Tuesday, February 5, 2008

Clinton, Obama, Insurance

This is an issue very close to me as I am a recent retiree from the health care industry. I sold my practice and retired earlier than planned because I simply did not want to deal with the insurance nightmare any longer. I suppose one of these days I should sit down and write out a long article about my experiences ... and even name names. But for now I'm still enjoying not having to think about it at all.

This issue has become the make or break deal for regarding the current race for nominations. I recall turning on a Republican debate a few months ago when they were discussing the health care crisis. I was shocked. I don't recall every hearing so much stupidity in one place .... ever. That's when I realized that the Republican slate is best suited to be the cast of a National Lampoon movie.

Of the remaining Democrats, there is only one candidate with a realistic plan born of many years of hard work and careful thought. The other seems to be the stuff of political sloganeering.

Jack Krugman has written a piece that attempts to bring to light the work of some researchers.

Clinton, Obama, Insurance
By PAUL KRUGMAN, New York Times, 02/04/07

The principal policy division between Hillary Clinton and Barack Obama involves health care. It’s a division that can seem technical and obscure — and I’ve read many assertions that only the most wonkish care about the fine print of their proposals. But as I’ve tried to explain in previous columns, there really is a big difference between the candidates’ approaches. And new research, just released, confirms what I’ve been saying: the difference between the plans could well be the difference between achieving universal health coverage — a key progressive goal — and falling far short.

Specifically, new estimates say that a plan resembling Mrs. Clinton’s would cover almost twice as many of those now uninsured as a plan resembling Mr. Obama’s — at only slightly higher cost. Let’s talk about how the plans compare.

Both plans require that private insurers offer policies to everyone, regardless of medical history. Both also allow people to buy into government-offered insurance instead. And both plans seek to make insurance affordable to lower-income Americans. The Clinton plan is, however, more explicit about affordability, promising to limit insurance costs as a percentage of family income. And it also seems to include more funds for subsidies.

But the big difference is mandates: the Clinton plan requires that everyone have insurance; the Obama plan doesn’t.

Mr. Obama claims that people will buy insurance if it becomes affordable. Unfortunately, the evidence says otherwise. After all, we already have programs that make health insurance free or very cheap to many low-income Americans, without requiring that they sign up. And many of those eligible fail, for whatever reason, to enroll. An Obama-type plan would also face the problem of healthy people who decide to take their chances or don’t sign up until they develop medical problems, thereby raising premiums for everyone else. Mr. Obama, contradicting his earlier assertions that affordability is the only bar to coverage, is now talking about penalizing those who delay signing up — but it’s not clear how this would work. So the Obama plan would leave more people uninsured than the Clinton plan. How big is the difference?

To answer this question you need to make a detailed analysis of health care decisions. That’s what Jonathan Gruber of M.I.T., one of America’s leading health care economists, does in a new paper. Mr. Gruber finds that a plan without mandates, broadly resembling the Obama plan, would cover 23 million of those currently uninsured, at a taxpayer cost of $102 billion per year. An otherwise identical plan with mandates would cover 45 million of the uninsured — essentially everyone — at a taxpayer cost of $124 billion. Over all, the Obama-type plan would cost $4,400 per newly insured person, the Clinton-type plan only $2,700.

That doesn’t look like a trivial difference to me. One plan achieves more or less universal coverage; the other, although it costs more than 80 percent as much, covers only about half of those currently uninsured.

As with any economic analysis, Mr. Gruber’s results are only as good as his model. But they’re consistent with the results of other analyses, such as a 2003 study, commissioned by the Robert Wood Johnson Foundation, that compared health reform plans and found that mandates made a big difference both to success in covering the uninsured and to cost-effectiveness. And that’s why many health care experts like Mr. Gruber strongly support mandates.

Be sure to read the entire article.