The Hillary Plan

Let me try and give a quick sketch of the Clinton proposal before I have to run for a meeting. Here's the thumbnail: Clinton's plan is of the "individual mandate" variety, in which universal coverage is achieved by mandating that every American purchase health care. In order to ensure that that's both possible and affordable, the Clinton plan creates a few new coverage options, reform the insurance industry, limits coverage costs to a percentage of income, and washes your car.

Okay, it doesn't wash your car. It does open the Federal Employee Health Benefits Program to everybody, ensuring that anyone can access the same menu of regulated private options that federal employees get. FEHBP is the program that already insures millions of current government employees, including the members of Congress, by offering a variety of regulated private options to choose from. Throwing the doors to that program wide open is the most basic and ubiquitous of coverage solutions.

More importantly, the plan also creates a new public insurance option, modeled off, but distinct from, Medicare. That's a big deal: The public insurer offers full coverage and is open to all Americans without restriction. Public insurance is what I feared her plan would avoid, and instead, she embraced it wholeheartedly. The concern with a plan like this (as with the Edwards plan), is that insurers will market coverage to the young and healthy and subtly tilt the public plan's risk pool towards the old and sick (the check is that governmental plans are, for reasons related to administration costs and care incentives, cheaper). At the end of the day, there's not much that can be done about that, unless you want to tax insurers with overly healthy pools, as they do in Germany. Come to think of it, that's exactly what they should do -- it was even in the 1994 bill.

And if you don't go through the newly expanded FEHBP or the public option, preferring to keep your current insurance, you'll still be dealing with a heavily-regulated and reformed insurance industry, which can no longer price discriminate based on preexisting conditions or demographic characteristics, refuse you coverage, or deny renewal of your policy -- including if you change your job. So if you like your current insurance but quit your cubicled existence at MegaCorp, your insurer can't drop you. All this matters because it keeps the private programs from having too much capacity to undercut the risk pools of the other options. It also destroys the elements of the insurance industry's business model that rely too explicitly on screwing you over.

There are a variety of affordability measures, the most important of which, by far, is a refundable tax credit limiting the cost of insurance to a certain percentage of family income. The plan doesn't yet define what that percentage of income is, but it'll presumably be reasonable. In this, the plan differs from Edwards' plan, which uses sliding scales of subsidy up to a certain level of income. On the other side, the employer tax deduction will now be limited to standard plans for middle-income folk, while gold-plated health care for wealthy individuals at will be subject to taxation.

So the policy is very, very sound, and includes other sundry goodies like a Best Practices Institute that will vastly accelerate the amount of research done and distributed on the cost-effectiveness of treatments, better chronic care incentives, and so forth. The rhetoric is interesting too, being entirely about "choice." It's called the "American Health Choices Plan." The first section, on the opening of FEHBP and the creation of a new public insurer, is titled, "Providing a Choice of Insurance Plans." The first bullet point assures readers that every American will be able to keep their current coverage if they so desire. Etc, etc. This is very distinctly aimed at the criticisms of the 1994 plan, which is that it would reduce choice and constrain medical freedom. This plan won't, and its ability to expand options is laced through the document, and through the statements her advisors have made.

The plan is more ambitious than her 1994 effort in some ways, less in others. The 1994 plan fully integrated the health care system into a whole new structure. It was probably a better structure -- particularly in its global budgets and growth caps, which would forcibly arrested the absurd growth in health costs -- but it would've caused far more disruption for most families, and was thus easier to attack. This plan leaves intact most every current program, including Medicaid and SCHIP (which come in for expansion), and offers a public option, which the 1994 plan didn't.

The only question is how serious of a proposal it is, i.e, whether it's what she plans to fight for from her first day in office, or whether it's to keep Edwards and Obama from opening up an advantage on her left flank. For now, there's no way to know. But given how smart she's been about neutralizing the other candidates' potential advantages -- including, with this plan, cutting their legs out on health care -- we're likely to find out.