The following is a commentary from John Goodman’s blog:
Her plan was released [September 17]. There are lofty goals, but not many specifics.
Thirty years ago Michael Dukakis campaigned for president with the boast, “I have insured everybody in Massachusetts.” Of course he hadn’t, and three decades later, everybody in Massachusetts is still not insured. Along the way there have been many other plans to create “universal coverage.” They haven’t worked either.
This is why candidates don’t get any points from me for “the thought was there.” Universal coverage at a minimum requires a credible plan. So far, no presidential candidate has come up with one, unless you count Dennis Kucinich’s plan to give health care away for free to everyone.
Here are a few principles politicians tend to overlook.
1. Employer mandates don’t work. Hawaii has had an employer mandate for more than 30 years; and the uninsurance rate in Hawaii is higher than in several states that have no mandate. A mandate is a tax on labor. Employers respond by economizing on labor as well as by turning to part time and contract workers. Pay-or-play mandates (insure your employees or pay a fine) have the same effect.
2. Individual mandates don’t work. All but three states mandate auto liability insurance. Yet the national uninsurance rate for drivers is only a point or two below the national uninsurance rate for health. Two Canadian provinces require a nominal premium to enroll in Canada’s Medicare. The uninsurance rate in those provinces is in the neighborhood of 4% to 5%.
Even if health insurance is absolutely free, mandates are unlikely to work. Up to 14 million people (almost one-third of the uninsured) are eligible for Medicaid or S-CHIP, but have not bothered to enroll.
3. A mandated benefit package only makes things worse. Health insurance mandates almost always specify a package of benefits that people must buy. The problem here is the cost of the package is going to grow at twice the rate of people’s incomes. So the mandate will absorb an increasing share of family income or require increasing tax subsidies. Things are made even worse as special interests lobby to include particular services and procedures in the package.
A much better alternative to a defined benefit, by the way, is a defined contribution requirement. The government could, for example, require people to spend $X on health insurance or pay $X in taxes, leaving cost control and the content of benefit packages to the market.
4. Insurance in name only is not universal care. The most important barrier to care for low-income patients is not lack of insurance or price rationing. It is rationing by waiting. Further, the uninsured and Medicaid and S-CHIP enrollees often get care from the same doctors and the same facilities. Indeed one reason why so many eligible people fail to enroll in government insurance plans is that enrollment often doesn’t expand access to care.
5. Pay or play for individuals is not enough. Making individuals pay more in taxes if they are uninsured is not unreasonable. In fact, we do that already under federal income and payroll tax laws. But as Massachusetts is currently finding out, many people will pay the fine and remain uninsured anyway.
6. The NCPA’s universal coverage plan is a reasonable solution. Fifteen years ago, Gerry Musgrave and I sorted through all this in Patient Power. Our idea combines all tax and spending subsidies into a single, simple policy. The government offers every person a subsidy of $X. If you buy health insurance, you get the $X as a refundable tax credit. If you are uninsured, the $X goes into a safety net institution in your neighborhood just in case you, and others like you, cannot pay your medical bills. A link to the latest exposition of the plan is below.
Bravo for Stossel
If you didn’t see John Stossel’s 20/20 program [September 14, 2007], you missed the best documentary on health care I have ever seen. (Best Scene: in Canada, a dog gets his MRI scan in one hour; people wait six months!) Get the DVD. View it. Share it with friends. Send a copy to our friends at The Commonwealth Fund. And note something about it that is unique.
For the past decade and a half, the orthodox conservative response to Hillary Care has been Hillary Lite. The left says, “The problem is that there is too little health insurance.” The right says, “You are right, that is the problem; we just don’t want as much insurance as you want.”
In Stossel’s program, insurance is neither the main problem, nor the main solution. Instead, the focus is on the market for medical care—on the value of empowering patients and letting providers compete for them.
John C. Goodman, Ph.D., is president of the National Center for Policy Analysis in Dallas, TX (www.ncpa.org).
Source: The John Goodman Health Blog, September 17, 2007: http://www.john-goodman-blog.com/advice-for-hillary-bravo-for-stossel/