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February 05, 2007
The Edwards Health Plan
I need to get back to spraying Zicam and complaining about my cold, but I'd be remiss not to offer a quick rundown of John Edwards's just-released health plan (pdf). The short answer: It's good.
Here's how it works: On first blush, the plan is much like the Wyden initiative, though it puts the onus of the responsibility for funding health coverage on employers, a decision I don't quite understand. The employers can satisfy that responsibility by either providing comprehensive care, or helping employees purchase from a menu of insurance options provided by newly formed, state-run "Health Markets."
As of now, the plan doesn't explain how much employers must provide towards health market coverage, but it's a safe bet to assume that it's somewhat less than the total cost of health care, and so the incentive will be for employers to encourage their employees to purchase from the HMs. And that's where things get interesting. The HMs will offer a menu of private options that are totally community rated. The plan "will require insurers to keep plans open to everyone and charge fair premiums, regardless of preexisting conditions, medical history, age, job, and other characteristics." These days, though, community rating is a common enough.
Where the Edwards' plan takes a big step forward is in mandating, along with the private options, that HMs offer "at least one plan [that] would be a public program based upon Medicare." And the intent is explicit: "Health Markets will offer a choice between private insurers and a public insurance plan modeled after Medicare, but separate and apart from it. Families and individuals will choose the plan that works best for them. This American solution will reward the sector that offers the best care at the best price. Over time, the system may evolve toward a single-payer approach if individuals and businesses prefer the public plan."
In other words, the public sector will finally be allowed to compete with the private sector, and consumers will be able to decide which style they prefer. For Democrats, this is a significant step forward. From there, the plan offers the usual mix of sliding subsidies to ensure affordability, individual mandate to universalize coverage, pay-for-performance promises, and public health fixes. You've heard those bits before. What's new, and what's important, are the community rated health markets that include public insurance. Indeed, the plan satisfied every plank of my progressive health reform test from last week.
The plan will cost between $90 billion and $120 billion a year, and according to Edwards, taxes will have to be raised to pay for it. Readers should remember that this is the first full health reform plan from a major candidate in the 2008 election. As such, it has widened the field of the debate, and unless the other candidates want to explain why they lack the boldness of Edwards' plan, they'll have to offer similarly comprehensive proposals. What they will have to match is full community rating, a public insurance option, total universality, scaleability towards more public involvement, and a willingness to propose something comprehensive enough to require revenue increases to fund. In other words, the goalposts have been moved. To the left.
Crossposted to the lovely Tapped.
February 5, 2007 in Election 2008, Health Care | Permalink
Comments
I hate this carping about taxes. Taxes will go up .. and premiums will go down! So this may work out to be a win for most workers.
Oy.
Posted by: Nicholas Beaudrot | Feb 5, 2007 12:44:01 PM
"Over time, the system may evolve toward a single-payer approach if individuals and businesses prefer the public plan."
At first glance, this whole approach strikes me as a deeply canny way of getting past the political obstacles...
Posted by: Petey | Feb 5, 2007 12:45:37 PM
"Can evolve into single-payer" rates pretty high on my list of cool features.
Posted by: Neil the Ethical Werewolf | Feb 5, 2007 12:46:56 PM
All of the articles on google news have "Edwards plans to raise taxes to pay for healthcare" or "Edwards health plan means higher taxes" or another variant. Give me a freaking break. That's all they have to say about it? Not "Edwards plans to cover the uninsured" or even "Edwards plan might fix broken health system" or anything like that? Tells you how deeply Republican talking points are ingrained in our mindsets.
Posted by: spike | Feb 5, 2007 12:57:09 PM
Just remember:
Community rating with no age-rating means an average premium of $2000/month for a 2-parent, 2-child family.
Posted by: SamChevre | Feb 5, 2007 1:00:26 PM
That's among the sillier things I've heard. It may interest you to know that a variety of states have already instituted various types of community rating, and none have seen that outcome.
Posted by: Ezra | Feb 5, 2007 1:04:45 PM
Ezra,
I'm trying to be fair. (So if my calculations are wrong, correct me--I'd like some re-assurance.)
Mean income is about $40k/year, and is less than per-capita GDP.
Health care costs about 15% of GDP.
So 40000*.15*4/12 gives me a monthly average spending on healthcare of $2000 for 4 people.
Posted by: SamChevre | Feb 5, 2007 1:09:59 PM
cool- so it would allow competition between the private sector and public to see which can really produce a better outcome, or am I misunderstanding it?
Posted by: akaison | Feb 5, 2007 1:10:49 PM
it puts the onus of the responsibility for funding health coverage on employers, a decision I don't quite understand.
Sounds like he sees it as part of his economic justice thing--(rich) employers should help foot the bill.
This American solution will reward the sector that offers the best care at the best price.
The public sector "competes" with what are easily portrayed as unfair advantages. Harry and Louise may oppose the plan just for this part of it.
Indeed, the plan satisfied every plank of my progressive health reform test from last week.
So you're confident that the employer participation requirement doesn't violate at least part of your first condition: An End To Employer-Based Health Care? Will there remain advantages to getting insurance through employers that won't be available to the self- or unemployed? The employer requirement ought to have some implications, depending on the details.
Posted by: Sanpete | Feb 5, 2007 1:18:24 PM
woohoo! community rating required, and public/private sector competition!
I'll take one of those, please, maybe.
But what about prescription drugs being included in the plans (and associated formulary issues)? This crucial issue is not mentioned anywhere in the plan. Modern medicine is largely based in drug treatments, and they are very expensive.
I'd bet Hillary sez we can't afford the tax increase and competition from the public sector is bad because Blue Cross/Shield and United Health say so. I'd bet the Dem. candidate's health-care proposal auction is low-bid from all the others - especially on drugs.
While we are dreaming of sugar-plum fairies, maybe Obama will propose extension of Medicare to all with drugs as a public sector choice as well. (I'm not so excited on state plans 'based on' Medicare). Reform should place responsibility and administration at the Federal, not state level. If not, states will compete in the run for the bottom to attract new businesses to their state.
Now, if Edwards would just get his head straight on mideast war, he'd get my heart throbbing (instead of being broken by his squirrelly position on Iran).
Posted by: JimPortlandOR | Feb 5, 2007 1:36:32 PM
And tangentially...
Has Edwards had a good weekend or what?
I love that Taegan Goddard can see the light:
After speaking with John Edwards over the weekend, it struck me how he's the "straight talk" candidate in the 2008 presidential race. Like Sen. John McCain in 2000, Edwards seems to have little interest in dancing around tough issues and finessing his answers. Instead, he seems compelled and driven to speak his mind....
Edwards' appearance on Meet the Press yesterday also showed his new style. From repudiating his Iraq war vote to pledging to raise taxes to pay for universal health care, he comes across as a very different kind of politician. It's worth watching.
Posted by: Petey | Feb 5, 2007 1:48:34 PM
His style is certainly being picked up by odd places in the media- they had a clip of him yesterday on NY 1 of all places.
Posted by: akaison | Feb 5, 2007 1:56:05 PM
Yesterday, watching MTP, when Edwards was asked if he planned on raising taxes to pay for health care and he answered, "Abosolutely" (a clip we'll see a million times if and when Edwards is the candidate) I had the feeling that Edwards had helped to usher in a new, honest, and progressive era in American politics.
That said, I agree with Ezra, I always thought one of the big problems with health care was that it was hinged to employment. Doesn't Edwards's plan pepetuate the problem, or am I missing something?
Posted by: david mizner | Feb 5, 2007 2:08:03 PM
Be careful with that Zicam. It's worked for me, but after learning that class-action lawyers are in the process of forming a class of users who lost their sense of smell after using the nasal gel, I've begun searching for a safer Zinc-delivery mechanism.
Posted by: thad | Feb 5, 2007 3:04:04 PM
On community rating: Health spending is not all, or even nearly all, premiums.
On employers: What Edwards' plan does is incentivize employers to put their employees in health market plans. I don't know how heavy that incentive is, and I don't know he doesn't just do it from the outset (a la Wyden).
Thad: I'm using the mouth spray. Is that dangerous too?
Posted by: Ezra | Feb 5, 2007 3:06:26 PM
Sorry, Ezra--I'm still not understanding.
If everyone has comprehensive health insurance, wouldn't "money spent on health care" = "money paid in health care premiums." (There are some copays/deductibles, but they are minimal; there are some profits, but that woudl increase premiums, not decrease them).
Or are you saying that currently, lots of premiums don't go to purchase health care? I agree with that; that's why I'm basing my calculation on the cost of health care, not current premiums.
On antother topic--the best cold remedy I've found is hot ginger tea, with plenty of sugar, lemon, and rum (or bourbon).
Posted by: SamChevre | Feb 5, 2007 3:23:58 PM
I have two questions for Mr. Edwards regarding his healthcare plan.
1. Would the public plan modeled after Medicare be required to price its product high enough to cover its costs (including its administrative costs)? If not, it's grossly unfair to the private insurers.
2. How come you didn't have a single word to say about medical malpractice reform and the high cost of defensive medicine? Don't you think special health courts could resolve medical disputes more fairly and objectively than juries?
I know you're a trial lawyer by background, but I think you could enhance your credibility if you came up with something constructive to say about how to improve our malpractice system and the culture of defensive medicine it spawns.
Regarding Medicare, which you envision as a model for your public plan that would compete with private plans, it has a lot of room for improvement. Part B charges, for example, require a 20% patient co-pay with no out of pocket maximum which means sick people with high healthcare costs still face crushing out of pocket exposure unless they also have a good Medigap supplemental insurance policy. Furthermore, there is a $900 deductible associated with every hospitalization, which is considerable for those with lower incomes. Finally, Medicare Part D has the infamous donut hole because politicians preferred to sprinkle at least some benefits over as many voters as possible rather than create a sensible insurance plan with a higher but still manageable deductible.
Finally, with respect to affordability, moderate income people who make a little too much to qualify for your sliding scale subsidy will find it extremely difficult to afford coverage, especially if they need to cover an entire family.
Posted by: BC | Feb 5, 2007 3:26:32 PM
Ezra, maybe you know something about the plan that isn't in the summary you linked to. It seems to me that it requires employers to subsidize employees' plans. If the subsidy required exceeds the subsidy available for the self- or unemployed (which will probably vary with income), then there is still a tie to employment of the kind I think you object to, isn't there?
Posted by: Sanpete | Feb 5, 2007 3:33:16 PM
My extensive research (on Google) suggests that the mouth spray is ok.
Posted by: thad | Feb 5, 2007 3:36:29 PM
Edwards' plan seems like a great start, but something to keep in mind about the competition part: When you ask insurance companies to compete on cost, they're not going to compete by cutting their profit margins. They'll try to keep their rates down by cutting back on what they pay in benefits. But you won't find out till you're sick and need your procedures covered. It's hard to control.
I know the politics of the situation seems to require making a place in the solution for insurance companies, but I worry that will just perpetuate many of the problems we have today. OK, so they can't refuse to cover people. But they'll still be able to pay inadequately or not at all, if in their judgement the treatment isn't needed.
That's why the only thing that seems to make sense if a single-payer universal system. Still, I don't want to make the best the enemy of the good.
Posted by: Madison Guy | Feb 5, 2007 3:37:19 PM
They'll try to keep their rates down by cutting back on what they pay in benefits. But you won't find out till you're sick and need your procedures covered. It's hard to control.
Well, I assume that all plans would need to pass a minimum standard of quality. That should get rid of the most egregious offenses, and many of the less egregious. The risk of getting screwed in the way you describe would decrease heavily in a switch from the current, less-regulated, non-universal program to Edwards' more-regulated, universal program.
Very few people seem to think that Medicare is too stingy with covering procedures. If the insurance companies can't beat Medicare, then people will head for Medicare.
I agree that the insurance company model creates real problems, and that you present a good argument for an immediate switch to single-payer. However, I just don't see how an immediate switch is politically feasible, and so every workable plan will have to deal with the drawbacks of partly privately-run insurance. That's why it's so good that the Medicare-like plan competes with the private plans - unless the insurance companies avoid trying to fuck over the most vulnerable patients, they'll slowly lose business. It sucks that this shift has to come at the expense of those who will suffer in inadeqaute health plans, but this plan sure beats the crap out of (a) not requiring meaningful minimum standards of care and (b) not providing universal insurance.
Posted by: DivGuy | Feb 5, 2007 3:48:08 PM
Posted by: Madison Guy | Feb 5, 2007 12:37:19 PM
Edwards' plan seems like a great start, but something to keep in mind about the competition part: When you ask insurance companies to compete on cost, they're not going to compete by cutting their profit margins. They'll try to keep their rates down by cutting back on what they pay in benefits. But you won't find out till you're sick and need your procedures covered. It's hard to control.
The first control upfront, is whatever the coverage requirements are to be entered into the state menu of plans.
The second control, at the back, is the ability to transfer into the public plan, so that the person that loses the coverage from that insurance company does not lose coverage altogether. That means the pursuit of profits through "denial of service" leads to a steady reduction in the share of private insurance coverage and a steady increase in the share of public insurance coverage.
That means that the ongoing
Posted by: BruceMcF | Feb 5, 2007 5:29:55 PM
DivGuy, it appears that Amanda has deleted your post.
Posted by: Sanpete | Feb 5, 2007 5:31:16 PM
Nope. No sooner said than it shows right up. Does this mean I have to apologize to Amanda too?
Posted by: Sanpete | Feb 5, 2007 5:33:24 PM
Posted by: SamChevre | Feb 5, 2007 10:09:59 AM
I'm trying to be fair. (So if my calculations are wrong, correct me--I'd like some re-assurance.)Mean income is about $40k/year, and is less than per-capita GDP. Health care costs about 15% of GDP.
So 40000*.15*4/12 gives me a monthly average spending on healthcare of $2000 for 4 people.
But you are ignoring that fact that with medicare, the government is already providing coverage for a large cohort with per capita health care spending substantially above the economy wide average. Take that cohort out of the average, and the spending on health care services by the remaining cohort is substantially less than 15% of their per capita share of GDP.
Posted by: BruceMcF | Feb 5, 2007 5:33:31 PM
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