Is Medicare sacrosanct?

In his column today, Paul Krugman declares that the Ryan plan for Medicare is something out of "vouchercare" and would be inferior to the current system. On one side, I am agnostic about this; a voucher scheme still has the government not only in control of the purse strings, but also acting as the distributor of medical care.

Now, Krugman has no problem with either of these roles of government, but he wants the state to send the checks because he says that it will better "control costs." He then uses Canada's medical system as a positive example of cost control.

While Krugman is free to say what he wants, I find this statement to conflict with what many people are saying about Canada's system:

Consider Canada, which has a national health insurance program, actually called Medicare, that is similar to the program we have for the elderly, but less open-ended and more cost-conscious. In 1970, Canada and the United States both spent about 7 percent of their G.D.P. on health care. Since then, as United States health spending has soared to 16 percent of G.D.P., Canadian spending has risen much more modestly, to only 10.5 percent of G.D.P. And while Canadian health care isn’t perfect, it’s not bad.

Bad, of course, is a relative term. There is almost no medical innovation in Canada, and much of medical care there is a time warp, as medical capital deteriorates and there is no incentive for medical providers to acquire new capital.

Take the following example: Montreal, which has about three million people, has three MRI devices, while Allegany County, Maryland, where I work, has 80,000 people and three such devices. In Montreal, a person in need of an MRI has to wait six months (unless the person has political connections), while in Allegany County, the wait is miniscule, perhaps a day to set up the appointment.

Why the disparity? To a Canadian medical provider, an MRI is just a cost, as the firm cannot make a profit from this piece of capital. So, one of the most innovative medical devices today is seen as pure cost in Canada.

When one speaks of lowering costs, we are talking administrative numbers, not opportunity cost. (Yes, I know. Keynesians believe that Opportunity Cost is an oppressive tyranny left over from those bad old Classicals.) The real costs are borne by individuals who have care withheld from them, and that is endemic in Canada, whether or not Krugman wants to admit it.

The larger issue as I see it is that Krugman believes that medical care should be in control of the state. He simply cannot see any role for markets and private enterprise, entrepreneurship and, Horrors!, real prices. Medical innovation, as he sees it, is the result of pure research and that can be done much more efficiently from the government side, since political considerations never enter into any production equation. In other words, Krugman actually believes that state-run care will provide better results at cheaper costs.

Thus, his belief that Medicare, which was created 46 years ago, is Holy and Sacrosanct. Despite the fact that it, like everything else associated with the U.S. Government is going broke, Krugman still remains the True Believer that government medical care will give us good care, plenty of innovation, and low costs. Not possible.

While I have no idea how he would respond to a recent action by the FDA, which seized "birthing pools" because the government claims they are "unregistered medical equipment." As one bureaucrat declared:

Pregnancy is an illness and birth is a medical event. Therefore, a pool that a woman gives birth in should be classified as medical equipment.

Interestingly, Portland, Oregon, hardly is a bastion of conservative Republicanism or even libertarianism. It is a community heavily steeped in statism, and so the reality of the very statism that they support crashes down upon them. (Since the FDA considers pregnancy to be a disease, maybe that is why the government is so anxious for there to be abortion on demand.)