Healthy Ideas or Bad Medicine?
Josh Harding
December 04, 2007
The 2008 elections are now less than one year away, with the caucuses here in Iowa just one month away. Health care looks to be the top domestic issue voters are concerned with this election cycle. As a service to you, the good reader, I’ll do my best to analyze the pros (if there are any) and cons of what our presidential front-runners are offering the voters. First, the Democrats:
Hillary Clinton
Senator Clinton, it should come as no surprise, is making health care her top priority. Her website says she is “offering more choices and lowering costs” with her plan. She plans to offer working families tax credits to help cover the costs of their premiums, plans to stop insurance companies from denying you coverage for a pre-existing condition (“no discrimination”), and says you’ll keep your health care if you lose your job. In addition, Senator Clinton says she’ll offer small businesses tax credits for providing health care, and claims insurance companies will have to compete for your business while reiterating that she’ll prevent them from denying you coverage. For good measure, she pats herself on the back for creating the SCHIP program (1).
There’s one big thing in here that she is leaving out, and it’s not mentioned on her website. Under Clinton, health insurance is mandatory (2). One of the big reasons health care costs have spiraled out of control is government regulatory manipulations that have forced third-party payer health insurance on this country. By allowing third-party payers such as Blue Cross to organize outside of the regulations that applied to other insurance companies (ones that indemnified the insured against a loss), giving them lower reserve requirements, and by providing a tax break only for employer-sponsored third-party health insurance (but not for individual coverage) (3), this type of insurance became the norm in our country. Because of this, and laws such as the 1973 HMO Act that mandated employers with at least 25 employees to offer health insurance, many companies offered health insurance in lieu of higher wages. Since health care consumers were now shielded from the costs of their health care, demand went up. With increased demand, costs skyrocketed. Out-of-pocket spending per capita went from $170.00 per capita in 1970 to $840.00 per capita in 2005, even though a person’s share of those costs went down during that time period from roughly 40% to 15% (4). This is the system Senator Clinton wants to entrench even further by mandating Americans get trapped into this vicious cycle of soaring health care costs.
She claims insurance companies will have to compete for your business, which would lower costs. Since the laws right now don’t allow you to shop out-of-state for health insurance, and considering the fact by mandating health insurance you’re creating an artificial demand, I don’t expect premiums to go down one iota. Plus, by requiring insurance companies to charge the same premiums regardless of age or health (5), you will punish those living responsibly with higher premiums in order for everyone to be on the same playing field. As for SCHIP, the last thing our overburdened health care system needs is to start subsidizing the health care of upper middle-class families, 77% of which already have coverage for their kids (6).
Barack Obama
Senator Obama’s website has a lengthy outline of plans. The heart of his plan is creating a new national health plan that people can buy into so they can receive affordable health coverage. Nobody would be turned away, and this plan will be similar in style to the Federal Employees Health Benefits Program. He stresses it will be easy to enroll in, with simplified paperwork. Senator Obama also wants to create a National Health Insurance Exchange, which would assist individuals in purchasing insurance and require providers to offer benefits comparable to his new national plan (7). His website includes a lot more information, but these above points look to be the distinguishing features he is running on.
Be leery of politicians promising new federal health care programs that will rein in costs. The government underestimated what the costs of Medicare Part A would be from its inception to 1990 by 165 %, and underestimated the growth of Medicare’s hospital program during the same time period by over $57 billion (8). Likewise, the Bush administration was busy concealing the higher costs of the Medicare prescription drug benefit (9). The fact that Senator Obama does not, on his website anyway, estimate a cost for his national health plan should make voters skeptical. Also relevant to his national plan is that it requires a mandated benefit, similar to the FEHBP. Since mandated benefits already add an extra 20-50% (10) to health insurance premiums, expect this mandate to do likewise, and if history is an accurate judge since we’re dealing with government, even higher. As for simplified paperwork? Please.
Also, I don’t understand the need to use taxpayer dollars to create a health insurance exchange. Organizations such as the National Association of Health Underwriters already exist to perform the functions Senator Obama talks about for his exchange. Plus, by demanding the insurance offered in his exchange has FEHBP-esque benefits not only risks adding to the costs discussed above, but also tells the consumer they are not smart enough to pick a plan that suits their own needs. This program looks to be absolutely unnecessary, and not something we should ask taxpayers to finance.
John Edwards
At least Senator Edwards doesn’t sugarcoat the issue. His website states that after providing all sorts of subsidies and an Obama-style “Health Care Market” to help you find affordable coverage, he will require Americans to get health insurance. According to his November 28 statement on health care, those who refuse to buy health insurance will have their wages garnished and have collection agencies hounding them (11). What a nice guy, standing up for working-class Americans by threatening them with collection agencies.
Senator Edwards also mandates you seek preventive care (12). Apparently he’s not content with the doctor-patient relationship, as he feels the needs to tell you what is best for your health, despite the fact that the US Preventive Health Services Task Force doesn’t recommend annual exams, and despite the fact that these exams are adding to the escalating costs of health care and are preventing doctors from treating those who truly are sick (13).
Basically, the Democrats don’t have much faith that you will survive without the government’s help, regardless of whether or not that help ends up exasperating the problems they claim will be fixed.
As for what the top-tier Republicans offer:
Mitt Romney
Per Governor Romney’s website, he wants the states to lead in finding solutions for our rising costs and finding coverage for the uninsured. He believes deregulating the insurance industry is a key to lowering costs, along with ending frivolous lawsuits and eliminating the special tax-treatment afforded to employer-sponsored health insurance, presumably by allowing premiums paid for insurance outside of the employer plan to be deducted from your taxable income (14).
I have no problem with deregulating the insurance industry, as long as that means allowing traditional indemnity insurance plans to be on the same regulatory field as third-party health insurance. I’d like to know if that is what Governor Romney means, or if he means lowering the regulatory burden on only the third-party payers. If it’s only done for the third-party providers, that’s not exactly true free-market reform like he speaks of. As for the tax deductions, if we’re going to maintain our complicated tax code as it is, then I agree with Romney’s rationale on allowing further deductions for health care. However, shouldn’t the goal be simplifying the tax code, be it with a low flat rate that doesn’t call for taxpayers to spend time and money figuring out their deductions? Too many politicians from both parties want to use the tax code to “encourage” you to make the decisions they want. Clearly Romney wants you to buy health insurance, regardless of whether you want to or not. While his approach does not have the heavy-handedness of Senators Clinton or Edwards, it further entrenches third-party health insurance into our health care system, and it will make any meaningful tax reform nearly impossible.
Rudy Giuliani
Mayor Giuliani is campaigning on his “12 Commitments,” of which health care comes in at number seven, stating he wants increased competition, reformed tax treatment for health care, expanding health-savings accounts, encouraging the states to innovate, and reforming the legal system (15). This is basically Romney’s approach, so the same concerns with Romney’s plans apply here also.
This leads into the debate going on between these two about changing positions on issues. Can either of these two be trusted to pursue free-market reforms for health care, or will they “flip-flop” on health care once the primaries are over, or once either of these two, if elected, has to work with the Democrats. Giuliani has accused, with accuracy in my viewpoint, Romney’s health insurance mandate that passed in Massachusetts to be another version of HillaryCare. What’s to say Romney won’t negotiate a similar “reform” when faced with a Democratic-controlled Congress? Furthermore, if Giuliani can change positions on guns, abortion, and gays, what’s stopping him from changing his mind about health care?
Mike Huckabee
Governor Huckabee reiterates the same points Romney and Giuliani make about the states being innovators, allowing individuals to deduct health insurance from taxes, and the need for free-market reform (16). So again, the same questions for Romney and Giuliani apply to Huckabee, with a special emphasis on the tax issue for Huckabee, since he also is campaigning on the idea of eliminating the federal income tax entirely. He can’t have it both ways.
Huckabee does touch upon something important on his website, and that is the idea that the ones consuming health care are not the ones paying for it. Despite the fact that individuals are spending more out-of-pocket for their health care, they are paying less and less for the total costs. Our current dysfunctional third-party system is encouraging this inflationary result (17).
The solution is to end the tax-favoritism given to employer-based third-party payer health insurance, and also to end the regulations that keep indemnity health insurance from being an affordable option for people. The result would be that individuals take more responsibility for shouldering the costs of their own health care expenses. If they don’t, however, the never-ending cycle continues upward, and individuals will end up paying more and more out of their own pockets anyway. By taking more responsibility of what they pay, consumers will be forced to be more cost-conscious, and that is the first step to get health care spending under control.
This is not to say there isn't room for people to purchase catastrophic coverage, or even to rid our health care system of third-party health insurance. It's just once everything is on a level playing field, individuals can best choose for themselves the kind of coverage they need. Plus, with everything on a level playing field, insurance companies will then be in an environment where real competition exists for them to attain and retain customers.
Despite some good things Governor Huckabee says on his website, his history of tax-and-spend policies make it unlikely that he’ll be the man to bring about the needed reforms our health care system is in dire need of.
Final prognosis: the Democrats front-runners don’t even touch upon the reforms needed; the Republicans front-runners touch upon it a little, but their history doesn’t reveal any reason to believe they’ll deliver. Better luck in 2012.
1. http://www.hillaryclinton.com/feature/healthcareplan/
2. http://www.cnn.com/2007/POLITICS/09/17/health.care/index.html
3. “100 Years of Market Distortions” by Greg Scandlen
4. http://www.chcf.org/documents/insurance/HealthCareCosts07.pdf
5. http://www.cato.org/pub_display.php?pub_id=8736
6. http://www.cato.org/pub_display.php?pub_id=8751
7. http://origin.barackobama.com/issues/healthcare/
8. Medicare’s Midlife Crisis by Sue Blevins, pg 55
9. http://www.cato.org/pub_display.php?pub_id=3700
10. http://www.cato.org/pubs/policy_report/v29n5/cpr29n5-1.html
11. http://johnedwards.com/issues/health-care/20071128-health-care-mandate/
12. http://abcnews.go.com/Politics/CancerPreventionAndTreatment/wireStory?id=3551321
13. http://www.triplicate.com/news/story.cfm?story_no=6051
14. http://www.mittromney.com/Issues/healthcare
15. http://article.nationalreview.com/?q=NDA1ZGZmOGU1OTE1ZmQ4NDE5YzQyYzM3NzFjYjc1YzU=
16. http://www.mikehuckabee.com/?FuseAction=Issues.View&Issue_id=8
17. http://www.kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=11820
Hillary Clinton
Senator Clinton, it should come as no surprise, is making health care her top priority. Her website says she is “offering more choices and lowering costs” with her plan. She plans to offer working families tax credits to help cover the costs of their premiums, plans to stop insurance companies from denying you coverage for a pre-existing condition (“no discrimination”), and says you’ll keep your health care if you lose your job. In addition, Senator Clinton says she’ll offer small businesses tax credits for providing health care, and claims insurance companies will have to compete for your business while reiterating that she’ll prevent them from denying you coverage. For good measure, she pats herself on the back for creating the SCHIP program (1).
There’s one big thing in here that she is leaving out, and it’s not mentioned on her website. Under Clinton, health insurance is mandatory (2). One of the big reasons health care costs have spiraled out of control is government regulatory manipulations that have forced third-party payer health insurance on this country. By allowing third-party payers such as Blue Cross to organize outside of the regulations that applied to other insurance companies (ones that indemnified the insured against a loss), giving them lower reserve requirements, and by providing a tax break only for employer-sponsored third-party health insurance (but not for individual coverage) (3), this type of insurance became the norm in our country. Because of this, and laws such as the 1973 HMO Act that mandated employers with at least 25 employees to offer health insurance, many companies offered health insurance in lieu of higher wages. Since health care consumers were now shielded from the costs of their health care, demand went up. With increased demand, costs skyrocketed. Out-of-pocket spending per capita went from $170.00 per capita in 1970 to $840.00 per capita in 2005, even though a person’s share of those costs went down during that time period from roughly 40% to 15% (4). This is the system Senator Clinton wants to entrench even further by mandating Americans get trapped into this vicious cycle of soaring health care costs.
She claims insurance companies will have to compete for your business, which would lower costs. Since the laws right now don’t allow you to shop out-of-state for health insurance, and considering the fact by mandating health insurance you’re creating an artificial demand, I don’t expect premiums to go down one iota. Plus, by requiring insurance companies to charge the same premiums regardless of age or health (5), you will punish those living responsibly with higher premiums in order for everyone to be on the same playing field. As for SCHIP, the last thing our overburdened health care system needs is to start subsidizing the health care of upper middle-class families, 77% of which already have coverage for their kids (6).
Barack Obama
Senator Obama’s website has a lengthy outline of plans. The heart of his plan is creating a new national health plan that people can buy into so they can receive affordable health coverage. Nobody would be turned away, and this plan will be similar in style to the Federal Employees Health Benefits Program. He stresses it will be easy to enroll in, with simplified paperwork. Senator Obama also wants to create a National Health Insurance Exchange, which would assist individuals in purchasing insurance and require providers to offer benefits comparable to his new national plan (7). His website includes a lot more information, but these above points look to be the distinguishing features he is running on.
Be leery of politicians promising new federal health care programs that will rein in costs. The government underestimated what the costs of Medicare Part A would be from its inception to 1990 by 165 %, and underestimated the growth of Medicare’s hospital program during the same time period by over $57 billion (8). Likewise, the Bush administration was busy concealing the higher costs of the Medicare prescription drug benefit (9). The fact that Senator Obama does not, on his website anyway, estimate a cost for his national health plan should make voters skeptical. Also relevant to his national plan is that it requires a mandated benefit, similar to the FEHBP. Since mandated benefits already add an extra 20-50% (10) to health insurance premiums, expect this mandate to do likewise, and if history is an accurate judge since we’re dealing with government, even higher. As for simplified paperwork? Please.
Also, I don’t understand the need to use taxpayer dollars to create a health insurance exchange. Organizations such as the National Association of Health Underwriters already exist to perform the functions Senator Obama talks about for his exchange. Plus, by demanding the insurance offered in his exchange has FEHBP-esque benefits not only risks adding to the costs discussed above, but also tells the consumer they are not smart enough to pick a plan that suits their own needs. This program looks to be absolutely unnecessary, and not something we should ask taxpayers to finance.
John Edwards
At least Senator Edwards doesn’t sugarcoat the issue. His website states that after providing all sorts of subsidies and an Obama-style “Health Care Market” to help you find affordable coverage, he will require Americans to get health insurance. According to his November 28 statement on health care, those who refuse to buy health insurance will have their wages garnished and have collection agencies hounding them (11). What a nice guy, standing up for working-class Americans by threatening them with collection agencies.
Senator Edwards also mandates you seek preventive care (12). Apparently he’s not content with the doctor-patient relationship, as he feels the needs to tell you what is best for your health, despite the fact that the US Preventive Health Services Task Force doesn’t recommend annual exams, and despite the fact that these exams are adding to the escalating costs of health care and are preventing doctors from treating those who truly are sick (13).
Basically, the Democrats don’t have much faith that you will survive without the government’s help, regardless of whether or not that help ends up exasperating the problems they claim will be fixed.
As for what the top-tier Republicans offer:
Mitt Romney
Per Governor Romney’s website, he wants the states to lead in finding solutions for our rising costs and finding coverage for the uninsured. He believes deregulating the insurance industry is a key to lowering costs, along with ending frivolous lawsuits and eliminating the special tax-treatment afforded to employer-sponsored health insurance, presumably by allowing premiums paid for insurance outside of the employer plan to be deducted from your taxable income (14).
I have no problem with deregulating the insurance industry, as long as that means allowing traditional indemnity insurance plans to be on the same regulatory field as third-party health insurance. I’d like to know if that is what Governor Romney means, or if he means lowering the regulatory burden on only the third-party payers. If it’s only done for the third-party providers, that’s not exactly true free-market reform like he speaks of. As for the tax deductions, if we’re going to maintain our complicated tax code as it is, then I agree with Romney’s rationale on allowing further deductions for health care. However, shouldn’t the goal be simplifying the tax code, be it with a low flat rate that doesn’t call for taxpayers to spend time and money figuring out their deductions? Too many politicians from both parties want to use the tax code to “encourage” you to make the decisions they want. Clearly Romney wants you to buy health insurance, regardless of whether you want to or not. While his approach does not have the heavy-handedness of Senators Clinton or Edwards, it further entrenches third-party health insurance into our health care system, and it will make any meaningful tax reform nearly impossible.
Rudy Giuliani
Mayor Giuliani is campaigning on his “12 Commitments,” of which health care comes in at number seven, stating he wants increased competition, reformed tax treatment for health care, expanding health-savings accounts, encouraging the states to innovate, and reforming the legal system (15). This is basically Romney’s approach, so the same concerns with Romney’s plans apply here also.
This leads into the debate going on between these two about changing positions on issues. Can either of these two be trusted to pursue free-market reforms for health care, or will they “flip-flop” on health care once the primaries are over, or once either of these two, if elected, has to work with the Democrats. Giuliani has accused, with accuracy in my viewpoint, Romney’s health insurance mandate that passed in Massachusetts to be another version of HillaryCare. What’s to say Romney won’t negotiate a similar “reform” when faced with a Democratic-controlled Congress? Furthermore, if Giuliani can change positions on guns, abortion, and gays, what’s stopping him from changing his mind about health care?
Mike Huckabee
Governor Huckabee reiterates the same points Romney and Giuliani make about the states being innovators, allowing individuals to deduct health insurance from taxes, and the need for free-market reform (16). So again, the same questions for Romney and Giuliani apply to Huckabee, with a special emphasis on the tax issue for Huckabee, since he also is campaigning on the idea of eliminating the federal income tax entirely. He can’t have it both ways.
Huckabee does touch upon something important on his website, and that is the idea that the ones consuming health care are not the ones paying for it. Despite the fact that individuals are spending more out-of-pocket for their health care, they are paying less and less for the total costs. Our current dysfunctional third-party system is encouraging this inflationary result (17).
The solution is to end the tax-favoritism given to employer-based third-party payer health insurance, and also to end the regulations that keep indemnity health insurance from being an affordable option for people. The result would be that individuals take more responsibility for shouldering the costs of their own health care expenses. If they don’t, however, the never-ending cycle continues upward, and individuals will end up paying more and more out of their own pockets anyway. By taking more responsibility of what they pay, consumers will be forced to be more cost-conscious, and that is the first step to get health care spending under control.
This is not to say there isn't room for people to purchase catastrophic coverage, or even to rid our health care system of third-party health insurance. It's just once everything is on a level playing field, individuals can best choose for themselves the kind of coverage they need. Plus, with everything on a level playing field, insurance companies will then be in an environment where real competition exists for them to attain and retain customers.
Despite some good things Governor Huckabee says on his website, his history of tax-and-spend policies make it unlikely that he’ll be the man to bring about the needed reforms our health care system is in dire need of.
Final prognosis: the Democrats front-runners don’t even touch upon the reforms needed; the Republicans front-runners touch upon it a little, but their history doesn’t reveal any reason to believe they’ll deliver. Better luck in 2012.
1. http://www.hillaryclinton.com/feature/healthcareplan/
2. http://www.cnn.com/2007/POLITICS/09/17/health.care/index.html
3. “100 Years of Market Distortions” by Greg Scandlen
4. http://www.chcf.org/documents/insurance/HealthCareCosts07.pdf
5. http://www.cato.org/pub_display.php?pub_id=8736
6. http://www.cato.org/pub_display.php?pub_id=8751
7. http://origin.barackobama.com/issues/healthcare/
8. Medicare’s Midlife Crisis by Sue Blevins, pg 55
9. http://www.cato.org/pub_display.php?pub_id=3700
10. http://www.cato.org/pubs/policy_report/v29n5/cpr29n5-1.html
11. http://johnedwards.com/issues/health-care/20071128-health-care-mandate/
12. http://abcnews.go.com/Politics/CancerPreventionAndTreatment/wireStory?id=3551321
13. http://www.triplicate.com/news/story.cfm?story_no=6051
14. http://www.mittromney.com/Issues/healthcare
15. http://article.nationalreview.com/?q=NDA1ZGZmOGU1OTE1ZmQ4NDE5YzQyYzM3NzFjYjc1YzU=
16. http://www.mikehuckabee.com/?FuseAction=Issues.View&Issue_id=8
17. http://www.kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=11820
Print
Email
