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Will the deficit Bush helped create consume the tax cuts Bush managed to pass?

CBPP takes aim at the worst aspect of the Baucus proposal.

Paul Krugman argues in favor of the public plan.

A look at Japan's health-care system.

• The excellent Bruce Bartlett joins the also-excellent Capital Gains and Games. Here's his first post.

By Ezra Klein  |  September 8, 2009; 6:30 PM ET
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Next: The Provider Problem


I've mostly considered the "Ezra versus the Blogosphere" debate over the Public Option to be mostly a wonk versus hack thing. Krugman seems to be the first wonk to take you on, directly.

Posted by: ImMark | September 8, 2009 6:33 PM | Report abuse

First, CBPP identifies a very possible negative outcome from what I feel sure was intended as a good idea. The danger of too-quick adoption of ideas which are at first glance seemingly good should not be underestimated.

Second, from the Post's "Health Care in Japan: Low-Cost, for Now" article you reference above we read "'Patients are treated too equally,' he said. 'Beds are occupied by less-urgent cases, and there are no penalties for those who over-use the system.'" and from Frontline's "Sick Around the World" we hear "In fact, Japan has been so successful at keeping costs down that Japan now spends too little on health care; half of the hospitals in Japan are operating in the red. Having no gatekeepers means there's no check on how often the Japanese use health care, and patients may lack a medical home." Both of those reports highlight the need for individual responsibility, the need for a "health home" aka primary care physician, and the need for practical and ethical rationing (or budgeting) of available resources.

Third, Krugman says plainly "Remember, to make reform work we have to have an individual mandate" and I agree. I will also go so far to say that some Reagan-affiliated economists miss the mark a bit and draw some (but not all) conclusions without proper basis. Beyond that, though...

Posted by: rmgregory | September 8, 2009 6:47 PM | Report abuse

"Will the deficit Bush helped create consume the tax cuts Bush managed to pass?"

The Bush Tax Cuts are Zombie Tax Cuts. Nothing will kill them off.

Orszag is being rather smart in setting up ConservaDems to join with the rest of the Dems to let them die, and for the GOP "Deficit Are Evil When Dems Are In The White House" mantra look foolish when they're unwilling to tax the rich to drive the deficit down. But we all know in the end that the ConservaDems, Blue Dogs and GOP will stand hand-in-hand to keep them going. And that forces in the White House will talk Obama out of vetoing any attempt to extend them.

One feels a bit sorry for a good wonk like Orszag. He knows what needs to be done. But Congress sucks, and there are far stronger forces at work in the White House than he can overcome. A bit like the civil libertarians that joined Justice and the White House Counsel's office.


Posted by: toshiaki | September 8, 2009 7:13 PM | Report abuse

To blow my own horn, On July 27th I made the argument just made by the CBPP

Posted by: rjw88 | September 8, 2009 7:44 PM | Report abuse

I'm with Krugman on this one. I would only add that the Public Option needs to be even stronger in order to ensure cost containment. There needs to be a degree of central planning which Americans have been brainwashed for generations to think is always bad.

Posted by: bmull | September 8, 2009 8:11 PM | Report abuse

I'm with Krugman too. Good luck keeping Democrats in office if we end up with an individual mandate, but no public plan. I've voted Dem my whole life, but if they force me to buy an unpalatable plan, I'm out. Seriously.

A mandate with no public plan is the biggest victory the Republicans could possibly hope for - do you even remember the Dem primary of 2008? All they have to do is run ad after ad of him asking Hillary "how much is the penalty for not buying health insurance?".... and then show him signing a bill with a $1000 penalty for not buying health insurance.

This plan is political suicide. Especially among young people.

Posted by: bridgietherease | September 8, 2009 8:20 PM | Report abuse

Second, a public plan would probably provide the only real competition in many markets.

I can't believe someone as well respected as Krugman gets away with this crap.

There are only 3 states (including DC) with less than 5 HMO products already in place (not to mention non HMO products. They are:


District of Columbia


Competition has never been the greatest problem its been cost. That's where I see Krugman and Ezra seperating and I agree with Ezra that it should be more about the cost. Ezra doesn't seem hardened by years of political issues as Krugman does. Krugman seems more concerned about keeping Democrats in power than getting reform that can pass with the number of Democrats coming out against a public plan. I get the impression that (and i don't know if he's said this or not) that Krugman would be stupid enough to not vote for reform (if he had a vote) without a public option. He'd give up an end to pre-ex forever to try to hold onto a public option. Same mistake Democrats have made plenty of times before.

Posted by: visionbrkr | September 8, 2009 10:53 PM | Report abuse

It's not just the number of HMOs, it's the quality of the HMOs. Integrated high-efficiency HMOs like Mayo and Kaiser can put cost pressure on the overall market if they have sufficient market penetration and are not shackled by state laws. On the other hand the far larger number of small and inefficient HMOs that mainly just suck at the Medicare Advantage teat do nothing to keep down costs.

Posted by: bmull | September 9, 2009 1:30 AM | Report abuse

As I see it, Krugman vs. Kelin 1:0. Sry, Ezra, but Krugman's arguments win the day. You never convicingly explained how a plan without a public option could result in affordable insurance for ordinary people.

Posted by: Gray62 | September 9, 2009 5:09 AM | Report abuse

"Competition has never been the greatest problem its been cost. That's where I see Krugman and Ezra seperating and I agree with Ezra that it should be more about the cost.'

Excuse me, pls, brkr, but competition and cost is inseperable! It's economics 101. Without competition, you need tough regulation to keep premiums down, and that regulation in itself is costly. So, the best possible outcome for the US is imho giving citizen the choice of a robust public option, and a handful of private insurance plans. There will always be customers who will chose the private plans, because of the extras they provide. The public option setting the standard will ensure that the other suppliers keep their premiums at a resonable level, and the competition by the corporations will ensure that the government run service won't become an expensive moloch of bureaucracy. What's not to like?

But without the public option, it's just business as usual. Like in the past, the insurers will find ways around the regulations, and even if some citizen with preexisting conditions will find insurance, it will be expensive and limited. Don't forget, corporations know no ethics, it's all about maximizing the profits, not about giving the best possible deal to the customer.

And then imagine the consequences of the individual mandate: All citizen will be forced to get insurance, and if there is no choice of a public option, the corporations will make a heyday out of this that would dwarf the bank bailout in the long run! Who wants that, except the lobbyists???

Posted by: Gray62 | September 9, 2009 5:21 AM | Report abuse


competition and cost are inseperable when and IF the government does not set what an insurer can make as a profit but they are setting loss ratios for all across the country at 85% which means that there is only a 15% corridor to pay premium taxes (usually 5%) pay for all their other expenses and make a profit. Currently the highest loss ratio in the country is 80% in any individual state and most states don't have any loss ratio so currently national insurers can actuarily ensure they meet loss ratios in one state that has a loss ratio and shift profit to those states that do not have a loss ratio. If there was no loss ratio I would agree with you but because of that, it forces insurers to make the least profit possible and spend all but 15 cents per healthcare dollar on claims.

As I've said before I'd be in favor of a trigger option because that would ensure no government takeover because of the fact that the public options through each bill do not pay premium taxes and to one extent or another set reimbursement rates to providers at or below sustainable rates that will force further cost shifting to private plans that will continue their death spiral.

And I've considered the consequences of an individual mandate. Look what it did for car insurance. It reduced rates for all because it spread risk. Again this talk of private insurers having a bailout is ludicrous talk of the left because they don't understand what a loss ratio is.

Posted by: visionbrkr | September 9, 2009 7:37 AM | Report abuse

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