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Obama’s health plan may promise less but accomplish more

Hal Holman is a professor of Medicine at Stanford University, and Diana Dutton is a research fellow at the London School of Economics and a former director of health services research at Stanford. The married couple supports Obama.

Obama
Many people think Hillary Clinton has a better health plan than Barack Obama. She repeatedly tells voters her plan will cover everybody, while Obama’s will leave out 15 million people. Newly emerging data tell a different story.

Since 2006, Massachusetts has been running what amounts to a pilot test of Clinton’s universal mandate plan, requiring all uninsured residents to buy private insurance or be penalized. The state regulates participating insurers and subsidizes costs for lower-income people. Yet after two years, nearly half of the uninsured still aren’t covered, despite strenuous outreach. To boost enrollment, Massachusetts has stiffened fines – up to several thousand dollars. Nevertheless, many people remain uninsured, citing more pressing needs. Clinton insists her mandate wouldn’t force people to buy insurance they can’t afford, but that’s exactly what’s happening in Massachusetts.  The state has had to exempt 20 percent of the uninsured because they couldn’t afford even subsidized premiums.

Clinton’s plan would also likely fall far short of universal coverage. She hasn’t said how her mandate would be enforced, but has mentioned the possibility of garnishing wages. Without affordable insurance, a universal mandate means little.

Massachusetts highlights the difficulty of expanding private coverage
and keeping costs under control. Since 2006, Massachusetts employees’
health insurance premiums have been rising faster than the national
average – individual annual premiums now average $5,370 vs. $4,476
nationally – and Massachusetts workers bear more of these costs than do
workers nationally (24 percent vs. 16 percent). With subsidy costs soaring, the
Massachusetts plan is running 30 percent over budget, and its survival is
uncertain. Meanwhile, the state’s major health insurers made over $1
million in profits every day, and charged overhead costs five times
higher than Medicare’s. “What Massachusetts has done successfully,” one
health care official wrote
, “is to provide a new revenue stream for the
private insurance system.  What remains elusive is health care for
all.”

In short, mandating universal coverage is easy, paying for it is not. The cost of expanding private insurance coverage nationally with
government subsidies is likely to swamp the federal budget.

Reigning in costs is the central challenge facing any health reform.
Both Clinton and Obama project savings from modernizing information
technology, stressing prevention, and coordinating delivery of care. Both would create a government-regulated insurance “market,” requiring
insurers to cover everyone at the same price regardless of their
health, and offering a Medicare-type public program with comprehensive
benefits open to all. The goal of this regulated insurance market
would be to drive costs down by increasing competition among insurers,
while ensuring adequate benefit packages and preventing discrimination
against the sick. Whether such reforms would actually control costs
remains to be seen. They will surely meet resistance from health care
industry groups that benefit directly from continued price escalation
and market expansion.

Anticipating such resistance, Obama has proposed a plan that is
intended to move toward universal coverage without putting an unfair
burden on individuals in the process. Will his plan leave 15 million
people uninsured, as Clinton claims?  More than 80 leading health policy
experts have stated publicly “there is simply no factual basis” for
this assertion. Most analysts agree that the combination of purchasing
pools, subsidies, easy enrollment, mandatory children’s coverage, and
existing insurance will cover the vast majority of Americans. Former
Labor Secretary Robert Reich thinks Obama’s plan will actually cover
more people than Clinton’s, once all the details are clarified.

Of course, no plan will amount to anything unless it can get through
Congress. Polls show that most Republicans oppose a universal mandate,
but party leaders concede their case is weaker against Obama. Clinton’s 1993 health reform effort failed in Congress largely over the
mandate, and many people remain leery of government coercion in health
care. Given our faltering economy, Obama’s incremental approach to
reform makes sense both politically and fiscally.

Paradoxically, Obama may promise less but accomplish more. With
growing public demand for better coverage, he may finally break the
health reform logjam.

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keep it simpleMark CooperYossi FaberMarcos PMark C Recent comment authors
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keep it simple
Guest
keep it simple

Heath insurance should only be needed for catastrophes or the seriously ill. Doctors could take the system back. Traveling Doctors could make house calls. Or Post a price list on the wall for 15 minute increments of time. Post a price list for cost of vaccinations or other services. A quick 15 minute visit could be $20 or so 30 minute $40 or so and so on. The patient hands the G.P. cash and is out the door for simple diagnosis. Charge a fair rate. Have patients pay cash. Not as much overhead for billing. Get a person to answer… Read more »

Mark Cooper
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Mark Cooper

To the question of what doctors charge. As a post-bacc pre-med student, with my original career in business, doctors have been extremely open with me about the finances of their practice. Here is what I have learned: ============================================= First, whereas most businesses have several points of revenue, there is one ‘money maker’ in your doctor’s office, the doctor. Some have techs which conduct test procedures, such as ECHOs at a cardiologist. However, that procedure only becomes billable once a doctor has reviewed it. A PA practices with a doctor. So for all practical purposes the entire office staff is dependent… Read more »

Yossi Faber
Guest

BOTH of the presidential candidate health plans have major flaws.
For details, see http://blog.faberhealthcare.com.
Joseph “Yossi” Faber
Faber Healthcare Solutions

Marcos P
Guest
Marcos P

Mark C, you do bring some interesting points, however the most basic visit to the doctor’s office doesn’t cost only a few dollars (i.e. 40 or 50), but rather several hundred (I believe the national average is about 200ish per visit. Can anybody confirm?). I know my sister in law, a general physician, told me that they bill insurance companies some $300 per visit – and that’s only for a general checkup! By getting people to pay out of pocket who would be able to afford such prices? Let alone for the whole family. For that matter, few of those… Read more »

Mark C
Guest
Mark C

Simplify the system and that is the only way cost can be controlled. How? 1) We don’t need insurance for every single health care service we receive; for a simple visit to a doctors office, why do we need insurance if the doctor charges a reasonable rate which is totally transparent. Medicare pays only about $40 for doctors office visit. Can we not pay from our HSAs? We don’t need to worry about in/out of network, copay, coinsurance, deductibles, filing claims, etc. For more than 90% of the procedures, we can pay from our HSAs and on average the our… Read more »

health and wellness
Guest

To john :
I think you will see with time that Obama is on the right track. It will take some time but it’s the right solution.

Peter
Guest
Peter

“To boost enrollment, Massachusetts has stiffened fines – up to several thousand dollars. Nevertheless, many people remain uninsured, citing more pressing needs.” More pressing needs such as gasoline and food. If you think there is a health insurance affordability problem now, wait until the winter heating season when oil and propane prices will put many people over the edge. I agree with a mandate but not within the present insurance structure. For real change we need to go to single-pay with price controls – that’s what every other single-pay country has had to do. The insurance model will NOT work.… Read more »

renata
Guest

Michelle Obama is a bonafide healthcare administrator and health media expert. Clearly, consumer healthcare will be HER priority. Ironically, the new first lady of New York State is also a VP at a NYC-based health insurance company. These women are Harvard/Princeton educated experts — equal to their husbands in every way — policy-wise. I look forward to working with them both in the years to come! Healthcare won’t be a hobby or pet project — for them — or their husbands.

tcoyote
Guest
tcoyote

The political reality is that our federal government is helpless in managing subsidy flows to powerful industries. Our health system is many times the size of our farm economy, and yet Congress just passed a mammoth farm bill that is continuing to pay subsidies to farmers even though farm income is at record levels and corn is at $6 a bushel. Regulation is largely controlled by the regulated in our political system. A more heavily regulated health insurance market will mean that an $800 billion industry will write its own rules, using its campaign contributions as leverage. The pre-2000 John… Read more »

John
Guest

When it come to health insurance, the plan that would hurt our economy the least is Hillary Clinton’s plan. Everyone would have health insurance. WA, NJ, NY and a few other states who have already tried Obama’s proposed health insurance plan of not mandating coverage. These states have driven out of the better insurance companies. When anybody can get health insurance without having to go through medical underwriting, people won’t get coverage until they need absolutely need it. Usually because of a serious illness. This causes health premiums to sky-rocket. That’s because insurance companies are only paying claims for unhealthy… Read more »

Sue Saltmarsh
Guest
Sue Saltmarsh

I am flummoxed by the idea that somehow someone is going to come up with a magic formula that will make health INSURANCE work for everyone. PEOPLE! As long as health insurance companies are in control of American healthcare, there will BE no consistent, quality healthcare for anyone who couldn’t pay for it out of their own pocket in the first place. PROFIT, not care, is and will forever be the motivation behind health insurance. What none of the economists, academics and policy makers seem to realize is the reality with which I myself live. I work at a non-profit… Read more »