With Hillary Clinton leading the Democratic fund-raising race, itâ€™s a sure bet that the issue of universal healthcare will come up. This will be controversial and confusing, as the candidates will blast one anotherâ€™s proposals and explain why only they can provide good and inexpensive healthcare for everyone. In the end, it is unlikely that anything will get done since a large enough proportion of each candidateâ€™s soft money contributions can be traced back to a PAC or individual with ties to the insurance industry. In any case, it will be entertaining watching the candidates attempt to differentiate themselves on this topic when all healthcare proposals may be placed into one of three general categories: Open Competition (todayâ€™s status quo), Managed Competition, or Single Payer.
Open Competition is the closest to what we have today. There are few or no limits on the number of insurers or the rates they can charge. There are state regulatory boards to weed out fraudulent businesses and ensure that insurers actually provide the services that they claim to. Health insurance is most often provided as a benefit to individuals by employers and the costs end up being passed on to the consumer.
Small and medium sized companies purchase policies from smaller insurers that may place limits on various types of medication and procedures. There is no requirement that an employer insure every employee and there are few safety nets for people without insurance, except in cases when people are very poor. An uninsured member of the middle class can sometimes receive state-sponsored benefits by doing a â€śspend-down,â€ť which entails disposing of most of his liquid assets by prepaying expenses like auto loans and rent. The benefit of Open Competition is that there little government interference with regard to an individualâ€™s healthcare choices, and for those who are insured, the quality of healthcare generally is good.
A form of Managed Competition is what Clinton proposed back in 1993. With Managed Competition, the government decides which companies may provide health insurance to the public and generally will require those companies to insure every citizen. Since insurers will have to provide some amount of free or very low cost benefits, they either will increase prices for their traditional customers (employers), reduce benefits, increase deductibles, or some combination of the three.
Of course, consumers will foot the bill for price increases and those who currently are insured are likely to suffer a reduction in benefits to make up for the insurersâ€™ losses from being required to insure those who cannot pay. An interesting side-effect is that insurance companies will have an even greater incentive to enrich politicians, in order to keep the rules in their favor. Clearly, the biggest winners from Managed Competition will be people like "Swillary" Clinton and the few insurers that are allowed to continue doing business.