Comparison and Contrast of the Plans
“Two possible reasons why people don’t have health coverage are usually given. One is that the uninsured are gaming the system. The other is that they can’t afford it and don’t know where to get it. Most of the literature suggests that the explanation is mostly the latter. That means the single biggest thing we can do to help the uninsured is to make coverage affordable and accessible.” -David Cutler, Professor of Applied Economics at Harvard and Senior Health Policy Advisor to the Obama Campaign.
Gaming the System
Paul Krugman best articulated the argument for mandates in a recent op-ed piece in the NY Times. He states, "under the Obama plan, as it now stands, healthy people could choose not to buy insurance — then sign up for it if they developed health problems later. Insurance companies couldn’t turn them away, because Mr. Obama’s plan, like those of his rivals, requires that insurers offer the same policy to everyone. As a result, people who did the right thing and bought insurance when they were healthy would end up subsidizing those who didn’t sign up for insurance until or unless they needed medical care." This is a good point that is repeatedly made by supporters of the Clinton plan. Under the Obama plan it would be possible to wait until you are sick to enroll. This would indeed be a burden on the system if a huge number of people failed to get insurance and only had an initial contact with the health care system once they had a catastrophic illness.
I have always dismissed this concern to some extent because I believe most people will have to initially utilize healthcare for something emergent but not extremely expensive, and because I believe most people find going uninsured to be a source of tremendous anxiety. First, the first encounter is much more likely to result from a sprained ankle or a bad case of the flu than an initial diagnosis of cancer. The vast majority of the uninsured are young and healthy. If they are not paying, they are not utilizing the system. As an example, I went without health insurance for a few months after Katrina. I had an accident on a Vespa -- I hit a iron fence and banged my head badly, hurt my knee, and thought my arm was broken. I didn't go to the emergency room, I went and took some Tylenol, cleaned my knee carefully, and iced my arm for 24 hours. If I'd gone to the emergency room, that one encounter would have cost more than my yearly premiums, because I'd have had to have lots of x-rays and a cat scan and an observation admission to the hospital. If my arm had been broken and I'd had no choice but to go, I would have been guilty of gaming the system once, but then I'd be enrolled and I've not had another emergent need for healthcare in two years. Of course, when I was on the ground trapped under that Vespa my head was ringing and I wasn't clear what had happened I had one thought -- I don't have insurance. It was that thought that I had every time I got behind the wheel of my car, every time I went jogging. Every time I had a headache or a small pain in my lower left belly, that anxiety would feel like a boulder on my chest. I know that if I'd had access to an affordable policy, I would have not hesitated for a moment. I imagine most people going without insurance feel the same way.
However, as Krugman states, the removal of pre-existing exclusions would take away the motivation of the sword hanging over the head of the uninsured. Clearly, that would have to be addressed, and there would have to be a penalty for those who wait until they are sick to enroll in a program. Obama has mentioned a penalty such as fines of the equivalent of six months premiums (the current pre-existing waiting period), some people have suggested taxing the value of the first three months' utilization as income. Clearly, this problem will have to be addressed when legislation is drafted but can be overcome without resorting to mandates to be effective.
Free Markets -- Good or Bad?
Paul Krugman recently criticized the Obama plan, "castigating" Obama, saying "he’s echoing right-wing talking points on health care." The Clinton campaign says his plan endorses "Reaganomics" over universal coverage. I think most Americans prefer a system with choice and will respond favorably to a plan that lowers the barriers of cost and access to health insurance whether private or public. Cutler sums it up this way, “the mandate argument is: You must buy something – but I’m not going to tell you what it is, how much it will cost, or where you’re going to get it.” The supporters of mandates advocate requiring proof of health insurance be submitted with income tax returns, and that the uninsured be automatically enrolled in the Congressional Health Plan. Opponents of mandates argue that you can automatically enroll people in health plans, but if they aren't affordable people won't pay the premiums. The pro-mandate analysts admit there will have to be fines and penalties, and many (including Clinton) have mentioned that it may be necessary to garnish people's wages to assure compliance. That amounts to a regressive tax, but by a different name.
A further point of contrast in the plans -- the Obama utilizes the market and competition through the insurance exchange while the Clinton plan focuses solely on adding people to the Congressional Health Plan. It is important to utilize the market to insure that those who are entering the system have access not just to health care, but to good quality, cost effective health care. Some of you may remember my theory of the three tier system (here -- [ame="http://sowal.com/bb/showpost.php?p=250596&postcount=38"]http://sowal.com/bb/showpost.php?p=250596&postcount=38[/ame])
We have to ask ourselves, if we want universal healthcare, which tier do we plan to add people to? Which tier is going to justify asking (or forcing) them to pay 10% of their income? The Obama plan seeks to add people to the second tier, while I believe the Clinton plan expands the third tier.
Finally, I encourage everyone to look at the plans themselves.
http://www.barackobama.com/issues/healthcare/
http://www.hillaryclinton.com/feature/healthcareplan/summary.aspx
The plans may be very similar with the exception of mandates, but the approaches could not be more different. The Clinton plan approaches the problems of health care as though they are all a matter of policy easily fixed with more legislation. The Obama plan specifies many areas to be targeted for reform. The Clinton plans sees the health system as one in need of a little tweaking, while the Obama plan aims to fix many of the fundamental flaws that are creating excessive profits in some parts of the healthcare system, while starving other of funds. The Obama plan makes cost and access the first priority, while the Clinton plan makes access and mandatory enrollment the priority. Which brings us back to the question -- when Americans say they want "universal healthcare," how do they define universal?
Next post -- The foreseeable consequences of the two plans.
