Coverage v. Coercion
Suppose you were choosing between two employers. Both offer the same Blue Cross insurance to employees who pay 25% of premiums. But one employer says, "Choose us. We provide more universal coverage because we make our employees take the insurance even when they don't think it is worth the 25% contribution." Does this argument sound persuasive? Sure doesn't to me. I'd say both firms are offering the same coverage, with one adding a heaping dosage of coercion that doesn't really sweeten the deal.
Yet Hillary Clinton is basically making the argument of the coercing employer. There is no serious claim that the Clinton plan would offer cheaper health care coverage than the Obama Plan. They both subsidize premiums for lower income persons, and the Obama plan, if anything, does more to lower premiums because it adds an innovative reinsurance plan that lowers insurer costs and invests more in information technology to lower medical costs. But Clinton keeps arguing her plan offers more universal coverage because of one thing: she adds a mandate that forces people to take the insurance even if they would rather not.
Now a national health care plan does have plausible reasons to include mandates. But the case for mandates has nothing to do with solicitude for those who cannot afford health insurance. It instead has to do with a very debatable policy question about whether free riding problems merit coercing citizens to force them to pay their fair share.
The free rider problem is this. Hospitals cannot legally deny people emergency care. Thus people who do not buy insurance can go to emergency rooms for care even when they cannot afford it. This might induce them not to buy insurance in the first place.
But it is quite unclear how large this free rider problem is. After all, it is not as if hospitals do not bill the uninsured for their emergency care. If they pay those bills, there is no free rider problem. And if they cannot pay the bills, they usually could not have afforded insurance either.
One also wonders how many people who could afford health insurance really are tempted to forgo it for the limited care provided by emergency rooms. After all, emergency rooms need only provide care to people with real emergency conditions, and even then need only stabilize those patients. They also make patients wait for hours, and often try to avoid treating nonpaying patients. Not surprisingly, the empirical evidence is mixed on whether a free rider problem exists at all.
In any event, this free rider problem would at most justify mandating the purchase of insurance covering emergency care, and cannot explain mandating full insurance coverage.
Nor is it clear how effective mandates would be at curbing any free rider problem. The Clinton campaign keeps saying their plan would insure 15 million persons left uninsured by the Obama plan. But this argument has two doubtful premises. First, it assumes their mandate would be 100% effective. Massachusetts has a health insurance mandate, and so far the evidence is that 20% of uninsured don't comply, which given 45 million uninsured would mean the Clinton plan would also leave 9 million uninsured, and thus able to free ride if we think that is going on. Second, the 15 million figure is quite debatable, and the Obama campaign presents reasonable data to say that only 2 million would fail to accept coverage under their plan.
But the debate about whether the correct number is 2 or 15 million misses the real point. If Clinton campaign is right that 15 million would reject health care coverage without a mandate, then she is effectively claiming that 1/3 of the uninsured would conclude they are worse off under her plan. I'm not sure why this should count as a point in its favor.
The bottom line is this. If you are worried about paying for your own health care coverage, there is no reason to favor the Clinton Plan over the Obama Plan, and the latter is probably a bit better. If your concern is other people not paying for emergency care, then the Clinton plan is more responsive. But it isn't clear whether that concern is significant or how effective mandates are solving it, and in any event a mandate covering all health care would be an overboard solution.
Einer Elhauge is Petrie Professor of Law at Harvard Law School, Director of the Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics, and an unpaid member of an Obama Health Care Advisory Committee. This op-ed does not purport to reflect the views of the Obama campaign.
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Given the background listed in your bio, it is surprising that you would give such a flawed comparison of the two plans. Was this misleading comparison the result of political trickery or a lack of understanding about how economics works.
The main flaw deals with comparing the two plans to the two companies you discuss. You say each company would provide insurance for a 25% copay on the premium. 25% of what? Ask any insurance person and they well tell you the the cost per person goes down with numbers. A bigger pool lessens the cost and risk per payee. Therefore the company that requires coverage for everyone would have a lower premium cost for the worker to pay 25% of. In the other company, healthy employees or those with spousal insurance or workers who just didn't plan well would opt out. Therefore the per person cost would be much higher, and the premiums would be a higher price for the worker to pay 25% of. In addition to this the insurance company would make more money on the higher premiums for fewer covered workers in the opt out plan.
Both of the candidates plans are dreadful. There is no need to figure a profit for the insurance corporations into the costs. But if you have to have one, Hillary's is the more egalitarian. It unites Americans by asking us to share the risks and costs together for the good of all. Barack's plan lets wealthy yuppies put themselves in a special class. By letting the selfish go their own way, the rest of us have to pay more and the poor have an even higher burden.
As I said, both plans are a boon to the insurance fat cats. One though appears to at least be trying to get health coverage for all of us. The other sounds more like a plan devised as cover, one that lets the candidate say he is for health care while also letting the rich and selfish buy in.
Mrs Clinton’s position on health-care, is not a working blueprint as she’d have you, the media, and her supporters to believe. Every last detail of her plan is not nailed down. Her health-care plan is just a set of bullet points, and no more detailed than Mr Obama’s outlined proposal. Besides, she has not even said how her “individual health insurance mandate “ will be enforced. The individual health insurance mandate is the crucial difference between her’s and Obama’s. She has not explained how she is going to enforce it, because she can’t. And the chances of her being able to enforce anything as President, and getting anything passed by Congress, are shrinking by the day. Surprised?
There are lots of people who don't buy insurance now. Most of it has to do with cost. But there is a segment of the population that can afford insurance and choose not to buy it. These folks are younger and relatively healthy. Why would the need insurance? I see this in my community all the time. People buy huge plasma TVs, iphones, wii systems, but will not pay for health care. If these folks become sick or injured they head to the emergency room. How does Obama think we should handle these people? How do you get people, young and healthy, to buy insurance they neither want nor need? I, myself, would love a Canadian style plan. And I'll have to move there when I retire if something is not done by then.
CindyV, I moved to Regina, Saskatchewan, Canada from Bakersfield, California two years ago, in large part because of the health care system. The powerful insurance companies in the U.S. are not going to let go of their stranglehold. I absolutely love the kinder, gentler society in Canada and I would highly recommend all progressives to immigrate north.
Obama calls these the people who are 'gaming' the system. He has said when they show up for healthcare and can't pay for it out of their own pocket, they will be charged for all their back insurance premiums, charged a penalty and then enrolled into insurance in order to get the care they need. So, it is basically a MANDATE at time of need.
I can't imagine why anyone who could affrod insurance would buy it under Obama's plan. YOu might as well invest the same amount of money as the insurance would cost you. Pocket the earnings on your investment. If you ever actually need insuranec you can pay your back premiums (you saved the money anyway) and your fine, then your insured. If you never really need it, you have all that extra money plus the eranings you realized on it for all those years....
Single payer universal healthcare, like exists in Canada, is the best system. Despite some flaws, every person is covered. Preventive healthcare, like vaccinations and check-ups is available to everyone, and infant mortality rates are lower in Canada than in the US, and life expectancy is higher.
Of the plans being put forward by the two Democratic Party candidates to be presidential nominee, Clinton's plan is better, because of mandates.
Without mandatory participation, there will be, of course, healthy people who just don't want to pay for something they don't think they need. This would reduce the risk spread, making coverage more expensive for the remaining people, and, in the case of accident or catastrophic illness, these people would be dumped into the system, using resources they never contributed to.
But there is another, more serious problem with a system that doesn't have mandated participation: if not everyone has to be covered, then the insurance companies don’t have to cover everyone. Not having mandates is a sword that cuts the system two ways, first, by allowing healthy people who would contribute and spread the risk, thus reducing costs to individual payers, to opt out, and second, by allowing insurance companies and state governments to exclude people with pre-existing conditions, or impose lifetime limits to benefits. In short, a system without mandates would still maintain many of the worst features of the present system.
One of the leading causes of personal bankruptcy in the US is expensive medical bills to the uninsured or the underinsured. Without mandates, this sorry state will likely continue.
Should Obama become the Democratic candidate for the presidency, his weak plan would guarantee that many millions of Americans still would not have health insurance. Any attempt by Obama to reconsider and move up to a Hillary Clinton style plan could face a Republican opposition merely re-issuing Obama’s ill-advised Harry & Louise scare ads. In trying to poison the waters for Clinton, he has spread poison into his own pond, where nothing healthy can now flourish, including a better medical insurance system for Americans.
The more enlightened policies on Obama’s website are just clones of Hillary Clinton policies, and where they are not clones, they are failures.
Even on NAFTA, Obama has had to move towards a similar policy to Clintons, although here we find his NAFTA bashing tirades were all for show; lies to the electorate.
Vote for Clinton, who has had reasoned, well-defined policies and goals from day one, and who has the know-how to achieve her goals.
Obama has policies patched together and cloned from Hillary Clinton’s (stolen) and, in debate, he doesn’t have a good grasp of the issues surrounding the policies on his own website. On healthcare, where he has forged his own path, he meanders and obfuscates in debates, and demonstrates only a cursory familiarity with his plan.
Vote for Clinton, for someone who truly can help America back on its feet, not for Obama, who has never known a position he couldn’t waffle on, and has never had an issue so fundamentally important that he couldn’t reverse himself on.
Health care was among the reasons for supporting Edwards and Kucinich over Clinton & Obama.
But they, and their plans, have been marginalized out, right?
Right! For people who believe in very progressive politics, Obama or Clinton are not very satisfactory candidates because they are too both too centrist: we preferred Kucinich or Edwards. I confess, I'm not inherently radical and I don't believe in socialism (it can't work any more than capitalism can) but eight years of Bush have radicalized me and today I'm in no mood for centrism. I'm in the mood for hurdles and gibbets for the people who put this country in its current state. That said, I'm also a realist and things need to get a little worse before people truly get radical. This may happen before the November election then again it may not. Looking back at history, this country has never elected a leftist president and it wasn't about to do it in 2008; hence Obama and Clinton. More than anything, Americans simply want government that works for them and it they can have it without radicalism fine. With all of the horse shit conservatives have thrown at New Deal politics, in truth they were far from socialistic. FDR didn't propose them because he was a socialist but because he believed that desperate times warranted serious change in direction. I'm certain, Americans would have rejected the New Deal had the good times of the 1920s continued because Americans are not inherently radical.
Two words: Michael Moore
He is the authority on Universal Healthcare. I even think he made a movie on the subject. Go to his website to find out what he thinks of Hillary’s and Obama’s healthcare plans. You might be surprised at what Hillary’s campaign said about Michael Moore (It wasn’t flattering).
www.michae
Here is my plan for a federal health coverage policy.
Do away with the insurance companies. They contribute nothing to the improvement of the general welfare.
Take the cash as a portion of tax income.
Run a competative market for medical services.
Use the windfall harvest of cash that the insurance companies do not get to take, and just plain cover all Americans.
Giving us the choice of providers. Everyone gets full coverage. The govt regulates rates.
The insurance companies dry up and blow away!
The good providers thrive, and the bad get better to compete.
As a bone to the insurance companies, they can spin off their data processing as outsourcing to the govt. Once those double bills stop coming in, why the costs will plumet.
Einer, Einer, Einer,
The "free rider" problem, as you know, is an "adverse selection" problem. Universal coverage requirements require that all people -- healthy and unhealthy -- be part of a common risk pool. Given the choice, the healthiest people are most likely to opt-out of an optional program, meaning that their premiums cannot be used to subsidize higher-cost individuals. So the average cost to the rest of the pool goes up. That's been proven over and over again in managed care populations -- why do you think HMOs cherry-pick the healthiest patients?
Hey, I'm a Barack supporter, for a slew of reasons. But claiming that adverse selection isn't a major problem with his plan is, frankly, intellectually dishonest.
That's quite an interesting point. I've never heard the actual math behind the plans put out there. It would certainly help make things more clear. Hillary should have explained that instead of mention tax credits!
Let us not forget that there are several million people who's religious beliefs who do not accept for themselves or their family members, modern medicine in general, who don't accept blood transfusions, would consider a sin to support funding of abortions, products developed from unused fertalized human eggs, birth control drugs for themselves or even others. Such persons may prefer to go without any health care as don't need it or want it or be in an private insurance scheme that respects their religious beliefs. Add to that many who are fearful of government involvement in anything, fearful of their privacy in a government system, fearful of rationing, want to pay on their own even if can't afford it out of a personal choice or pride, or just are cheap and don't want to support such schemes.
For those that don't want to participate until they get sick, then cause them to pay higher co-pays or higher rates based on income, limit government benefits and so on after the service is provided.
For those reasons and others, we must tred carefully to mandate payments and enrollment into a government run program.
Yes, I think we CAN forget about a few million people. Our government does this routinely and it's usually more than a few. And as for folks too fearful of government to pay taxes with everyone else or too selfish or self-absorbed to want to participate, I am all for a tattoo on their ass that says don't heal me. I want the buying power of every American person all at once to make healthcare the CHEAPEST THING AROUND. This is of course, exactly the opposite of what every healthcare provider in America wants right now so you can bet they're really for mccain and you can bet we'll have to fight for it.
So a Harvard professor is willing to mislead the public on behalf of a political candidate.
I'm not going to make the argument because I don't see how he can't know it.
No wonder people are cynical.
I'm sure unsupported ad hominem attacks have nothing to do with anyone's cynicism.
Bravo:
I was hoping to learn from argeec exactly why he came to the conclusion he did. Instead he resorted to attacking "a Harvard professor" who "is willing to mislead the public on behalf a political candidate.
How do you mandate 20 million illegals to pay for their health insurance when they go to the emegernecy room?
Americans forced to support insurance which cost 3 times more than the rest of the world and then pay for another 20 millin along with pay 4-5 times more for the same druigs as the rest of the world.
Eh Gads... Clinton's plan sucks.
Regards
The question of 100% participation in an insurance pool was settled over 400 years ago!
You apparently care only about whose name is on the plan.
Her plan excludes illegals. So if they are the majority of people in emergency rooms (not sure about that, but I hear it enough) then NOTHING CHANGES. under Hillary's plan.
It's a complete sham. As has been her entire, lying, distorting campaign.
This 57 year old feminist who defended the Clintons for years is disgusted by them.
America needs universal health coverage. Any step in that direction is a good one no matter how it is approached. The way you describe the use of emergency rooms for primary care as if it is a solution for anything is sickening to me. Hospitals were forced years ago to at least maintain the appearance of not turning away the uninsured and unwanted because there were too many of them to sweep under a stairwell. What America really has ,I guess, is a people disposal problem; if we could somehow get rid of all these pesky "free-riders", we'd be all set!
The biggest problem that I see with a mandate is that it will enable employers to do away with coverage for their employees. If the government is going to provide affordable health insurance to anyone who needs it, then what's to stop employers from pulling out of their obligations? Gurthermore, they will likely not raise wages in compensation for the lost health insurance.
Also, how will HRC enforce the mandate? Will people be fined when they go to a hospital without insurance? Will their be random insurance card checks? She has yet to offer a detailed plan as to how this mandate will be enforced. So much for detailed policy points.
There is no requirement now for emplyers to pay for health insurance. POnly 55% still do and the number is dropping and those that do are raisng the amount the employee is paying.
The problme is the cost. Its 3 times more in the U.S. than the rest of the world as a percent of GDP ( and we have a much larger GDP than most countries per person). Per Capita our healthcare is costing 5 times more than the rest of developed nations which insure their whole population.
As a Medical center owner, employer based healthcare does not work. Get sick for a couple of months, you lose your job and of course you cant afford to pay for your insurance, and you are dropped in the middle of treatment Thats why half the bankruptcies are caused by the illnes of people who had health insurance. Pay for it for 20 years, never get sick and when you do, you may not have it!
You must fix the cost problem and get rid of the insurance company middleman and stop paying 5 times as much for drugs. That cuts the cost by more than half and you need single payer.
Obama's plan is a single government plan. Hilary's is an insurance company bonanza. If employers and indivdiuals buy into Obamas plan becuase it cost the less, then the insurance companies are gone and the drug companies must deal with one buyer as in Europe!
Regards
I'd like to know where you get your information. You say "Not surprisingly, the empirical evidence is mixed on whether a free rider problem exists at all." Really? What evidence would that be?
My partner is an Emergency Room physician located in an area that is not low-income. Yet they are beset with people seeking free care simply because they know it cannot be denied to them.
Patients come in complaining of belly pain for which hundreds of dollars worth of tests must be ordered to cover their ass. But all the patient really wanted was a pregnancy test!!! They don't want to spend the 5 bucks to get one at CVS. This happens all the time.
Patients come in every day who claim to not know where they live or where they work simply so they can avoid payment. This places a burden on all of our healthcare costs. ONLY mandated coverage will solve this free-rider problem, and it is a very real problem.
Maybe the problem isn't the people seeking healthcare without the subsequent gouge in their wallet. Maybe the problem is that there are many VERY greedy healthcare providers in this country that could care less about people that don't have wallets to gouge. Healthcare should be free like air in the supposed richest country in the world.
And what is it you think your partner's anecdotal reports of one emergency room say about the extent of free riding on a national scale?
In Europe there is no co pays.. so by your logic every one would avail themselves of all of this free healthcare and their cost would be astronomical. Much higher than ours. But in fact their healthcare cost 1/3 of the GDP that our does and 1/5 as much per capita and have the same or better outcomes..
Now thats not one emegerency DOC pointing out that people abuse the system. There will always be some that abuse, including 20 million illegals who you cant mandate.
You can more than afford the abusers, if you get the insurance companies out whioh are 50% of the cost and treat no one and stop paying 5 times more for thesame drugs.
Regards
why are democrats so afraid of embracing the position of raising taxes for much-desired social programs. Why dont they push the idea that paying corporations to provide healthcare for a profit is essentially a regressive tax that (because of profit) keeps us from getting the biggest bang for our buck. I think the only reason Americans hate taxes is because they really never see where the money is going to make their lives better. If the 7500 we spent per person per year on healthcare actually went entirely to healthcare (we already spend more than any other country on the planet for healthcare), wouldnt we beat out france for the best healthcare? I say make healthcare a progressive tax. Let people see the benefit taxes could have on their lives. Let people enjoy the product of a successful governmental program.
Great post Einer! After enduring weeks of idiotic attacks by Krugman, it's refreshing to see a balanced analysis of both plans.
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Posted March 3, 2008 | 06:54 PM (EST)