Europe’s Secret Success

Source: NY Times

Author: Paul Krugman

I’ll be spending the next couple of days at a forum sponsored by the European Central Bank whose de facto topic — whatever it may say on the program — will be the destructive monetary muddle caused by the Continent’s premature adoption of a single currency. What makes the story even sadder is that Europe’s financial and macroeconomic woes have overshadowed its remarkable, unheralded longer-term success in an area in which it used to lag: job creation.

What? You haven’t heard about that? Well, that’s not too surprising. European economies, France in particular, get very bad press in America. Our political discourse is dominated by reverse Robin-Hoodism — the belief that economic success depends on being nice to the rich, who won’t create jobs if they are heavily taxed, and nasty to ordinary workers, who won’t accept jobs unless they have no alternative. And according to this ideology, Europe — with its high taxes and generous welfare states — does everything wrong. So Europe’s economic system must be collapsing, and a lot of reporting simply states the postulated collapse as a fact.

The reality, however, is very different. Yes, Southern Europe is experiencing an economic crisis thanks to that money muddle. But Northern European nations, France included, have done far better than most Americans realize. In particular, here’s a startling, little-known fact: French adults in their prime working years (25 to 54) are substantially more likely to have jobs than their U.S. counterparts.

It wasn’t always that way. Back in the 1990s Europe really did have big problems with job creation; the phenomenon even received a catchy name, “Eurosclerosis.” And it seemed obvious what the problem was: Europe’s social safety net had, as Representative Paul Ryan likes to warn, become a “hammock” that undermined initiative and encouraged dependency.

But then a funny thing happened: Europe started doing much better, while America started doing much worse. France’s prime-age employment rate overtook America’s early in the Bush administration; at this point the gap in employment rates is bigger than it was in the late 1990s, this time in France’s favor. Other European nations with big welfare states, like Sweden and the Netherlands, do even better.

Now, young French citizens are still a lot less likely to have jobs than their American counterparts — but a large part of that difference reflects the fact that France provides much more aid to students, so that they don’t have to work their way through school. Is that a bad thing? Also, the French take more vacations and retire earlier than we do, and you can argue that the incentives for early retirement in particular are too generous. But on the core issue of providing jobs for people who really should be working, at this point old Europe is beating us hands down despite social benefits and regulations that, according to free-market ideologues, should be hugely job-destroying.

 

Oh, and for those who believe that out-of-work Americans, coddled by government benefits, just aren’t trying to find jobs, we’ve just performed a cruel experiment using the worst victims of our job crisis as subjects. At the end of last year Congress refused to renew extended jobless benefits, cutting off millions of unemployed Americans. Did the long-term unemployed who were thereby placed in dire straits start finding jobs more rapidly than before? No — not at all. Somehow, it seems, the only thing we achieved by making the unemployed more desperate was deepening their desperation.

I’m sure that many people will simply refuse to believe what I’m saying about European strengths. After all, ever since the euro crisis broke out there has been a relentless campaign by American conservatives (and quite a few Europeans too) to portray it as a story of collapsing welfare states, brought low by misguided concerns about social justice. And they keep saying that even though some of the strongest economies in Europe, like Germany, have welfare states whose generosity exceeds the wildest dreams of U.S. liberals.

But macroeconomics, as I keep trying to tell people, isn’t a morality play, where virtue is always rewarded and vice always punished. On the contrary, severe financial crises and depressions can happen to economies that are fundamentally very strong, like the United States in 1929. The policy mistakes that created the euro crisis — mainly creating a unified currency without the kind of banking and fiscal union that a single currency demands — basically had nothing to do with the welfare state, one way or another.

The truth is that European-style welfare states have proved more resilient, more successful at job creation, than is allowed for in America’s prevailing economic philosophy.

 

Emphasis Mine

See:

Kathleen Sebelius: The Affordable Care Act has made the U.S. health-care system stronger

From:Washington  Post

By:Kathleen Sebelius

“The Supreme Court decision upholding the Affordable Care Act was a turning point in the health-care debate, a chance to stop refighting old political battles and move forward with implementing and improving a law that is already lowering health-care costs and providing more security for millions of American families. Instead, congressional Republicans will spend Wednesday staging yet another repeal vote.

Fortunately for those Americans whose health and finances depend on protections in the law, the vote is only symbolic. But it’s worth setting the record straight about some false claims that have recently resurfaced.

One claim is that the Affordable Care Act is driving up Americans’ health-care costs. The facts tell a different story.

In the decade before the law was passed, national health expenditures increased about 7 percent a year. But in the past two years, those increases have dropped to less than 4 percent per year, saving Americans more than $220 billion. And that trend is expected to continue, with health-care costs projected to stay level as a share of gross domestic product from 2009 all the way through 2013.

You can see the same trend with premiums. Between 2000 and 2009, the average family premium more than doubled, from $6,438 to $13,375, an annual increase of 8.1 percent. From 2009 to 2011, family premiums still rose — but at a rate 25 percent lower. That generated savings of more than $1,200 per family, a trend of lower premium increases that independent experts such as Mercer, the human resources consultant, and the nonprofit National Business Group on Health project will continue. And the law will provide even more relief in the years to come, including a tax cut averaging $4,000 for 18 million middle-class Americans — a tax break that repeal would eliminate.

Another falsehood repeated by opponents of the law is that it is putting a greater burden on small businesses. Again, the facts show that the opposite is true.

Small-business owners were struggling in the health insurance market long before the law passed, spending an average of 18 percent more than their large competitors annually for health coverage and often seeing their insurance bills skyrocket if a single employee got sick. The result was that the number of small businesses in the United States offering coverage to employees was falling rapidly — from nearly 70 percent in 2000 to less than 60 percent of employers by 2009 — leaving millions of working families without coverage.

Since the law passed, the share of small businesses offering employee coverage has held steady at 59 percent, the Kaiser Family Foundation has found, in part because new tax credits in the law are saving hundreds of thousands of small companies thousands of dollars each on their insurance costs. And independent experts such as Rand Corp. predict the number of employers offering coverage will rise in 2014 — just as it did in Massachusetts after health reform was passed — when small-business owners have the choice of shopping for health coverage in new competitive marketplaces.

A third false attack recycled in recent weeks is that the Affordable Care Act cuts Medicare benefits. In truth, Medicare is stronger than ever.

Thanks to the law, seniors have new benefits such as free preventive care as well as discounts on brand-name medications in the “doughnut hole” coverage gap that have already saved more than 5 million people with Medicare about $600 each. Medicare Advantage premiums have fallen two years running. New crackdowns on fraud and abuse returned a record $5.4 billion to Medicare in 2010 and 2011. And the health-care law has strengthened Medicare’s long-term outlook, adding eight additional years to the projected solvency of the Medicare trust fund.

Those calling for repeal have yet to propose credible ideas for lowering health-care costs. In fact, the same House Republicans who are voting Wednesday to repeal these Medicare savings voted to keep them in their budget in March.

People are entitled to their opinions, but not to their own facts. And the facts in this case are clear: Since the Affordable Care Act was passed, national health spending is rising at a slower rate, health insurance premiums are rising at a slower rate, small-business coverage is holding steady and Medicare is on a stronger financial footing.

Now that the Supreme Court has issued a decision, the American people would be better served if Congress joined the president in working to build on that progress, not undo it.

Emphasis Mine

see:http://www.washingtonpost.com/opinions/kathleen-sebelius-the-affordable-care-act-has-made-the-us-health-care-system-stronger/2012/07/09/gJQA1BOOZW_story.html?wpisrc=nl_opinions

American health care is remarkably diverse.

In fact, it’s hard to avoid the sense that Republicans are especially eager to dismantle government programs that act as living demonstrations that their ideology is wrong. Bloated military budgets don’t bother them much —

From: NY Times, via Truthout

N.B.: Republicans continue to lie, while people continue to die, and before I die, I hope the word ‘socialism’ is no longer pejorative, along with ‘atheism’, and ‘humanism’, in our country.

By: Dr. Paul Krugman

“In terms of how care is paid for and delivered, many of us effectively live in Canada, some live in Switzerland, some live in Britain, and some live in the unregulated market of conservative dreams. One result of this diversity is that we have plenty of home-grown evidence about what works and what doesn’t.  

Naturally, then, politicians — Republicans in particular — are determined to scrap what works and promote what doesn’t. And that brings me to Mitt Romney’s latest really bad idea, unveiled on Veterans Day: to partially privatize the Veterans Health Administration (V.H.A.).

What Mr. Romney and everyone else should know is that the V.H.A. is a huge policy success story, which offers important lessons for future health reform.

Many people still have an image of veterans’ health care based on the terrible state of the system two decades ago. Under the Clinton administration, however, the V.H.A. was overhauled, and achieved a remarkable combination of rising quality and successful cost control. Multiple surveys have found the V.H.A. providing better care than most Americans receive, even as the agency has held cost increases well below those facing Medicare and private insurers. Furthermore, the V.H.A. has led the way in cost-saving innovation, especially the use of electronic medical records.

What’s behind this success? Crucially, the V.H.A. is an integrated system, which provides health care as well as paying for it. So it’s free from the perverse incentives created when doctors and hospitals profit from expensive tests and procedures, whether or not those procedures actually make medical sense. And because V.H.A. patients are in it for the long term, the agency has a stronger incentive to invest in prevention than private insurers, many of whose customers move on after a few years.

And yes, this is “socialized medicine” — although some private systems, like Kaiser Permanente, share many of the V.H.A.’s virtues. But it works — and suggests what it will take to solve the troubles of U.S. health care more broadly.

Yet Mr. Romney believes that giving veterans vouchers to spend on private insurance would somehow yield better results. Why?

Well, Republicans have a thing about vouchers. Earlier this year Representative Paul Ryan famously introduced a plan to convert Medicare into a voucher system; Mr. Romney’s Medicare proposal follows similar lines. The claim, always, is the one Mr. Romney made last week, that “private sector competition” would lower costs.

But we have a lot of evidence about how private-sector competition in health insurance works, and it’s not favorable. The individual insurance market, which comes closest to the conservative ideal of free competition, has huge administrative costs and has no demonstrated ability to reduce other costs. Medicare Advantage, which allows Medicare beneficiaries to buy private insurance instead of having Medicare pay bills directly, has consistently had higher costs than the traditional program.

And the international evidence accords with U.S. experience. The most efficient health care systems are integrated systems like the V.H.A.; next best are single-payer systems like Medicare; the more privatized the system, the worse it performs.

To be fair to Mr. Romney, he takes a somewhat softer line than others in his party, suggesting that the existing V.H.A. system would remain available and that traditional Medicare would remain an option. In practice, however, partial privatization would almost surely undermine the public side of these programs. For example, one problem with the V.H.A. is that its hospitals are spread too thinly across the nation; this problem would become worse if a substantial number of veterans were encouraged to opt out of the system.

So what lies behind the Republican obsession with privatization and voucherization? Ideology, of course. It’s literally a fundamental article of faith in the G.O.P. that the private sector is always better than the government, and no amount of evidence can shake that credo.

In fact, it’s hard to avoid the sense that Republicans are especially eager to dismantle government programs that act as living demonstrations that their ideology is wrong. Bloated military budgets don’t bother them much — Mr. Romney has pledged to reverse President Obama’s defense cuts, despite the fact that no such cuts have actually taken place. But successful programs like veterans’ health, Social Security and Medicare are in the crosshairs.

Which brings me to a final thought: maybe all this amounts to a case for Rick Perry. Any Republican would, if elected president, set out to undermine precisely those government programs that work best. But Mr. Perry might not remember which programs he was supposed to destroy.

Emphasis Mine

see:http://www.nytimes.com/2011/11/14/opinion/krugman-vouchers-for-veterans-and-other-bad-ideas.html?_r=2

Whose Waterloo?

Conservatives and Republicans [on Sunday] suffered their most crushing legislative defeat since the 1960s.

Is the successful passage of Health Care Insurance reform a major GOP defeat?

Conservative columnist David Frum says the Democrats’ passage of health-care reform is the greatest legislative defeat for the GOP in decades.

“After an epic political battle, House Democrats on Sunday won final approval of a historic overhaul of the health-care system without a single Republican vote. David Frum argues in FrumForum.com that by trying everything in their power to block the legislation, instead of making a deal and sharing in the victory, Republicans set themselves up for an “abject and irreversible defeat.” Here’s an excerpt:

“Conservatives and Republicans [on Sunday] suffered their most crushing legislative defeat since the 1960s.

It’s hard to exaggerate the magnitude of the disaster. Conservatives may cheer themselves that they’ll compensate for [Sunday’s] vote with a big win in the November 2010 elections. But:

(1) It’s a good bet that conservatives are over-optimistic about November — by then the economy will have improved and the immediate goodies in the health-care bill will be reaching key voting blocs.

(2) So what? Legislative majorities come and go. This health-care bill is forever. A win in November is very poor compensation for this debacle now.

So far, I think a lot of conservatives will agree with me. Now comes the hard lesson:

A huge part of the blame for [Sunday’s] disaster attaches to conservatives and Republicans ourselves.

At the beginning of this process we made a strategic decision: unlike, say, Democrats in 2001 when President Bush proposed his first tax cut, we would make no deal with the administration. No negotiations, no compromise, nothing. We were going for all the marbles. This would be Obama’s Waterloo – just as healthcare was Clinton’s in 1994.

Only, the hardliners overlooked a few key facts: Obama was elected with 53% of the vote, not Clinton’s 42%. The liberal block within the Democratic congressional caucus is bigger and stronger than it was in 1993-94. And of course the Democrats also remember their history, and also remember the consequences of their 1994 failure.

This time, when we went for all the marbles, we ended with none.

Could a deal have been reached? Who knows? But we do know that the gap between this plan and traditional Republican ideas is not very big. The Obama plan has a broad family resemblance to Mitt Romney’s Massachusetts plan. It builds on ideas developed at the Heritage Foundation in the early 1990s that formed the basis for Republican counter-proposals to Clintoncare in 1993-1994.

Barack Obama badly wanted Republican votes for his plan. Could we have leveraged his desire to align the plan more closely with conservative views? To finance it without redistributive taxes on productive enterprise – without weighing so heavily on small business – without expanding Medicaid? Too late now. They are all the law.

No illusions please: This bill will not be repealed. Even if Republicans scored a 1994 style landslide in November, how many votes could we muster to re-open the “doughnut hole” and charge seniors more for prescription drugs? How many votes to re-allow insurers to rescind policies when they discover a pre-existing condition? How many votes to banish 25 year olds from their parents’ insurance coverage? And even if the votes were there – would President Obama sign such a repeal?

We followed the most radical voices in the party and the movement, and they led us to abject and irreversible defeat.

There were leaders who knew better, who would have liked to deal. But they were trapped. Conservative talkers on Fox and talk radio had whipped the Republican voting base into such a frenzy that deal-making was rendered impossible. How do you negotiate with somebody who wants to murder your grandmother? Or – more exactly – with somebody whom your voters have been persuaded to believe wants to murder their grandmother?

I’ve been on a soapbox for months now about the harm that our overheated talk is doing to us. Yes it mobilizes supporters – but by mobilizing them with hysterical accusations and pseudo-information, overheated talk has made it impossible for representatives to represent and elected leaders to lead. The real leaders are on TV and radio, and they have very different imperatives from people in government. Talk radio thrives on confrontation and recrimination. When Rush Limbaugh said that he wanted President Obama to fail, he was intelligently explaining his own interests. What he omitted to say – but what is equally true – is that he also wants Republicans to fail. If Republicans succeed – if they govern successfully in office and negotiate attractive compromises out of office – Rush’s listeners get less angry. And if they are less angry, they listen to the radio less, and hear fewer ads for Sleepnumber beds.

So today’s defeat for free-market economics and Republican values is a huge win for the conservative entertainment industry. Their listeners and viewers will now be even more enraged, even more frustrated, even more disappointed in everybody except the responsibility-free talkers on television and radio. For them, it’s mission accomplished. For the cause they purport to represent, it’s Waterloo all right: ours.”

see: http://theweek.com/article/index/201046/Is_health_care_the_GOPs_Waterloo

Emphasis mine

Government Health Insurance

Paul Krugman, in the NY Times: At a recent town hall meeting, a man stood up and told Representative Bob Inglis to “keep your government hands off my Medicare.” The congressman, a Republican from South Carolina, tried to explain that Medicare is already a government program — but the voter, Mr. Inglis said, “wasn’t having any of it.”

It’s a funny story — but it illustrates the extent to which health reform must climb a wall of misinformation. It’s not just that many Americans don’t understand what President Obama is proposing; many people don’t understand the way American health care works right now. They don’t understand, in particular, that getting the government involved in health care wouldn’t be a radical step: the government is already deeply involved, even in private insurance.

And that government involvement is the only reason our system works at all.

The key thing you need to know about health care is that it depends crucially on insurance. You don’t know when or whether you’ll need treatment — but if you do, treatment can be extremely expensive, well beyond what most people can pay out of pocket. Triple coronary bypasses, not routine doctor’s visits, are where the real money is, so insurance is essential.

Yet private markets for health insurance, left to their own devices, work very badly: insurers deny as many claims as possible, and they also try to avoid covering people who are likely to need care. Horror stories are legion: the insurance company that refused to pay for urgently needed cancer surgery because of questions about the patient’s acne treatment; the healthy young woman denied coverage because she briefly saw a psychologist after breaking up with her boyfriend…most Americans do have health insurance, and are reasonably satisfied with it. How is that possible, when insurance markets work so badly? The answer is government intervention…So here’s the bottom line: if you currently have decent health insurance, thank the government..

Right-wing opponents of reform would have you believe that President Obama is a wild-eyed socialist, attacking the free market. But unregulated markets don’t work for health care — never have, never will. To the extent we have a working health care system at all right now it’s only because the government covers the elderly, while a combination of regulation and tax subsidies makes it possible for many, but not all, nonelderly Americans to get decent private coverage.

Now Mr. Obama basically proposes using additional regulation and subsidies to make decent insurance available to all of us. That’s not radical; it’s as American as, well, Medicare.

see: http://www.nytimes.com/2009/07/31/opinion/31krugman.html?scp=6&sq=krugman&st=cse