With Hillary Clinton leading the Democratic fund-raising race, it’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 another’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 candidate’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 (today’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 “spend-down,” 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 individual’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 insurers’ 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.
Article comments
— go to most recent comments1 - Dr Dreadful
"It is hard to imagine a Single Payer system working effectively in a country as large as the United States."
Too true. A more realizable approach would be to allow the states to introduce such systems if a majority of their residents wanted them to.
I'm in a position to appreciate both sides of the argument because I grew up under a socialized healthcare system in the UK. It is nice not to have to worry about bills and copays for everything. The overall standard of service may not be as high, although as in the US, it is to a certain extent a matter of luck: some doctors, some hospitals, some clinics are just better than others. But you don't necessarily need the best care in the world if all you need is a shot or a prescription. There is also the option of taking out private healthcare if you're unwilling to deal with crowded hospitals and surgical waitlists.
The difference has been acutely noticeable for me this year, as I and my wife have needed a lot of minor medical procedures: even with insurance, the out of pocket cost is painful.
Still, can always claim them as a tax deduction.
P.S. Editors, can anything be done about the particularly odious troll who is posting under various aliases on the "BBC Journalist Abducted in Gaza" thread?
2 - Clavos
Doc sez,
"Still, can always claim them as a tax deduction."
Only that portion of them that exceeds 7.5% of your AGI is deductible.
For most middle income taxpayers without serious illness in the family, that essentially means no deduction.
3 - Dr Dreadful
7.5%: We're getting there, Clav. We're still both young (-ish, in my case!) and healthyish, so this is being a bit of a freaky year. We've been making a concerted effort to finally get the various health niggles that have been concerning us addressed; unfortunately, this seems to have encouraged a few previously unknown niggles to get in on the act as well. We're not exactly at death's door, but it all mounts up!
Hopefully, by this time next year things will have settled down and we'll be back to our normal nauseatingly healthy selves.
As will your wife and yourself, I hope.
4 - Clavos
here is the abstract of a proposal for a single payer national healthcare system by an organization named Physicians For A National Health Plan:
"Abstract:
Our health care system is failing. Tens of millions of people are uninsured, costs are skyrocketing, and the bureaucracy is expanding. Patchwork reforms succeed only in exchanging old problems for new ones. It is time for basic change in American medicine. We propose a national health program that would (1) fully cover everyone under a single, comprehensive public insurance program; (2) pay hospitals and nursing homes a total (global) annual amount to cover all operating expenses; (3) fund capital costs through separate appropriations; (4) pay for physiciansÕ services and ambulatory services in any of three ways: through fee-for-service payments with a simplified fee schedule and mandatory acceptance of the national health program payment as the total payment for a service or procedure (assignment), through global budgets for hospitals and clinics employing salaried physicians, or on a per capital basis (capitation); (5) be funded, at least initially, from the same sources as at present, but with payments disbursed from a single pool; and (6) contain costs through savings on billing and bureaucracy, improved health planning, and the ability of the national health program, as the single payer for services to establish overall spending limits. Through this proposal, we hope to provide a pragmatic framework for public debate of fundamental health-policy reform. (N Engl J Med 1989; 320: 102-8.)"
The full plan is available here.
I think it makes a lot of sense.
5 - Lumpy
I have enough medical expenses to deduct some years, but the standard deduction is so hi that even so it's hard to exceed it, and i'm sure that my medical expenses are high even for someone much older, though I no longer have operations every year.
As far as the problem and a solution, the thing which troubles me about the current system is not the uninsured who mostly choose not to be insured. I worry about those with preexisting conditions who cannot get coverage or can't get it at a fair price.
6 - Clavos
Thanks, Doc.
We have unfortunately been able to take substantial deductions for medical expenses for about three years now.
7 - Lumpy
The point being that what we need is not single payer, but some regulation to get coverage for those who can't get it and an expansion of medicaid for those who truly can't afford insurance.
It doesn't seem right to charge everyone for the irresppnsibility of more than half of the uninsured who could afford insurance but would rather buy lottery tickets or a widescreen tv. Let 'em die.
8 - Clavos
You make a good point, Lumpy, but we ARE paying for 'em now, one way or another.
Either we pay higher taxes, or higher premiums and deductibles, or a combination, but those people's health care gets paid sooner or later, and usually is more costly because they've neglected it for so long.
9 - STM
Use the Aussie method, you dopey buggers.
It's tried, tested - and much loved. If it can work here, it can work anywhere.
10 - Clavos
If I'm not mistaken, it's a single payer system.
Right, Stan?
11 - Dr Dreadful
Quiet, Stan, for goodness' sake! If Howard sees this, he'll want to abolish it! I don't know how he's missed the Aussie health service so far. Probably because he never uses it, since none of the doctors are trained in gnome anatomy.
12 - STM
Well Doc, I believe he has had some kind of bizarre surgical or medical proceedure, as his top lip never moves when he speaks.
Clav, yes ... a single pay system, with the Government the major fee provider. However, the private-health insurance industry is big too, and most people have it so they can choose which hospital they go, which doctor they have, etc.
Under that, Medicare pays the bulk of everything, and then your health fund makes up the difference so you're never out of pocket. The funds also cover hospital accommodation in a private hospital if that's how you choose to go, but the doctors are paid by Medicare and then the funds top up on your out-of-pocket stuff. There are also financial safety nets for everyone, so that if you require a big annual expense on medicine/proceedures, when you hit a certain amount there is nothing to pay at all. It's so popular here, no government would dare tinker with it too much unless they want to remain in the political wilderness for decades. It just covers all the bases, and works really well. The funds also offer heaps of extraneous services, which has created work. I get a tax break too for having private cover as I'm categorised as a high-income earner (Lol. I'd like to know how they worked out the fu.king criteria on that)
My wife is a RN in the heart/lung transplant unit at St Vincent's, one of the world's pioneering cardio-thoracic set ups. The quality of care is excellent.
No patient at Vinnies need pay a cent, regardless, and everyone's on the same waiting list if they need a transplant. The public hospitals are administered by the State Govt, and all in all, whilst not perfect, they are pretty damn good.
13 - Yabosi
Clavos,
I took a look at the proposal for universal healthcare, and it really says very little. Implementation details are sparse. It's a suggestion not a plan.
I think that in a smaller country a single payer system can work, but in a nation with 300M people that lacks competent management in government, it is likely to turn into a corrupt, welfare-like system.
As bad as our system is, I think that allowing the Government to manage a network of independent healthcare providers would only make things worse.
Yabosi
14 - Arch Conservative
All this talk of a universal system........
There are two very easy things we could do before we even get to that bridge that would drastically reduce the costs of our individual healthcare.....
1. Make it legal for every single provider in this nation to refuse all but immediate life saving care to anyone who cannot provide proof of citizenship
2. We must all change our diet/exercise/lifestyle habits to ensure that we each take a more preventative proactive approach to our own health thereby reducing the number of health problems that will arise for each of us down the road.
It's not rocket science folks.......
15 - Doug Hunter
Universall healthcare is a complicated subject which I have mixed feelings. I already have good healthcare at less than $100/mo. With universal care my taxes will go up way more than that and then our services will be stressed and backed up to the point where I get worse care.
Like most socialist policies it rewards the unproductive and unfortunate at the expense of the responsible and hard working. A safety net is great if you fall, but a weight dragging you down if your trying to improve your lot in life.
16 - NMS
"It is hard to imagine a Single Payer system working effectively in a country as large as the United States."
Have you ever heard of Medicare, the single-payer program that ALREADY takes care of all the oldest and sickest residents of the United States?
17 - SteveS
A single payer system probably wouldn't work in a nation full of people who have to go to the doctor for every cut or cramp, nevertheless it is the only solution and we just have to learn to weather most illnesses. The human body is very hardy if it isn't drowning in blubber. Many of us forget that.
18 - Yabosi
NMS,
Medicare is an example of why we should NOT attempt implement a single payer system on a mass scale.
Benefits can be limited and often only cover a portion of the total cost. Additionally, there are procedures that may not be covered in all cases.
Let's not forget that it's poorly managed.
Elderly people who have their own long-term healthcare or personal insurance plans generally get better care.
Also don't forget that even with Medicare, co-pays can get expensive for a long-term hospital stay, and in some cases will still pay as much as 20% of the cost of their services as a deductable.
It's true that people can buy MediGap insurance to help with these potentially high deductables, but that's still private insurance.
Lastly, keep in mind that the ratio of people paying FICA to Medicare users is dropping with our aging population so there is no guarantee that Medicare can stay in business without a substantial tax hike.
Right now, we pay 2.9% of our income (1.45% out of our paycheck and 1.45% in price increases that cover the employer's half of the 2.9%) and still need private insurance.
Yabosi
19 - Yabosi
NMS,
First, forgive me if this is a repeat of a similar response; my internet connection acted up a bit so this may appear twice.
"Have you ever heard of Medicare, the single-payer program that ALREADY takes care of all the oldest and sickest residents of the United States?"
Medicare can have some very high co-pays for long hospital stays and for some procedures/situation the co-pay can be as high as 20%. Of course there is MediGap insurance, but that is provided by private insurers. So, Medicare is not really a single payer system; the government is one of many payers even though Medicare was originally theorized as a single-payer system.
Don't forget that the number of Medicare users is rising faster than the number of FICA contributors, so there is no guarantee that Medicare will remain solvent without a large tax increase at some point in the future. This is another reason Medicare is an example of why we should NOT attempt to implement a single-payer system.
Lastly, keep in mind that Medicare can be severely limited as to what it covers, depending on what facilities are in your area. I'd rather put my 2.9% (yeah if you're self-employed you pay the entire 2.9%, rather than 1.45% that is matched by the employer - I could write an entire article on why self-employment taxes are a rip...) into a tax-deferred healthcare savings account and grow the fund myself rather than have the Gov. do it for me.
Yabosi
20 - Zedd
Yabosi
Your solution is not a solution for the bulk of people who are not insured currently.
Start up entrepreneurs often cant afford insurance. The unemployed with some savings beyond the medicaid limit (a little over nothing) don't fit. People who work for non profits or small companies. People who work part-time. Those are your uninsured. How does your plan fix that.
Perhaps I didn't read your article properly. I speed read it.
21 - Yabosi
Zedd,
"Perhaps I didn't read your article properly. I speed read it." - That's true...
I don't propose a specific solution to the healthcare problem, other than to say that creating more bureaucracy is not one, and that creating a single-payer system for a nation of 300M is not likely to work.
I suggest that a form of open competition be kept, with tax credits for insurers and employers who provide low cost individual insurance programs and employers who insure part-time employees. That's not a detailed solution but simply an approach that I believe is more favorable than either single-payer or managed competition.
Tax incentives if set up correctly have a better chance of making insurance affordable with better quality than building a huge socialistic infrastructure.
Yabosi
22 - Sir Cumstishen
Stems cells couldn't save Terri Schiavo but health insurance can't save America.
23 - Zedd
Yabosi
I suppose what I was thinking is that the problem with health care is not how its organized, its that there are Americans who don't have coverage at all and cant AFFORD insurance.
How does your article contribute anything to the discussion on health care.
24 - Yabosi
Zedd,
Exactly my point. If insurers had some incentive to provide reasonably priced packages to people who currently can't afford it then some may consider doing so. Tax breaks may be an incentive. Ditto for employers who currently choose not to provide insurance to part-time help.
In the end the taxpayers would foot the bill to make up for the tax credits, but it would be far more cost-effective than building an unwieldy socialistic infrastructure.
As for whether my article contributes anything to the discussion, I leave that up to the reader. Some will find that it does while others will believe that it doesn't.
Although you appear to be in the latter category, I suppose that I can forgive you :).
Yabosi
25 - bliffle
"If insurers had some incentive to provide reasonably priced packages to people who currently can't afford it then some may consider doing so."
Doesn't figure. The government subsidy would have to be much bigger than the premiums. For example, to subsidize an insurance company to provide insurance at a premium cost of $100/mo. for an illness that costs $1000/mo. would cost $900/mo. More, actually, since they operate at a margin of about 30-40% it would cost more like $1500. Not a good economic model.
Any private insurance company will always have incentive to terminate people as soon as they change from premium-payers to sick people.
It may be that the whole idea of tax incentives has been exhausted and is no longer workable. Incentives only work when a small amount of incentive produces a big effect. It shouldn't be used as a subsidy.