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November 27, 2007
Barack Obama Has No Man Dates, Continued
This is the smartest defense of Barack Obama's health care plan that I've seen. But I don't agree with it. I have to run, but the short version is that you can't actually have this wonderful system everyone's talking about without full buy-in. The insurance industry really can't offer community rating -- which is to say, they can't offer health care coverage at flat rates, disregarding preexisting conditions and the like -- if individuals don't have to participate in the system. In that world, they really will get nailed by adverse selection, as healthier folks forego insurance and sicker types sign up in droves. Universality isn't just a nice moral decision, it's part of the bargain with the insurers -- and you can't force them into community rating without it.
Then comes the question of whether mandates work. Barack Obama believes they do. He's got one for children. Surely he doesn't mean to say that "Americans aren't going without health care because they don't want it, it's because they can't afford it. But the reason their kids are going without health care is that their parents don't want to give it to them."
The third point is a bit airier: Universality should simply be a non-negotiable bottom line. I made this argument at greater length yesterday, but the idea that we're all in this together is key to progressivism, and if you can't even sell something with the obvious rhetorical advantages of medical coverage for everybody, you may as well pack up your toys and go home. It's just an absurd place to pull up on the reins -- bad policy, yes, but my hunch is, a huge political error. You'll lose support on the left, won't gain any on the right, and will give opponents an easy way to attack your plan. "We're spending all this and we're still leaving 20 million uninsured? Typical liberal efficiency, I guess."
And fourth, the rhetoric he's using will, later, be turned on progressive reformers. He's constructing an argument, that will be attributed to leading liberal Barack Obama, that battles against universality. The way he's engaging on this issue is actually, so far as I can tell, setting back the cause of reform. That's bad in the particulars, of course, but it also suggests, to me, that Obama hasn't spent much time thinking abut how to achieve universal health care reform.
November 27, 2007 in Politics of Health Care | Permalink
Comments
Certainly universality should be a nonnegotiable option, but I still don't see what that has to do with the argument. Universality does not mean mandates, and mandates don't mean universality (and mandating that people buy insurance just doesn't seem very progressive to me, or very politically palatable). As far as I can see, none of the plans from the top candidates actually provide universal coverage, but they could eventually lead to it after the system is patched to cover those that they leave uncovered.
Posted by: KCinDC | Nov 27, 2007 11:19:38 AM
"it also suggests, to me, that Obama hasn't spent much time thinking abut how to achieve universal health care reform."
Wrong conclusion, IMHO.
It should suggest to you that achieving universal health care is not a particularly high priority of the Obama campaign.
Posted by: Petey | Nov 27, 2007 11:23:42 AM
As far as I can see, none of the plans from the top candidates actually provide universal coverage
Then you haven't looked very closely.
Posted by: Herschel | Nov 27, 2007 11:34:21 AM
Um...."man dates" or "mandates"?
Posted by: gregh | Nov 27, 2007 11:34:49 AM
Then you haven't looked very closely.
Dennis Kucinich may be a great guy, but he's not, in this context at least, a "top candidate."
Posted by: Christmas | Nov 27, 2007 11:37:07 AM
Quite so, Ezra. Obama's child mandate undercuts a large swath of his rhetorical argument. And as some of the recent coverage of MA's mandate issues have made clear, there most certainly is a 'free rider,' problem with health insurance, one that would be made much worse by eliminating pre-existing condition clauses.
By the way, Edwards solves the 'enforcement' issue with automatic enrollment.
Posted by: AJ | Nov 27, 2007 11:37:08 AM
Herschel, can you suggest where I should be looking closely? When I say "universal coverage", I mean everyone is covered, not everyone has the option to buy coverage or everyone is punished in some unspecified way if they don't buy coverage. And as Christmas says, I'm excluding Kucinich.
Posted by: KCinDC | Nov 27, 2007 11:49:51 AM
I have made this point a couple times before, but I'll try it again and see if it sticks. Is a mandate really necessary? I think the easiest answer to the entire mandate issue is to borrow an idea from Furman at Brookings and set up a high deductible safety net set at a cetain percentage of your total income made payable over 12 months. Do this in lieu of premiums. I think 7.5% is a fair amount. So if you make 100,000, you would spend 7500 dollars or about 625 a month the insurance kicks in, but if you make 25,000 then you would spend 1875 or about 160 bucks a year. In addition you could lower that rate to 5% for those with chronic conditions who effectively manage their diseases (i.e. go to regular check ups, take their meds, quit smoking ,and eat right. I think the payments in conjunction with a business pay or play mandate and a roll back of some of the tax cuts would pay for what would be true universal health care.
A deductible could also be used in Obama's plan as an alternative to a mandate. Raise the deductible to something like 10% of family income. That way you get true universal insurance because everyone is either paying premiums or is insured after 10% of income. Also, it provides an incentive to pay premiums (10% percent of a family's income is alot of money) without charging people penalties or additional taxes which would be difficult and politically unpalatible.
Posted by: j | Nov 27, 2007 11:49:53 AM
"By the way, Edwards solves the 'enforcement' issue with automatic enrollment."
Yup. See also Jon Cohn's coverage.
Posted by: Petey | Nov 27, 2007 11:57:29 AM
"When I say "universal coverage", I mean everyone is covered, not everyone has the option to buy coverage or everyone is punished in some unspecified way if they don't buy coverage. And as Christmas says, I'm excluding Kucinich."
Under the Edwards plan, everyone will be covered.
See AJ and my links upthread for details.
Posted by: Petey | Nov 27, 2007 11:59:11 AM
Herschel, can you suggest where I should be looking closely?
Well, you might start at John Edwards's website.
Where he uses the word "require", I think he means "legally require"; his plan when fully implemented will legally require that every American resident have health insurance. It is always possible that some will defy the law, but that's true of any law. Now, if your point is that having insurance is not the same thing as having health care, I might agree with you, although I would resist the idea of health-care press-gangs roaming the country forcing medical procedures on unwilling patients.
Posted by: Herschel | Nov 27, 2007 12:06:54 PM
"It is always possible that some will defy the law"
For about the ninth time on this thread, Edwards today spelled out details on how it will be impossible to 'defy the law' in practice.
Basically every time [people] come into contact with either the healthcare system or the government, whether it's payment of taxes, school, going to the library, whatever it is they will be signed up.
Posted by: Petey | Nov 27, 2007 12:12:40 PM
Ok, so Obama is against universal healthcare coverage and for smashing up Social Security. And we're supposed to be for him why, now?
Posted by: Bloix | Nov 27, 2007 12:14:09 PM
"Ok, so Obama is against universal healthcare coverage and for smashing up Social Security. And we're supposed to be for him why, now?"
Because you oppose the Clinton candidacy for largely rational reasons and because you are unaware of the Edwards campaign.
Posted by: Petey | Nov 27, 2007 12:19:32 PM
Universality isn't just a nice moral decision, it's part of the bargain with the insurers -- and you can't force them into community rating without it.
Exactly right. The economics of UHC simply don't work if lots of healthy, young people opt to spend more on lattes, IPhones, and Caribbean vacations instead of paying premiums.
Posted by: Jasper | Nov 27, 2007 12:19:48 PM
economics work if there is enough tax revenue and if those without insurance are paying for most of their own care. Teh tax revenue part is a big deal. I think 100 billion dollars is likely which when combined with premium payments and the money spent by those who don't buy in to the system should be enough.
Posted by: j | Nov 27, 2007 12:43:39 PM
Petey,
Right; Edwards is going to require everyone to sign up. This will be enormously popular. At $500/month/family member, everyone will be able to afford it easily, and no one will try to evade it. (OR maybe it will be 3% of income + $400 a month/family member, if we keep MediCare; that will make it much more affordable.)
Yeah, right.
Posted by: SamChevre | Nov 27, 2007 1:03:36 PM
SamChevre,
Way to make up your own details to make the plan look bad.
Now, you are free to be opposed to universal healthcare. In contrast, I'm in support of universal healthcare. Happily, the deciders of this argument are going to be Democratic primary voters, and I think they are going to be with me, not you.
Posted by: Petey | Nov 27, 2007 1:10:48 PM
I'm all for universal healthcare--but $500/person/month is about what it will cost. ($40K GDP, 15% going to health care.)
In other words, UHC requires some kind of cost control.
Posted by: SamChevre | Nov 27, 2007 1:15:57 PM
Sam, I think we should examine your estimate of the cost. 6000 per person is roughly what we currently spend on health care, but those numbers can be tweaked a bit. First of all, 6k a year includes the amount spent on Medicare for the elderly, and the amount spent on the developmentally disabled via Medicaid. Both groups drive up the cost per person substantially esp. the elderly. Since virtually none of the population that you are ensuring will include the elderly, your overall cost per person is substantially smaller. Then you have to consider that the major canidates healt plans all include expansion of schip (I believe to 300%). S-chip coverage per child is substantially cheaper then private coverage per individual. Then you have to factor in the tax on businesses who do not insure their patients. I have seen estimates that put this tax at 4 to 6% of wages. a business tax like this would be tough but not impossible to implement. Then you have to factor in additional revenue brought in by some roll back of the tax cuts. This is a done deal so long as dems maintain control of Congress.
So you get a smaller cost per person for insurance, and you get a 100 billion dollar (my estimate)subsidy to be spread over roughly 45 million people which comes to over 2000 per person. I think a reasonable premium is doable.
Posted by: j | Nov 27, 2007 1:33:08 PM
j, this statement is not accurate; "S-chip coverage per child is substantially cheaper then private coverage per individual." SCHIP is private coverage, most states I have seen you can purchase an individual child policy cheaper then what the SCHIP premium is because SCHIP is gurantee issue.
Posted by: Nate O | Nov 27, 2007 1:47:11 PM
j, this statement is not accurate; "S-chip coverage per child is substantially cheaper then private coverage per individual." SCHIP is private coverage, most states I have seen you can purchase an individual child policy cheaper then what the SCHIP premium is because SCHIP is gurantee issue.
Posted by: Nate O | Nov 27, 2007 1:47:26 PM
j,
You are missing the fact that this changes everyone's health insurance, and makes it more expensive for 90% of them--it doesn't just affect the 45 mm uninsured. (That's what community rating does, by design--the 90% whose costs are lower than average subsidize the 10% whose costs are much higher than average.)
Let me take your cost savings 1 by 1.
Medicare is about 20% of healthcare spending IIRC, and it's msotly paid for by a ~3% payroll tax. Take it out, and premiums are $400/month for everyone else.
The disabled, receiving Medicaid--I'm assuming this new system would replace Medicaid; they are in the pool.
S-CHIP is just a moving money around enterprise. Children's premiums are lower than adults, and the cost is what it is in total; lower premiums for children mean higher premiums for adults.
I think we're still at a base of $400/person/month before subsidies.
Posted by: SamChevre | Nov 27, 2007 1:49:33 PM
I am sure that there are insurance policies that are cheaper then schip, but its not because they are guarantee issue. Its because they do not provide the same benefits, and/or have substantially fewer benefits. The per child costs of S-chip and Medicaid for kids per Kaiser State Health Facts was 1500 per child in 2004. Even when you factor in the medical inflation that number is still substantially less then 6000 dollars per person. You are right thoughm that S-chip is often operated by private companies. I don't have a problem with that.
Posted by: j | Nov 27, 2007 2:27:45 PM
I think maybe we are having a miscomunication Sam. What I am saying is that many of the high cost patients that drive up our costs per person are already covered by Medicare and Medicaid and would not need to be covered by a new system. We are laready subsidizing those higher costs in our current system. Why would Medicaid need to be changed? Those covered by Medicaid would still be covered by Medicaid, nothing changes.
One thing I forgot is that Edwards' plan calls for Medicaid for everyone up to 100% of the poverty line. Of the entire uninsured population, 36% are below the poverty line. Medicaid costs per person are substantially less then private coverage. But I don't think doctors (the ama is alreayd ok with this measure) nor insurance companies mind this, because they aren't a population that was insured before, and insurinng them cuts down the costs of uncompensated care and probably lowers the prices the hospitals charge private insurers.
You are right that insurance for kids is cheaper, but I disagree that lower insurance for kids means higher insurance for adults. Medicaid charges are cheaper then private care, but I think Docs would be okay with that as long as a large portion of the uninsured got private care/ Medicare. The AMA already likes S-chip and has called for its expansion.
Now my number per person, per month isn't way different then yours. I get 350 per person per month. But substract the subsidy which is about 185 per person per month and you get 165 bucks per person per month. I think that is definitely doable especially if premiums are set on a sliding scale relative to income.
Laslty you have to factor in additional costs savings from increased prevention and disease management programs, electronic health records, and comparitive effectiveness studies which will show the wastfulness of certain procedures.
I think all of that makes universal health care quite possible.
Posted by: j | Nov 27, 2007 2:48:49 PM
I think maybe we are having a miscomunication Sam. What I am saying is that many of the high cost patients that drive up our costs per person are already covered by Medicare and Medicaid and would not need to be covered by a new system. We are laready subsidizing those higher costs in our current system. Why would Medicaid need to be changed? Those covered by Medicaid would still be covered by Medicaid, nothing changes.
One thing I forgot is that Edwards' plan calls for Medicaid for everyone up to 100% of the poverty line. Of the entire uninsured population, 36% are below the poverty line. Medicaid costs per person are substantially less then private coverage. But I don't think doctors (the ama is alreayd ok with this measure) nor insurance companies mind this, because they aren't a population that was insured before, and insurinng them cuts down the costs of uncompensated care and probably lowers the prices the hospitals charge private insurers.
You are right that insurance for kids is cheaper, but I disagree that lower insurance for kids means higher insurance for adults. Medicaid charges are cheaper then private care, but I think Docs would be okay with that as long as a large portion of the uninsured got private care/ Medicare. The AMA already likes S-chip and has called for its expansion.
Now my number per person, per month isn't way different then yours. I get 350 per person per month. But substract the subsidy which is about 185 per person per month and you get 165 bucks per person per month. I think that is definitely doable especially if premiums are set on a sliding scale relative to income.
Laslty you have to factor in additional costs savings from increased prevention and disease management programs, electronic health records, and comparitive effectiveness studies which will show the wastfulness of certain procedures.
I think all of that makes universal health care quite possible.
Posted by: j | Nov 27, 2007 2:50:03 PM
j,
I think we only disagree on 2 points.
I think lower costs for kids means higher costs for adults; here's my reasoning. We spend a certain amount on healthcare; we can say that's $X per person, or $Y per adult and $Z per child--but if $Z is lower than $X, then $Y must be higher than $X.
I think you are overestimating the subsidy per-person, because you are spreading the whole amount over only the currently uninsured; you need to spread it over the whole privately-insured population. That makes it somewhere around $40/month on average, versus $185.
If Medicare continues in something like its current form, your $350/month per person for premiums sounds reasonable.
Posted by: SamChevre | Nov 27, 2007 3:36:27 PM
Medicare s/b Medicare and Medicaid.
Posted by: SamChevre | Nov 27, 2007 3:38:54 PM
This is why I like Ezra's blog. I think you can often have a productive discussion about health policy which isn't easy to find.
I agree with you about where our disagreement lies. That 6000 per person is reflective of our entire population as a whole, but I don't think that the expendintures per person for the uninsured would be that large because, as we have discussed, that 6000 dollar number takes into account most of our high dollar patients who are already insured.
That 6000 is not set in stone.
And with such a large amount of the newly covered patients being covered by Medicaid which pays substantially less for services provided, I think that number remains low. While Medicaid does not pay alot, the new revenue it does provide will likely be much more then health care provdiers currently receive for these patients. Right now its just written off as bad debt or charity care for tax purposes. Having those same patients come in outside of an emergency room setting, and in a sitaution in which the provision of care for the provider is cheaper, will save these providers alot of money even if it isn't profitable.
In other words, I don't think that providers will try and recoup lost money due to low Medicaid reimbursements by charging others more money.
Lastly, I am not sure why you would apply the new subsidy to everyone in the country. Those who are insured currently already are subsidized. Either they are getting government provided health insurance or they are getting a tax deduction on their privately provided care. The new tax revenue should be split into two parts. The money gained from the roll back of the tax cuts would pay for the increase in Medicaid, and the pay or play tax would pay for those over the poverty level who gain insurance. This is why pay or play is crucial. The amount of revenue provided by such a tax increases or decreases dependent on the amount of businesses that provide health insurance. That way, if the new plan becomes popular it has a revenue stream built in.
Posted by: j | Nov 27, 2007 4:30:09 PM
Ok, so Obama is against universal healthcare coverage and for smashing up Social Security. And we're supposed to be for him why, now?
Foreign Policy. Congress will have to fix health care. The president will have to fix the rest of the world.
Posted by: Dave | Nov 27, 2007 4:46:03 PM
Of Ezra's rejoinders, I think the universality idea is the most important as symbolic politics. But isn't it true that mandates are not exactly universality? Having forgone the idea of single payer because of pragmatic political considerations, it seems that progressives are turning mandates into a type of universality litmus test when true universality comes from single payer, and mandates seems a sorry second. In other words, we seem to be enraptured by the narcissicism of small differences in the absence of a more robust health care debate.
I probably haven't read enough, but I don't get the faith in mandates-- it's true that enforced mandates (i.e. making people pay) will reduce the risk pool, but it seems like the enforcement part is not so simple, despite any automatic enrollment plan. You still have to pay, right?
also, the question of whether mandates work seems tricky and technical, and is not enriched when it becomes a simple "progressive" litmus test separating the good from the bad. Obama's support for a mandate for children does not imply, as Ezra suggests, that he believes mandates work plain and simple: it's easier to imagine an effective limited mandate than a universal one.
disclosure: I'm an Obama supporter
Posted by: eli | Nov 27, 2007 5:14:37 PM
Ezra,
As I wrote yesterday, which still applies today:
He's offering a plan that promises affordable coverage to everyone. The purist in you sees an even better option which is universal coverage rather than just simply access. That's a lot different than saying he's arguing against collection action and universality. He's for universal access, just not universal coverage. Beyond the fact this is a difficult difference to highlight politically as I wrote above, from a pure health standpoint the difference only has incremental, minimal value anyways. IIRC he would still push for community rating with no pre-condition exclusions, so if a few individuals do get sick and need coverage, they'll still be able to seek it. This could of course lead to free-loading, which could become a problem if more and more people stop getting insurance until after they need it. At that point however, mandates will be more than politically acceptable, they'll be demanded. Which is exactly what Obama has said-- if his plan didn't lead to full coverage (we know it won't), then he'll close the loophole down the road. In the meantime however-- look what he's offered: a system where everyone has coverage who wants it, and for those who don't they still won't be left in the cold-- everyone gets health care.
You aren't correct that community rating isn't possible without universal coverage-- in the short run. Which is my point above, when there is sufficient free-riding by people who wait to get insurance until after they need health care, then mandates will be very easy to implement politically. No harm, no foul.
Posted by: wisewon | Nov 27, 2007 8:34:01 PM
Ezra,
Aren't you concerned that we will have mandated private health insurance, but the same high rates? Yes, everyone would get health insurance, but would it be at a reasonable cost? I am concerned that mandating health insurance is better for insurance companies than it is for patients. I would feel differently if it weren't private insurance that we were mandating.
Posted by: Felicia | Nov 28, 2007 1:05:13 AM
J, in NV you can purchase the exact same SCHIP policy from the exact same carriers for less if you pass health underwriting. SCHIP is more expensive because it is guarantee issue. SCHIP by it’s nature is more expensive. You have additional layers of administration as well. You can buy top of the line policy on a child for under $1500 a year. You can buy good policies for $80 per month.
Posted by: Nate O | Nov 28, 2007 11:40:00 AM
Ezra's spot on. Single payor is the sensible solution to our pseudo-market kloodge of a system whose central idiocy is the linkage of health insurance to one's employment situation.
What progressives fail to see, and hammer home to sensible independents and even many conservatives, is that single payor is also the only truly PRO-BUSINESS solution. When every business in this country is finding ways to outsource non-core admin, HR, back-office functions, there's utterly no sense in burdening businesses of any size with the need to choose, negotiate and pay for their employees' health plans. Which is why struggling industries (auto) and non-struggling ones alike (IBM, other tech stalwarts) are doing everything they can think of to try to weasel out of the health care portion of their pension obligations. Insane, and businessmen know this better than anyone.
We should be reaching out to not just the obvious targets like Bill Ford, Rick Wagoner and Bob Nardelli but also the small businessmen, contractors and other self-employed types who make up the core of Limbaugh's audience.
Single payor is good for American business, good for red staters, good for working families, good for America's ability to compete in the world. It would be foolish and self-defeating to wimp out on this, easily the most powerful argument we have in our arsenal.
This stand more than any other of Obama's is why I find it difficult to summon any excitement or admiration for the man. Obama lacks not just steel but imagination and political cunning.
Posted by: teplukhin | Nov 28, 2007 3:43:02 PM
I'm not up on all the specifics of the plans but it seems to me that there are two things we have to face.
America simply will not go for single-player yet even though that is clearly the best option but we don't want "government running our healthcare". Clinton's emphasis on keeping what you have if you like it is, I fear, the only way we'll get anywhere.
We have to decide what we're going to do about the uninsured. If they don't buy, and get sick, will we bar the hospital door? If you've ever sat in a hospital emergency room and watched young men arrive in pieces from their motorcycle accidents, you know that their medical care will be long and costly and they will not opt in without a mandate.
Obama's route seems to be the worst of the bad options.
We will pay higher and higher premiums for the 15 million or more that don't pay in and more and more people will drop out and it will go higher....oh, that's what we have now.
Posted by: logic101 | Nov 29, 2007 2:02:45 AM
so exclude the old with this program, exclude the young with another. Exclude a few more covered with medicaid.. so to make universal care look good we have to hide the cost by maintaining current bureaucracies and creating a new one. ..great.
I like Obama despite his attempts at health care reform.. I think we're going WAY down the wrong path with this. All we're doing is lining the pockets of pharma, doctors, and hospital board members while providing no beter care for our citizens. A favorite tool for those in favor of UHC is comparing us to our foreign counterparts. ..try comparing doctor salaries, cost of prescription medication, cost to the system for hospital stays.
A good deal of their system works only because they dont deal with the insane cost inflation that we have. This is made worse, but not created by the uninsured.
There is a real world example of it here in Portland, Or called simplecare. Where groups of doctors capped costs and offered services at resasonable rates, with no insurance allowed. Its a very successful program working right now.
We need obama because he can fix the things that a president has to think about, like foreign policy and appointments to government positions. Harass congress over fixing healthcare which is inherently a budget issue in this context.
Posted by: david b | Nov 29, 2007 9:03:31 PM
