Obama vs. Clinton: The Health Care Debate

No working out today; I am stronger but have a cough. I’ve all but decided to bag the marathon next weekend.

I am watching Friday Night Fights and the first one lasted less than one round; the younger, quicker fighter was simply too much.

Obama-Clinton: The Health Care Debate

I don’t mind a debate on policy, but I do mind Clinton’s insistence that Obama “leaves 15 million out” of his health care plan.

That is patently false. The primary difference between their plans is that Clinton’s requires all adults to buy into it (though it does provide subsidies for the poor) whereas Obama’s plan does not require all adults to buy into it. However, Obama’s plan allows for anyone who wants health insurance to get it; it provides for subsidies for those who want the insurance.

Sources: Factcheck.org

Clinton said that Obama’s health care plan would leave 15 million Americans without insurance, while her plan provided universal coverage. Obama countered that his proposal would cover everyone in the country. Clinton’s plan will likely cover more people than Obama’s, but it’s doubtful the difference between their very similar proposals would be as high as the figure Clinton cites. [...]

Clinton uses a dubious statistic when she claims Obama’s plan would leave out 15 million of the uninsured. But Obama’s statement that his proposal provides “universal” health care is also suspect.

Clinton based her claim on a column by The New Republic’s Jonathan Cohn, who loosely estimated Obama’s plan would leave 15 million uninsured:

Cohn (The New Republic, June 3): The best studies out there — by Urban Institute researchers, the RAND Corporation, and MIT economist Jonathan Gruber — suggest that, without a mandate, improving affordability will cover roughly one-third of the people who don’t have coverage. Mandating that kids (but not adults) have coverage bumps that up to about a half. Obama’s advisers think that, by really loading up on the subsidies … they can goose that up to two-thirds. But that’s getting optimistic — and, even then, you still have around 15 million people who are uninsured.
Cohn makes it clear here that he is offering an estimate based on the best information available, not a hard and fast calculation. And the best available information doesn’t always agree. One of the people Cohn cites, economist and influential health care expert Jonathan Gruber, has gone on record saying that without a mandate, Obama’s plan would still leave 6 percent of the nation – about 18 million people – uninsured. But it’s not clear whether he meant “without an individual mandate” or “without any kind of mandate.” The Obama plan does include limited mandates, including a requirement for employers to either provide health insurance or pay into a public fund. A Gruber study from 2006 estimates that a plan with generous subsidies and an employer mandate would lead to 82 percent of the uninsured gaining coverage, based on 2001 data. Applied to today’s figures, that would leave about 8.5 million without insurance. Gruber found that a proposal that included an individual mandate would lead to 100 percent coverage of the uninsured.

Other studies also find only a small discrepancy between the types of plans that Obama and Clinton are proposing. For instance, a 2003 Commonwealth Fund study found that a plan with mixed private-public options (as the leading Democratic candidates have put forth) that also included an individual mandate would reach near universal coverage, leaving just 1 percent of people uninsured. Not including a mandate would still reach most of the uninsured, leaving about 3 percent without coverage.

Again, remember that those who are “left out” are those who don’t want to buy it. Subsidies are offered for those who want insurance but can’t afford it.

Quality, Affordable and Portable Coverage for All

* Obama’s Plan to Cover Uninsured Americans: Obama will make available a new national health plan to all Americans, including the self-employed and small businesses, to buy affordable health coverage that is similar to the plan available to members of Congress. The Obama plan will have the following features:
1. Guaranteed eligibility. No American will be turned away from any insurance plan because of illness or pre-existing conditions.
2. Comprehensive benefits. The benefit package will be similar to that offered through Federal Employees Health Benefits Program (FEHBP), the plan members of Congress have. The plan will cover all essential medical services, including preventive, maternity and mental health care.
3. Affordable premiums, co-pays and deductibles.
4. Subsidies. Individuals and families who do not qualify for Medicaid or SCHIP but still need financial assistance will receive an income-related federal subsidy to buy into the new public plan or purchase a private health care plan.

Of course, there are those who think that mandates (that is, forcing someone to buy into the system) are a good thing; that is a legitimate debate, in my opinion. But claiming that Obama is just going to “leave someone uninsured” is, at best, highly misleading. An accurate way to say it would be to say “we think that X people will elect to not participate in Obama’s plan”, but that just doesn’t sound as negative, does it?

Others have weight in, such as a Stanford Economics professor Donald Harris. He talks about the role of mandates in keeping the health care affordable; the idea is that healthy, not-as-likely-to-get-sick people would opt out; making them opt in might lower premiums for everyone and prevent the small percentage of uninsured who get sick from driving up the costs on those who did the right thing and bought the insurance. But the professor sees the real issue:

The question of whether or not to include insurance mandates as part of a national healthcare policy has emerged as a major issue in the debate about the healthcare proposals offered by the three leading Democratic presidential candidates: Senators Hillary Clinton, John Edwards and Barack Obama. (Edwards has since dropped out of the race.) In seeking to evaluate the different proposals, it is important to place this issue in proper perspective.

The common objective of all the proposals is to arrive at a system of universal healthcare. The key issue is about how to get there. Mandates are simply one practical measure aimed at meeting that objective, and may not be the most effective among competing alternatives.

More importantly, the process of getting there is essentially a political one. It requires the ability to negotiate the battles within the U.S. Congress and the turbulent waters of competing interest groups lobbying for influence, and to win a widely acceptable legislative package. The really key issue, then, is, who among the candidates has the demonstrated capacity to succeed in this effort?

Amen! That is the question! And who better? The “take it to ‘em fighter”, or the “let’s remember that we are all in this together” leader?

In the final analysis, however, what counts is the capacity to survive the searing battle of the legislative process and emerge with a package widely accepted by the electorate. This is, and should be, the bottom line in judging the proposals. The president — with his or her executive power as the final arbiter of this process and ability to exploit the bully pulpit to gain public support, along with the qualities that the individual brings to the office (transparency, persuasiveness, leadership, determination and forcefulness in dealing with powerful opposing pressures) — is in a unique position to determine the outcome [...]

Clinton lays claim to, and can be justly lauded for, long experience in the political arena. But, given the extraordinary opportunity during her husband’s administration to make a major breakthrough in healthcare legislation, her own efforts in this most relevant and critical case resulted in a disastrous failure (a paper by UC-Berkeley Economics Professor Brad DeLong, one of the policy-making insiders during that debacle, provides valuable insights into the causes of this failure — http://www.j-bradford-delong.net/TotW/system.html). Obama, in his eight years serving in the Illinois legislature and three so far in the U.S. Senate, has shown a well documented and highly regarded record of leadership and successful achievement in enacting significant legislation in many areas of public policy: health care, poverty, crime, civil rights, ethics, foreign policy and the environment. This record bodes well for his ability to do an outstanding job as President and to secure passage of path-breaking healthcare legislation.

Robert Reich, Bill Clinton’s Labor Secretary, argues that the argument over mandates is overblown anyway:

But instead of celebrating, the candidates and left-leaning pundits are squabbling over whether the plans should include so-called mandates that require everyone to purchase health insurance. Talk about self-inflicted wounds. Mandates are a sideshow, and fighting over them risks turning away voters from the main event.

In almost every important respect, all major Democratic plans are the same. They require employers to “play or pay” — either provide coverage to their employees or contribute to the cost of coverage. They create purchasing pools that will offer insurance to anyone who doesn’t get it from an employer. They offer a public heath-insurance option. The plans preserve freedom of choice of doctors. They aim to save money through more preventive care, better management of chronic disease, and standardized information technology. All of them subsidize lower-income families.

Despite some skirmishing over whose subsidies are most generous, the subsidies are about the same. The major Democratic plans would spend nearly an identical amount of money helping low- and middle-income families because they rely on the same source of general revenue, derived from allowing the Bush tax cuts to expire. Given the myriad ways universal health insurance might otherwise be organized — single payer, employer mandate, health-insurance vouchers, tax credits — this Democratic consensus is striking. It also highlights the abject failure of Republicans to come up with any coherent plan.
[...]

As a practical matter, the difference between Sen. Clinton’s and Sen. Obama’s approaches come down to timing and sequencing. Mrs. Clinton wants a mandate first, believing that enrolling the younger and healthier will help reduce costs for everyone else. Mr. Obama thinks forcing people to buy health insurance before it’s affordable isn’t realistic. He wants to lower health costs first, and is willing to consider a mandate only if necessary.

This fight is little more than a distraction, given that a mandate would matter only to a tiny portion of Americans. [...]

Who’s left? Only around 3% of the population. So the question they’re really battling over is whether it’s better to require this 3% to buy insurance, or lure them into buying it with low rates and subsidies.

The answer depends on who’s in this 3%. Mrs. Clinton thinks they’re mostly younger and healthier than the general population so they should be required to buy health insurance. That way, they’ll bring costs down for everyone else because their payments will subsidize the others.

Mr. Obama thinks a lot of them are people who won’t be able to afford even the subsidized premiums, so they’d either ignore a mandate or wouldn’t be able to pay for it. He says if his plan gets 97% coverage without a mandate and he finds that the remaining 3% are mostly young and healthy, he’ll go along with a mandate.

Who’s correct? It’s hard to know. So far, the Massachusetts experiment suggests Mr. Obama. Massachusetts is the only state to require that every resident purchase health insurance. The penalty for failing to do so could reach $4,000 next year, but the state has already exempted almost 20% of its current uninsured from the requirement. Massachusetts is concerned they can’t afford a policy, even with subsidies similar to those in all the Democratic plans. So far, about 50% of Massachusetts’s uninsured have complied with the mandate.

Interestingly enough, Reich agrees that the big issue will be getting the problem through Congress to begin with.

The public is ready for universal health insurance, but getting any plan through Congress will still be tricky. To get it enacted after January 2009, Democrats need to start building a movement in support of the big and important reforms universal health insurance requires — and on which they happen to agree.

One other issue: how much to those who are not insured but get sick anyway cost the rest of us? From Cato (a Libertarian-Conservative think tank)

Is Free Riding Really the Problem?

Supporters of the individual mandate rely heavily on the problem of uncompensated care. People who lack health insurance nevertheless receive health care in this country, because hospitals and health care providers are unable or unwilling to turn them away. When recipients don’t pay for their care, the rest of us end up footing the bill one way or another. Individual-mandate advocates contend, plausibly enough, that we should make the free riders pay for themselves.

But how big is the free-rider problem, really? First, we should note that not all free riders are uninsured. In fact, people with insurance consume almost a third of uncompensated care. Second, not all care received by the uninsured is paid for by others. Analysts at the Urban Institute found that the uninsured pay more than 25 percent of their health expenditures out of pocket.

So how much uncompensated care is received by the uninsured? The same study puts the number at about $35 billion a year in 2001, or only 2.8 percent of total health care expenditures for that year. In other words, even if the individual mandate works exactly as planned, it will affect at best a mere 3 percent of health care expenditures.

My Summary I think that one can argue the merits of mandates; that is a legitimate policy difference. Both Clinton’s and Obama’s plans represent a major improvement from where we are now. Frankly, I really don’t have a strong preference between plans, though my gut tells me that Obama’s is closer to what we are actually going to be able to get.

My only beef is with those who think that Obama is “leaving people out” when in fact, he isn’t.