolish and short-sighted–again, the approach should have been to bring out the facts!!!!!!!!!! What is so hard about that?!! Then we could have had people who knew what they were talking about explain things to us–perhaps brought over someone from Canada or from Singapore or from Germany to explain how civilized people do things as the Japanese did after Admiral Perry showed up there in the middle of the 19th century.

  32. Alex Bollinger

    I don’t really get the Lemieux criticism of this mindset. He’s been sarcastically writing “Obama didn’t even try [to get single payer]!!!” for weeks, but that’s just plain true, no matter whether or not you think he should have tried. He didn’t campaign on it and he didn’t try to get it in the ACA. Are the neoliberals re-writing that bit of history now?

    The idea that single-payer advocates don’t have a plan makes no sense either. Lemieux’s plan seems to be: 1)shut up about single payer, 2)??????, 3)free health care for everyone! Any viable plan for single payer will involve supporting it verbally.

    Then again, is he in favor of single payer? He seems to think that talking about single-payer in 2013 means that the ACA will not pass in 2009; if not, there really isn’t a trade-off between the Medicaid expansion and continued advocacy of single-payer. If there isn’t trade-off, then what can his position be other than opposition to single-payer?

    Anyway, that’s my little rant about the “I’m oh so strategeratastic!!!!!11!!!” liberals. There’s nothing really all that original about finding another reason that non-rich people can’t have nice things.

    1. Lambert Strether Post author

      How many dimensions does Obama’s chess-playing have now? I lost track at 11, but maybe LeMeiux knows more. Do I really have to go read this, or can I just let it slide down the greasy gullet of the “progressive” memory hole?

  33. Jake

    It’s a bit ridiculous to level all these insults towards Obamacare. It’s an incremental improvement on a terrible system. I’m down with the US healthcare system in general being described as an awful sucking monstrosity, but it’s weird to be so apoplectic about an insufficiently effective anti-tapeworm remedy.

    1. Yves Smith

      I don’t see how a program that further enriches Big Pharma and the insurers, which are two of the big reasons we have grossly overpriced healthcare with no better to worse outcomes than other advanced economies, can be deemed to be an “incremental improvement,” unless you are one of the parties that benefits from the improved looting.

  34. Javier Gonzalez

    The differences in health care spending as a percent of GDP are staggering. I am at a loss to try to explain the difference. No developed country comes even close. We know pharma advertising doesn’t help. Medicines are much more expensive in the US than in the rest of the developed world, but why? Is it an issue of market concentration? Moreover, when one does the breakdown of health spending, there is a large portion coming from private health services. The country needs to address these issues of cost head on, as having the largest health care expenditure has not translated in higher average health, just top-notch health for the ones who can afford it. Warren Buffett has said it is a tapeworm, but did not specify why. I wish he would elaborate.

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