Paul Krugman: The Real Chicken-Checkup Fallacy

[babylonsister]

http://krugman.blogs.nytimes.com/2010/04/23/the-real-chicken-checkup-fallacy/

The Real Chicken-Checkup Fallacy
Paul Krugman


Everyone’s having fun with the chickens for checkups story, in which Sue Lowden, the leading Republican Senate candidate in Nevada, expressed a desire to return to the good old days in which people who wanted a checkup from their doctor would offer a chicken in exchange. And she’s not backing down!

But I think even the mocking critics are missing the main point. Sure, it’s funny to see a 21st-century political candidate pining for the days of a barter economy. But her remarks would have been breathtakingly ignorant even if she had called for payments in cash.

The key fact about health care — the central issue in health care economics — is that it’s all about the big-ticket items. Checkups don’t cost much; neither does the treatment of minor illnesses. The money that matters goes to bypasses and dialysis — costs that are highly unpredictable, and that almost nobody can afford to pay out of pocket. Modern health care, if it’s going to be provided at all, has to be paid for mainly out of insurance.

Conservatives don’t like this; if few of them propose paying in chickens, there is nonetheless a constant refrain of calls for making the market for health care more like the market for bread, with consumers paying out of medical accounts and engaging in comparison shopping. There is, for example, vast romanticizing of things like Lasik and cosmetic surgery, which are held up as models for health care as a whole — even though they’re actually very poor models. (They’re discretionary and fairly cheap — not at all like the procedures that dominate health costs in the real world.)

Why this preference for cash? Because even conservatives know in their hearts that insurance markets are deeply imperfect, which means that standard free-market arguments become very weak once insurers are involved. And so they pretend that we don’t really need all that insurance.

The business with the chickens adds an additional level of absurdity. But Ms. Lowden’s perspective is ludicrous even without the feathers.