Friday, July 31, 2009

Krugman's Take On Health Care

We recently discussed the free market solutions to health care. Now I will let Krugman give the other side of the story. Krugman is the Nobel Prize winning economist who is the most read and influential living columnist on earth.

Krugman's claim is a health care system cannot work without government intervention. All data shows nobody except young healthy people could ever get coverage without government intervention.

Example: Most people's private insurance comes from their employer whom the government, not the free market, forces to provide coverage regardless of things like pre-existing conditions. Without the government, working a full time job would not bring you and your family coverage if you or you family was sick or had preexisting conditions.

Outside of such government mandates, sick people or those with pre-existing conditions just can't find coverage. => If you are sick or have pre-existing conditions probably the only reason you would have coverage is because of government intervention.

Here are the relevant articles:
  1. Why markets can’t cure healthcare: where he describes a "definitive" economics paper that argues health care can't be marketed "like bread or TVs" and thus can never work with a free market.
  2. Health Care Realities: Where he describes why the government is needed for health care coverage to work at all. "And that government involvement is the only reason our system works at all."

Now, I took the time to read dozens of pro-free-market articles to try to find if the free market can solve health care issues.

I think the only way we can have a truly unbiased view of these issues is if we now read the take of the other side.

I'd appreciate comments if people have any.


  1. The way I see it there are two somewhat contradictory facts that make free-market health care such a debated topic. They are:

    1) The free (or mostly free with some government regulation) market has been enormously successful as an economic system. Free markets in almost every economic sector I am aware of are more effective, innovative, and stable (in a long-term sense) than any sort of command economy.

    2) Several basic economic principles are violated in health care. For life-saving procedures there is no price at which I would decide to pass on treatment. Doctors and hospitals are morally bound to act in ways that hurt themselves financially.

    So free market health care is either the best possible solution or an oxymoron.

  2. I agree Nick, I think the real power is behind the statement that health care can't be marketed "like bread or TVs".

    Some might brand Krugman as a liberal socialist, but I think he is more of an economic realist: He knows that free markets only work if there are some underlying market forces at play. Take away those forces and the free market doesn't work correctly.


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