The Crucial Link Between Making Health Care Affordable and Universal

Senator Clinton and Senator Obama agree on the goal of making health insurance both affordable and universal. The difference is that Senator Clinton's plan will achieve both of these objectives while Senator Obama's plan will achieve neither.

Senator Obama embraces the merits of universal coverage, but assumes that it will materialize within a voluntary system. Yet, there is a strong consensus among independent experts--based on real-world experience--that a voluntary system will fall far short of universal coverage. According to these experts, even with generous subsidies to purchase health insurance, at least 15 million Americans would remain without coverage under Senator Obama's plan. As a result, the costs of providing health care to those who remain uninsured would continue to be shifted onto those with health insurance, imposing what Governor Schwarzenegger has termed a "hidden tax" in the form of higher health premiums. In fact, in 2005 Families USA estimated that the cost of uncompensated care for the uninsured increases insurance costs by more than $900 for the typical American family.

Requiring that everyone, both healthy and sick, have health insurance is the only way to eliminate this tax. In a fragmented system with millions of uninsured, insurers can - and do - profit by doing whatever they can to avoid offering insurance to sick people. Those with pre-existing conditions are charged exorbitant prices or denied coverage altogether and those who have purchased insurance one year can find themselves summarily dropped from coverage the next year. Both Senators Clinton and Obama call for long overdue reforms that require insurers to issue policies to any one who applies and is willing to pay the premium. But without the individual requirement to purchase health insurance that Senator Clinton includes in her plan, these insurance market reforms will actually end up increasing premiums and making insurance less affordable. Here's why.

As long as they know that they have the right to purchase insurance when they are sick, many people will choose not to purchase insurance until or unless they encounter health problems. How are insurers likely to respond to such behaviour? By charging significantly higher premiums to those who buy insurance to cover the anticipated health care costs of those who do not. In other words, under Senator Obama's plan responsible individuals who choose to purchase insurance even when they are healthy would pay higher prices to subsidize irresponsible individuals who choose to buy health insurance only when they need medical care. Despite insurance market reforms, the hidden tax of cost-shifting on those who purchase insurance would rise and insurance would become more expensive!

A plan that succeeds in ensuring coverage for all Americans, as Senator Clinton's does, would also help make health insurance more affordable by making it easier to tackle escalating health care costs in several ways. First, more and better use of information technologies would allow information to be shared (with the strictest privacy protections) among doctors, institutions, and patients to reduce the paperwork burden on providers, to coordinate treatments, to prevent costly duplication of tests, and to curtail deadly errors. But even the best technologies are only as good as the patient information available to providers at the time of treatment. For those who are uninsured, the necessary information is usually incomplete, often too late, and sometimes simply unavailable. Ensuring coverage for all, along with a significant upfront investment in information technology, as Senator Clinton has proposed, would give patients and providers the information they need to make informed choices about higher quality and more cost-effective care.

Second, containing health care costs without undermining quality requires more careful coordination of the care of chronically ill patients who account for the largest portion of health care spending. But providers cannot coordinate the care for such patients when they are uninsured. Indeed, nearly half of the non-elderly uninsured has at least one chronic condition. Of these, more than one-third lacks a usual provider and nearly one-half foregoes needed medical care or prescription drugs. Requiring coverage for all would reduce health insurance costs by enabling disease management approaches for the treatment of all chronically ill patients.

Third, preventive medicine, including regular checkups, measures to reduce cardiovascular and cancer risk, and diabetes management, can both improve health and reduce costs. But the uninsured, even those with high-incomes, receive significantly less preventive care than the insured. Both Senator Clinton and Senator Obama call for more preventive care to reduce costs. But only Senator Clinton's plan would secure coverage and prevention for all Americans, savings lives and saving dollars.

***

We are currently trapped in a vicious circle. The rising cost of health care and health insurance is driving more Americans into the ranks of the uninsured. The increase in the number of uninsured Americans is fuelling the relentless rise in costs both by shifting the health care costs of the uninsured onto the insured and by undermining measures like the application of information technologies, disease management techniques, and preventive medicine to contain costs. Meanwhile, the insurance industry continues to drive up the price of insurance for those who need it most through price discrimination based on pre-existing conditions and health risks.

Breaking free of this vicious circle requires that all Americans have health insurance. This goal can be realized only by passing insurance reforms that make affordable coverage available to all, by providing subsidies for purchasing health insurance to those who need help, by requiring that everyone have health insurance to end the shifting of costs from the uninsured onto the insured, and by stemming the rise in health care costs. Senator Clinton's plan takes all these steps. Regrettably, Senator Obama's plan fails to do so.

Comments

[Rfrank5]

Obama's voluntary plan is flawed from the start. As you state in your article, we must end the invisible tax on the insured. Uninsured members of society can easily become a burden. Clinton's plan is better then Obama's, at least her plan insures all. However, the plan relies far too much on the insurance companies. Private enterprise is all about making money and not about providing superior health care. All too often claims are rejected and coverage avoided via loopholes. Procedures are deemed to be experimental, pre-existing ailments disqualify some coverage and patients are sometimes directed to hospitals that are far away. Often patients cannot find the best surgeons due to the fact that their insurance policy does not cover the specialist. Our medical care is too important to leave in the hands of private enterprise. Similar to the defense of the nation, we cannot leave the defense of our health in the hands of enterprises whose sole purpose is to increase shareholder wealth. Please see my blog. There is a good post titled "The Role of Socialism in a Free Economy". www.frank-vision.blogspot.com.

[swkidder]

You're missing a couple of important points. As long as we have private coverage provided by a mosaic of 3rd party payers, we have medical imperatives and economic incentives lined up in opposition to one another.
There are two kinds of care we need in this country that are most likely to break the vicious cycle you mention. These are prevention - of which we know we need much more but don't actually provide - and the long term, focused and broad based treatment programs necessary to actually "cure" a complex chronic illness. If you're a private payer you don't want to make people healthy who may then run off and buy coverage from your competition.
In addition, our current system actively punishes, if not totally prohibits, the kind of human relationships that used to give us at least half the horsepower in our medical "encounters" and our positive clinical outcomes. Understanding a disease is only half of what it takes to "cure" one, the other half requires understanding the human being who "presents" with the disease.
I don't carry health insurance, and that's deliberate. There's not a single private 3rd party payer out there that offers a product or service that I believe is worth the money they're charging. Nice try, but single payer, universal coverage is the only solution that gives us a payer with an equal investment in everybody's health .... and that's what it's really going to take. It's not just about the cost of overhead - the cost of mis-aligned medical and economic incentives is a much larger problem.

[PTodd]

Toyota and GM have both moved plants to Canada in recent years, in large part to avoid the spiraling costs of insuring American workers, despite a higher tax rate in Canada. Those were jobs that left and which provided workers with insurance, unlike Wal-Mart where some of them may work now.

Insurance is not the way to go people, that should be obvious by now. But I can see it now, for those who can not afford the mandated insurance, they can borrow money from the insurers to pay for it. LOL.

[ProudLiberalDan]

For those of us who had hopes of universal health care, this election has been a tragedy.

First, there was the Single-payer system proposed by Kucinich.

Then I settled for Edwards' credible transitional plan.

Then I resigned myself to Clinton's ripoff of Edwards' plan.

With Obama now looking the nominee, I'm left with a Democrat who has a weak, non-universal plan, with holes that are big enough to drive a truck through, that will leave 15 million out on paper and who know how many more million in practice.

What a colossal disappointment.

There are many reasons to like and be excited about Obama and his candidacy. His weak, non-universal health care plan ISN'T one of them. Those "Harry and Louise revisited" ads were disgusting and will be used against him for whatever weak and limited reforms he actually pursues as President. Obama wasn't even progressive enough to come up with a universal plan in the first place.

The only hope now is to put pressure on Congress where any bill will be actually drafted to force a universal bill onto President's Obama's desk that he will not feel comfortable about vetoing.

[DrColes]

The government caused the entire problem with health care in America by over socializing (with unfunded mandates) medicine to the extent it is not completive. The government allows a monopolistic pharmaceutical environment, and the FDA a federal agency failing American citizens and needs be eliminated or completely re-organized; it"s corrupt, and is causing a major impact on the cost of healthcare in America, and we want to exacerbate the problem? http://www.InteliOrg.com/

[Nutcase]

One thing caused the entire problem? Unfunded mandates causes socialism? I'm afraid I didn't read that right.

cognito ergo populistae

[LeftRight]

Really, the health care industry in America is socialized? I don't remember that. When did it happen? Cause it sure ain't the case out where I'm at. The closest that we've got is one of the local hospitals is owned by the county, and is the most efficient hospital in the county!

[Nutcase]

Absolute poppycock.

No healthcare system is affordable as long as 24 cents of every healthcare dollar goes to administrative costs (insurance costs and profits). The only affordable system is single-payer. Unless and until someone starts talking seriously about single-payer any talk of universal healthcare is nothing more than a waste of time. Unless a candidate is speaking of single-payer that candidate is either trying to BS his/her audience or is too ignorant of the subject to understand it.

cognito ergo populistae

[jdm58]

These posts back and forth are enough to make a person sick! Michael Moore was right, we've been conditioned for so long to fear change in our health policy, that we forget the larger picture. We have arguably the best healthCARE in the world, with the fewest number of people able to receive it. We also have the most exclusive, and expensive healthCOVERAGE. This MUST change. Being afraid to change from the status quo, or reluctant to help another human being because, god forbid! they might be "illegal" or worse- "deserve" their plight, as I've read some posts to say. The government provides our schools, our mail, our police, our firemen, and healthcare to the military, and the retired. Why must we continue to ignore the millions who can not get into the system as it stands now, many are not just unable to pay, they are excluded by Insurance Companies due to PREEXISTING CONDITIONS.
MANDATORY coverage is the first step to equalize the system, and put us on a road to an EQUAL AMERICA, where not just the privleged are allowed healthcare.

[Trilby]

You say "a hidden tax...increases insurance costs by more than $900 for the typical American family." Here is the hole in that theory: in the event that coverage is mandated and more people get it, private insurance companies will still NOT drop their rates, they will simply pocket larger profits. So that arguement is a non-starter.

[Nutcase]

The plans of both Clinton and Obama would increase the income and the profits of the health insurance companies. Why else would they be among the largest contributors to both campaigns?

cognito ergo populistae

[mslindab]

What about illegals/undocumenteds? Hillary said in Nevada that there are no illegals so should I assume that her plan will cover all 12 million plus? How will she garnish the wages of people who work off the books for cash? Quoting HRC let's have a reality check, I don't think it is possible to have full universal health care so let's just agree to a solid start to getting more affordable health insurance for those who want it and not try to force anyone to do something against their will. Consider auto insurance which is required yet how many people go without it at the risk of financial loss and criminal prosecurion. Even that can't be enforced.

[SShaw490]

I get annoyed when so many of Hillary's supporters criticize Obama for not offering enough specifics (I don't understand this criticism, www.barackobama.com has enough specifics to make your eyes glaze over); but they don't seem to mind the fact that Hillary is basing her campaign on her version of a health care plan, but she doesn't address the single glaring weakness of the plan - how do you mandate coverage? What is the mechanism? What are the penalties of non-compliance?

If there was ever an issue that needed to have specifics articulated, it's Hillary-care. But she doesn't say a word about it. There's a reason for that - it didn't work in 1996 and it won't work now.

[jake1az]

Obama has never explained who is going to pay for those who choose not to be covered why is that.

Do we let them not have insurance and we pick up the tab like we do now.

[Aaror]

While I appreciate the attempts to provide this at the federal level, it will be too hard to overcome the health care monopoly. I think there may be hope at the state level however. I think the car companies could push for a Canadian style plan in the state of Michigan, and cut thier health care costs in half. Once that is done, it might pass in other states, and eventually we would take the lessons of the state plans that did the job best and create a national plan.
But any system that involves the health insurance industry will still cost far more than a universal plan. There is a reason we are the only industrial nation without socialized health care, the nation that spends the most, and the nation that has the worst health care system.

[Merlin7]

Hillary's plan will make health care both universal and affordable? You mean like the Massachusetts plan, which is very similar to Hillary's?

The Massachusetts plan is brand-new and it's already a boondoggle, with deficits in the hundreds of millions of dollars in its first year and climbing.

You can't keep insurance companies in the system and end up with anything else. When are the politicians going to acknowledge that? Oh, wait . . . never.

[ElkoJohn]

`
so exactly what percent of my income (20K) do i have to pay for medical insurance ??
and exactly what percent does Lady Hill pay for a Senator's medical insurance
and how much will i have left over to pay for my rent, utilities, gasoline,
credit cards & a beer ??
and how much does Lady Hill have left over to pay her bills ??
.

[qwr]

OK, here's a link with a roundtable about healthcare mandates. It's boring, but informative nonetheless:

http://www.kaisernetwork.org/health_cast/health2008hc.cfm?hc=2486

I think a calm, reasoned debate about mandates is necessary without the kind of cheerleading that we see in this article. Even the strong proponent of mandates in this dialogue doesn't get close to the kind of alarmist rhetoric found in Krugman or in this article.

[CantStopJustice]

I'm a nurse in MA where we are living through individual mandate HELL. The Kaiser gig was a rig-job. Read on.

http://www.gooznews.com/archives/000957.html
2/1/08
Unfair and Unbalanced Wonkery on Mandates

"Individual Mandates were also a central issue in last night's Democratic Party debate...

For the record: I'm opposed to mandates for two reasons. First and foremost, they're bad politics. Americans don't like to be told to do anything. They especially don't like unfunded mandates....

In an America that does not understand the complexities of the health care system and will not be given the information needed to vote intelligibly on the issues, that's a debate that the Republicans can easily win, especially if it supplemented with a mass advertising campaign by the drug and insurance industries, which have the most to lose under the Democrats' proposals.

...in yesterday's Kaiser Family Foundation forum, two policy wonks -- Michael Gordon of the libertarian Cato Institute and Len Nichols of the centrist New America Foundation -- both referred to single-payer health care as a system that, to use Nichols' words, "turns physicians, clinicians into employees of the government."

I don't expect better from Gordon. But this was so fundamentally wrong that it is hard to believe that Nichols, who is one of the leading architects of the individual mandate movement, didn't know he was telling a lie. Perhaps he was upset that his handiwork in California had been shot down. Whatever.

The sad part is that the moderator of the discussion, Larry Levitt, did nothing to correct that lie. That's too bad. As the mandates contained in the Massachusetts and California plans collapse, the movement for universal coverage will need a full and frank discussion about other alternatives. The good folks at KFF can start the process by inviting the full range of opinions onto their panels, and only include those who accurately describe the options.

For an real-time MA blog discussion on the individual mandate mess, visit
http://bluemassgroup.com/showDiary.do?diaryId=10524

[LeftRight]

Actually, the only Democrat that the health insurance, health care, and pharmacuetical industries would have lost under was Dennis Kucinich. Under Hillary and Obama they will recieve a windfall, just a larger one under Hillary.

[RealistDem]

Laura your just like Hillary you never answer what happens if i dont opt in, are my wages garnished? Because if yes then that wont fly with the country. Sorry but hillary and healthcare...been there done that....blowout loses in the house and senate....no thank you.

[DudeE]

and Obama never answers how he would enforce enrollment of children (what happens if you don't?) or how he would 'penalize' those who opt out but later seek to enroll. neither does he have a plan for what to do with uninsured people who show up at the emergency room. who gets stuck with that bill?