There's been a lot of back and forth on Krugman's cascading posts on Healthcare issues that has been particularly hard on Obama's stated policy position.
Some of the Obama people have concluded that Krugman is for Hillary.
Krugman may or may not be for Hillary, but his argument is based upon the Economic models appropriate for Commodities/Utilities.
Healthcare is not a commodity or a utility, but health insurance is. Like all utilities the cost goes down (and generally the quality goes up) as the pool of contributors become larger.
(First: some disclaimer. The stuff I am writing here is from memory of a class I had in Law School taught by a Nobel Prize winning Economic historian. If I get it wrong here, it's my fault, not his, nor the arguements - but hopefully it will be simple enough.
Second: I was/am an Edwards fan, I vote on super Tuesday in Arizona. And I am struggling with what to do.)
Back on topic: Health Insurance is both a utility and a commodity. Like all utilities the cost goes down (and generally the quality goes up) as the pool of contributors become larger. This is true with electricity, gas, water and sewage.
Case in point is the St. Louis area's water utility.
St. Louis has a lot of food processing industries that consume and use water in their products. The most prominent being Anheuser-Busch. Anheuser-Busch is perhaps the wealthiest company in the city, located on the Mississippi River, it has it's own water treatment plant. It doesn't need to buy water from the city. But it's plant is mandated, by law, to buy a portion of its water from the local water utility.
The reason is the formula for utilities breaks down the minute you allow subscribers to opt out.
Busch represents the wealthy subscriber that could obviously opt out as it could produce its own water. This would force water rates up on the rest. Soon poor subscribers opt out by digging wells or some other method because the burden on them has gone up. As the burden goes up more and more subscribers opt out or find alternative means.
Eventually you are left with something that looks like our current health care system.
Let me tell you that St. Louis has some of the best water coming out of the tap in the country. It taste great, it's better for you than the stuff you buy in the bottle because it has fluoride in it, and it is very cheap.
Anheuser-Busch and other industrial consumers don't really object because they understand the model, their cost is still low, and the quality is high.
Because Health care insurance is a utility, it functions best if we treat it as such.
In this sense, I am surprised that someone had not stepped forward and proposed a model based upon the Telecom industry circa 1979. That was a very successful model for the time.*
The telecom model was based upon a perceived need for universal service. The phone companies were forced to merge into a monopolistic oligopolly that was heavily regulated. This allowed the network to become universal (I still pay a very small charge to allow service to the back woods), have high quality and low cost.
I am surprised that no Democrat has considered this idea because it would give us universal and single payer health care (something Democrats want) and yet leave it in the hands of a private, though highly regulated, company (something Republicans want, thus negating their arguments). (If I were John McCain, I would pick up this idea to one up the Democrats).
I don't think that Krugman is being hard in his analysis. He's just being very technical. The utilities model is an old, well known one. He is doing us all a service by pointing it out. No doubt this is very inconvenient for Obama's supporters and those of us who would like to vote for him but need a universal health care system.
Final disclosure: I was an Edwards fan. I like Obama's charisma. I think that's important. But I have needs. I need health care insurance, and I need a job that will pay me enough to dig myself out of my own economic hole.
If I go with Hillary, I have the prospect of the 1990s economy and a better health care insurance model going in. But Hillary doesn't have the coat tails. I've personally met many disenchanted Republicans who hate McCain but will crawl on their belly through a blizzard to vote to stop Hillary (that means she has reverse coat tails because those Republicans will vote for Repbulican Senators and Congressman, as will independents who don't like Hillary, meaning it will be harder to vote healthcare proposals throught congress).
If I go with Obama, I get the inspirational leadership, the vague promise of new kind of politics and the 'goodbye to all that' in our politics, but there is the flawed healthcare model going in and frankly he has no history of managing an economy or administration which the Clinton's do have.
I truly miss Edwards: he was right on policy, he had good charisma (though not as powerful as Obama), and he had real coat tails that could have given us a 60+ majority in the Senate.
Obama would do us all a favor in acknowledging this technical aspect of his policy proposal. If he chooses not to fix it, it tells us something about his politics.
I want to personally thank Paul Krugman for enduring attacks from pro-Obama people for his work in this matter.
To the Pro-Obama people, I understand you passion, and I love your candidate. I really want to vote for him. But some of us have real needs that have to be serviced before our wants. This technicality is real and it is important and it's creating for me a real dilema.
*(essentially, for Telecom, though the rules have changed, we are still under the same governing regulatory regime that prevailed in 1979 - they have simply surgically introduced competition and deregulation where they thought it would work).