The Democrats' Health Plan: The Short Version
Posted by Chris Martin at 6/8/2008 7:04 PM 
Categories: Health policy, presidential election, Health Insurance, Market Failure
Categories: Health policy, presidential election, Health Insurance, Market Failure
In order to avoid favoritism and to further serious political discussion Wonks Anonymous now turns his attention to the Democratic plans for health care reform.
These plans ultimately originate from proposals put forward by John Edwards which have been adopted more completely by Hillary Clinton and less completely by Barak Obama. These plans share four reforms:
- Required employer participation. Employers over a certain size will be required to either play, that is provide health insurance to their employees, or pay a specified amount into a fund that will be used to provide insurance to those who do not have employer provided health insurance.
- Government subsidies for the purchase of private health insurance. These will be available for those who do not have insurance through their jobs and meet yet unspecified criteria of need.
- Mandates for coverage of all applicants. Insurance companies will probably be required to offer some kind of a policy to anyone who asks for one. What this policy covers and how much it will cost are matters that have not yet been determined.
- Government provision of health insurance. The government will sell health insurance to individuals that is based on the benefits offered by Medicare.
So what could we expect from these proposals?
Unlike the McCain Plan, The Democratic plans will help you keep your employer provided health insurance. Right now, employers save money when they drop health insurance. Under the McCain plan they would be taxed if they provided health insurance. Under all of the Democratic plans they will have to pay some kind of tax if they do not pay for employee insurance. Employers who do not currently provide health insurance will also pay this tax. If these plans work as intended more people may be covered by employer provided health insurance.
The quality of employer provided health insurance will probably continue to decline. The health insurance industry is highly competitive and the industry leaders have adopted a successful strategy of cutting costs by reducing payments. Deductibles and other costs shares paid by the insured are rising. Wherever possible, some conditions are being excluded from coverage. Complete explanations of this are to be found in an earlier post on this blog. These low quality plans are quite popular with employers and the trend can be expected to continue. You can expect to pay more out of pocket in the event that you need medical care.
Wonks Anonymous hopes that these increases in out of pocket expenditure are not enough to discourage people from seeking needed medical care or forming relationships with health care providers. He is not at all sure about this as you can see from his numerous posts on High Deductible Plans.
The impact of these plans on the combined public and private cost of health care is uncertain. These plans are essentially similar to the Massachutsetts plan which has had rather interesting results: The cost of publicly provided insurance has risen beyond the predicted amount and the number of newly insured citizens seeking appointments with primary care doctors has increased beyond the abilities of primary care doctors in the state to provide services.
Based on this evidence Wonks Anonymous would predict that health insurance costs will first rise as more individuals are covered and seek to form relationships with health care providers. After this health care costs should fall as the impact of improvements in preventative care and changes in lifestyle are felt. Health is an investment produced by close cooperation between patients and doctors or - sorry Dr. K. - other qualified health care providers. As a state or nation invests in this relationship we can expect to see a payoff in healthier citizens who require fewer expensive and heroic treatments.
It is most likely that the government provided plans will experience great initial growth in any Democratic reform. People who have been priced out of private insurance markets or who have been offered expensive restricted plans with high deductibles will want to buy into the medicare type plan which will initially provide superior coverage at lower costs. Those who believe that they are healthy will continue to go uninsured.
In this case it is most likely that the cost of government provided plans will increase as they continue to get the less healthy individuals. This may eventually make them unaffordable or it may drive the government to increase subsidies on these plans.
It is not likely that insurance mandates will lower costs of government provided insurance. With mandates Wonks Anonymous sees a future with two insurance markets. Those who need health insurance will buy a relatively expensive government provided plan. Those who believe that they are healthy will meet the mandate to have health insurance by purchasing a high deductible, low cost plan from a private source. They will be satisfied with this until they get sick or have a major accident. When this happens they will regret their choices but there will be no help for it. For further discussion of this issue see: What Type of Health Insurance Do You Want? on this blog.
All of the Democratic plans are based on a political "reality": The Clinton health reforms taught us that the insurance industry can sabotage any health care reform if they do not like it. Any viable plan must therefore satisfy the health insurance industry by preserving its position as the chief financial intermediary between the people and the providers of health care.
Unfortunately, while our leaders attend to this political reality they ignore the economic reality that is clear to anyone in health care who is not being well paid to believe otherwise: The current insurance market is dysfunctional. It cannot provide affordable, comprehensive health insurance to those who need it. For further development of this argument the reader is invited to read numerous other posts on this blog.
The political reality of having to satisfy the health insurance industry exists soley because our elected politicians allow it to continue to exist. If lobbyists and their accompanying money were removed (by our elected politicians), I believe this political reality would disappear.
Their is no reason for a health insurance industry. You have described their role correctly, i.e., a role as fiscal intermediary. Certainly, administrators of payment for health care services and product are necessary. It just doesn't need to be a multi-million dollar per year profit making business enterprise. This post and the provided links clarify the business mechanisms employed to garner that huge profit and, as well, how our presidential candidates (and their advisors) use convoluted manipulations of taxes and regulations, vagueness, and rhetoric to fool the American public into believing that beneficial change for them will occur once they are elected president, while concomitantly maintaining the current political reality.
Regarding your sentence: "Health is an investment produced by close cooperation between patients and doctors or -sorry Dr. K - other qualified health care providers."
1. please give an exact definition of the term "investment" that clarifies your meaning.
2. please define exactly what you mean by the term "other qualified health care providers."
R. Garth Kirkwood MD
http://www.equalhealthcareforall.com
doctork@equalhealthcareforall.com
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Health is an investment in the same way that knowledge and education are investments. Just because does not produce tangible results does not mean that it is not an investment that will produce future returns in the form of better lives and even, enhanced productivity.
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