Hillarycare II: New and Improved

The health care primary, Part 4.

Candidate: When it comes to health-care reform, Hillary Clinton is the sadder-but-wiser girl. A decade ago, she tried to transform the way we pay for health care with a complicated “managed competition” plan. The best argument in its favor was that it probably wouldn’t work and that when it didn’t, the federal government would have an opportunity to take over. Today, Clinton advocates incremental reform. The best argument in its favor is that it probably won’t work and that when it doesn’t, the federal government will have an opportunity to take over. This time, though, the path to single-payer health insurance (shhhhhh!) seems a bit smoother.

Hillary Clinton

Elegance: As always, I must explain that this refers not to the elegance of the former first lady herself, who always dresses to the nines, but rather to her health-care plan. The plan consists not of one big idea but of various small ideas, most of them familiar. That renders the plan inelegant. On the other hand, as with John Edwards’ plan, Clinton’s would set some interesting (though unacknowledged) economic forces in motion. (See “Market gimmicks,” below.)

Market gimmicks: Clinton’s “American Health Choices Plan” is all about choices! If you’re happy with your health-care coverage, then you may keep it. This is wonderful news for the 12 people in the United States who are happy with their health-care coverage. Even these 12 (OK, maybe it’s 15) won’t necessarily remain happy with their private health insurer after the insurance lobby has a chance to wrestle to the ground new regulatory requirements included in Hillarycare II (see “Susceptibility to the insurance lobby,” below).

If you aren’t happy with your health-care coverage, now or later, you can opt for a private plan modeled on the one Congress has, which includes “mental health parity and usually dental coverage.”

Or you can choose a public plan similar to Medicare. Like John Edwards’ plan, Hillarycare II proposes a competition between private plans and a public plan that the public plan is foreordained to win, because public health care plans are superior to private plans. Bashing Clinton’s health-care plan in the Sept. 20 Wall Street Journal, Mitt Romney gripes (subscription required) that once a public plan is established, “[l]obbyists will go to town adding coverage mandates, setting rates and re-shaping plans to fit the wants of their clients.” This would be a refreshing change from the current practice, in which lobbyists persuade Congress to set the rules for private-option “Medicare Advantage” coverage so that private insurers run up bigger bills than Medicare does and then send those bills to … Medicare. That is not, I think, what Adam Smith had in mind.

It’s probably true that most of the time, public health-insurance programs (Medicare, Medicaid, the Veterans Administration, SCHIP) are more generous than private ones. But Romney fails to acknowledge that public health plans are typically more efficient economically than private health-care plans, too. Romney opposes a market test that allows consumers/taxpayers to choose between a public plan and various private plans because he knows the public plan will likely be both more generous and thriftier. The private sector may never recover from the humiliation.

Susceptibility to the insurance lobby: High. A regulatory component to Hillarycare II prevents insurers from screwing sick or elderly people by denying them insurance, refusing to renew their insurance, or charging them higher premiums. The insurance lobby would embrace these noble goals while quietly working to undermine them in Congress and in agency rulemaking. It would also make fast work of a vaguely defined provision forbidding the use of premiums for “excessive profits and marketing” as opposed to providing high-quality care.

Cost: $110 billion, but Clinton claims that this can be paid for by reining in unnecessary Medicare and Medicaid spending, allowing Medicare to negotiate drug prices, removing barriers to the introduction of generic drugs, instituting electronic recordkeeping (wouldn’t that raise costs, at least initially?), ending the Bush tax cuts for households earning more than $250,000, and ending the tax exclusion for employer-paid health insurance for households above $250,000. Is that really $110 billion? Beats me.

How universal? Everybody is required to have some sort of plan. As I’ve stated before, I don’t believe this can possibly be enforced. (“What are you in for?” “Forgot to buy health insurance.”) I even have my doubts whether it’s constitutional. So, the “my plan is more universal than your plan” taunt that Edwards and Clinton direct toward Obama is meaningless. The only way to make health insurance truly universal is for the public plan to enroll automatically every man, woman, and child, bypassing any sort of premium and funding the program with tax revenues.

How socialistic? Not enough for this pinko. (See above.) But it does contain the seeds of destruction for private health insurance, at least as configured today. I like that.

How disciplined? Only somewhat.Clinton pledges to end Medicare overpayments and unnecessary Medicare and Medicaid spending. She doesn’t really spell out what the latter means, but I presume she’s alluding to the phenomenon described in Shannon Brownlee’s excellent new book, Overtreated: Why Too Much Medicine Is Making Us Sicker And Poorer. The ultimate solution to this problem is to eliminate fee-for-service medicine and put doctors on salary, but no mainstream politician dare whisper that. I give Clinton points for outlining in detail where the money to pay for her program will come from, even though she’s probably overstating the savings. 

Impact on employers: As with Edwards’ and Obama’s plans, the system is pay or play. Private employers must either provide their workers with health insurance or pay into a fund to support public health insurance. I remain convinced that this is an unfair burden on commerce. One of the main reasons we’re even talking about health-care reform is that employer-based health insurance is a drag on the global competitiveness of U.S. companies, especially big rust-belt companies. Most other countries don’t make private industry pay for their employees’ health insurance. Clinton’s plan eases the burden for small businesses with a tax credit, but I say throw off the yoke entirely. Among other benefits, it might help get U.S. industry behind a single-payer solution. Why does no one see the necessity of having one or two right-wing reasons to nationalize health insurance? 

Longevity: Clinton’s plan says all the right things about computerizing health records and routinizing preventive care. But if the patchwork of public and private plans remains in place—I think it won’t—then insurers will remain fixated on procedures rather than patients as employers continue to shop around for the best plan. 

Health Care Primary Archive:
Aug. 2, 2007: “ Giuliani’s Tepid Health Reform
July 5, 2007: “
Edwardscare: An Elegant, Laudable Trojan Horse
July 1, 2007: Health Costs Screw Business, Too
June 19, 2007: ” Obamacare: Better Than It Looks
March 13, 2007: ” A Short History of Health Care
November 8, 2006: ” Time To Socialize Medicine
March 9, 2005: ” Socialized Medicine, Part 2
March 8, 2005: ” The Triumph of Socialized Medicine