Sloppy Krugman

Here’s a letter Don Boudreaux sent to the New York Times:

And these data ignore the fact that Massachusetts’s plan relies in part on subsidies from Uncle Sam.


24 July 2009

Editor, The New York Times
620 Eighth Avenue
New York, NY 10018

To the Editor:

I’m surprised that Paul Krugman points to Massachusetts’s three-year-old program for creating universal health-insurance coverage in that state as a model for the national level (“Costs and Compassion,” July 24).  Krugman himself admits – in a column devoted to insisting that such government plans will reduce health-care costs – that Massachusetts “is now looking for ways to help control costs.”  If Massachusetts’s experience is Mr. Krugman’s best real-world case for how such reform itself controls costs, why are legislators in that state “now looking” – three years later – “for ways to help control costs”?

But control costs they must.  A 2008 Kaiser Family Foundation study of this Massachusetts reform finds that “the costs for this program have exceeded previous estimates.  The Governor’s budget request of $869 million for 2009 is about $400 million more than that for 2008, and it is believed that this funding level may still fall short.”*  And just last month, Cato Institute scholar Michael Tanner reported that “since the program became law, insurance premiums have been increasing by 10 to 12 percent per year, nearly double the national average. On average, health insurance costs $16,897 a year for a family of four in Massachusetts, compared to $12,700 nationally. Meanwhile, total health-care spending in the state has increased by 28 percent.”**

Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030




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