Ezra Klein: A larger welfare state means a smaller deficit, or something
posted at 1:53 pm on December 9, 2011 by Bruce McQuain
Honestly, that’s his premise. You can read it here. He bases his argument mostly in health care costs. Obviously where he tries to go with it is toward selling a single payer system. But he uses Germany as the model.
Anyone, does Germany have a single payer system? No, it has a public health insurance program that covers 88% of the population.
Take Germany. They have a pretty big welfare state: pensions, health care, paid vacations, unemployment benefits equal to two-thirds of one’s income.
So that’s great and per Klein, who, like I said, wants you to believe by his vague general description, that Germany has a system like … Canada.
Don’t believe it? Well it takes that sort of implication to make a statement like this:
To bring this across the Atlantic, you could argue that the United States’s debt burden is the product of an insufficiently large welfare state — at least with regard to health care. To see a stark illustration of that thesis, head to the Web site of the Organization of Economic Cooperation and Development and download their health-care statistics for Canada and the United States [emphasis mine].
Notice how apparently we transitioned seamlessly from a country with health insurance to a country with a single payer system without that being obvious? In reality we’ve looked at the apple, now he plans on comparing it to the orange:
As recently as 1965, the cost of those two systems competed neck-and-neck. That year, Canada spent 5.9 percent of its GDP on health care. The United States spent 5.7 percent. But around that time, Canada was transitioning to its current single-payer system. Over the next four decades, the growth of health-care costs slowed in Canada while it accelerated in the United States. By 2009, Canada was spending 11 percent of its GDP on health care — and covering everyone. The United States was spending 17.4 percent of its GDP and leaving 45 million uninsured. In dollar terms, we’re spending $3,600 more per person, per year, than Canada.
Emphasis mine. It’s a pretty ballsy attempt, I’ve got to say. Here’s another question for those paying attention. Can anyone tell me what began in 1965? Anyone? That’s right … Medicare. Per Klein, we were actually spending less than Canada until the same year that Medicare and government intrusion into the health care market was made law.
Based on that extraordinarily flawed bit of reasoning which managed to factor out or ignore a major reason for the increase in US health care costs, Klein concludes:
If the United States had Canada’s health-care system, and Canada’s per capita health-care costs, we would have a much “larger” welfare state, but we wouldn’t have a deficit problem.
Really? Seriously? You really want to run with that one, Mr. Klein?
Perhaps a less rosy look at Canada might help temper that nonsense a bit. Here’s a Canadian economic analyst speaking about the Canadian healthcare system:
“There’s got to be some change to the status quo whether it happens in three years or 10 years,” said Derek Burleton, senior economist at Toronto-Dominion Bank.
“We can’t continually see health spending growing above and beyond the growth rate in the economy because, at some point, it means crowding out of all the other government services.
“At some stage we’re going to hit a breaking point.”
It means crowding out other government services or what?
That’s right, deficits.
Well, except in Ezra Klein’s magic welfare state where one can happily spend whatever they want and there are no apparent consequences or … deficits.