Ezra Klein does a really helpful job outlining both the policy philosophy and the practical political hurdles to health care reform. He discusses Jacob Hacker’s Health Care for America Plan, a form of which is influential in both Clinton’s and Obama’s health care plan (even including the difference over individual mandates). On the other is the bipartisan Wyden-Bennett plan. I’ve highlighed Klein’s analysis of the Wyden plan before (here).
The third alternative, which Klein as a liberal is not really considering (bc he thinks it’s ludicrous and unworkable) though he briefly mentions is the McCain Health Care plan. The flaw in McCain’s plan is that it shifts costs to individuals and allows health insurance companies to set parameters–particularly around rejecting applicants based on prior illnesses and so forth. So while McCain invokes the specter of Canada in the time-worn tradition of US conservatives to scare Americans into thinking there will be long waiting lines with socialist Obama/Clinton plans while you are dying so bureaucrats can count some beans, McCain’s plan in effect (analysis here) will (as Klein says) price care out of the reach of millions more of Americans, particularly as the Boomer retirement push comes. There’s a cap, it simply isn’t set by the government but rather by health insurance company bean counters for shareholders. The social costs of that policy would be beyond staggering.
Returning then to the Hacker plan:
Hacker’s plan works on a few basic principles. First, no one loses what they already have. You like your current insurance? Keep it, unless your employer kicks you off. Second, a new group market is created (the Health Care for America market, henceforth HCA), where insurers can compete for the business of individuals and employers (who can buy their employees in for 6 percent of payroll). Third, the group market contains a strong public insurer modeled on Medicare, creating competition between private insurance companies and the public offering. The hope is that the public insurer, which will not need to turn a profit and will be free of some of the perversities of private insurance, will prove the most cost-effective and attractive option, leading individuals and businesses alike to gravitate toward it. Over time, it would evolve into something approaching a single-payer system.
The HCA however is created to compete, as Klein says, with the private market and the plan assumes greater and greater buy in to the HCA absent any push back or media manipulation/messaging from the private insurance companies (remember 1993/1994 any Americans?). It would be something like a 2-tier structure as the private system would increasingly look, one imagines, into the insuring of healthier individuals, wealthier individuals and perhaps therapeudic practices (biotech, elective surgery, etc.). That would leave the HCA with the older, sicker populations, its care costs increasing and caps then perhaps put on available care not to mention the possibility of worse care (than the upper tier system). Though that is mitigated perhaps by the fact that 47 million already have no insurance and so many go to emergency rooms for care. So even reduced care seems a major step up for these folks.
But politically it will require depending on how this election goes at least 5-6 I would bet Republicans crossing-over in support. In fact it already is clear it is so politically sensitive Obama and Clinton have both dropped the ability of the HCA to cap spending, meaning the plans (both of them, mandate or no) would likely go way over budget. War or no war in Iraq, this is not good.
Which is where Wyden’s plan comes in–the I favor but sadly no presidential candidate is currently supporting–because he has 12 senators from both parties already on board. Including six Republicans.
Wyden’s plan differs from Hacker’s in two key ways. First, it lacks a public insurer, meaning that there won’t be public-private competition. But it compensates for that absence with much more radical system integration…Wyden’s plan, by contrast, does away with employer health coverage almost entirely. Rather than encouraging employers to transition to a single group market, as Hacker’s does, Wyden’s forces them to redirect all the money they were spending on employee insurance into paychecks. At the same time, it creates “Health Help Agencies,” one in each state, which act much like Hacker’s group market — they’re regulated structures where various insurers compete for business. No cherry-picking, no high premiums or denials of coverage for pre-existing conditions. Everyone pays the same price, but everyone has to buy insurance that’s at least as comprehensive as the current Blue Cross-Blue Shield Standard Plan. There are subsidies for those with low incomes, and penalties for those who don’t buy in. Medicare still exists for the elderly.
But here is politically where Klein points out we could be back to the past:
But where the basics of Hacker’s structure have a reformist political logic, Wyden’s risks running into the same fears that detonated the efforts in 1994. By blowing up the employer-based system, Wyden’s risks triggering the natural status quo bias of voters and insurers. In Hacker’s plan, the majority of the country sees no change unless they volunteer for it. With Wyden’s, the majority needs to buy new insurance. The question is whether Wyden’s plan can compensate for that political risk by attracting more support from stakeholders — employers who no longer want to run health-care businesses on the side and insured individuals worried about losing what they have. Also, to realize cost containment, Wyden’s state agencies would need to define, which is to say, regulate, qualified plans — a sensible policy that led the insurance industry to oppose a similar idea under a different name when Clinton proposed managed competition in 1993.