Democrat’s health care plans have differences

23. February 2008 by Jon Moss.

NY Times article illustrates some of the differences between Clinton’s & Obama’s healthcare reform ideas:

 Brandy Coons is what health economists call a free rider.

She may not fully appreciate it, but her decision to go without health insurance , like millions of similarly situated Americans, has become central to the pre-eminent policy dispute of the Democratic presidential campaign.

Ms. Coons, a 23-year-old waitress who rents a room and rarely eats out, said she could probably afford a high-deductible policy if she gave up her gym membership and spent less on her amateur photography. But she chooses instead to gamble against the odds of confronting a bankrupting catastrophe.

“I’m young and in pretty good shape,” Ms. Coons said one recent afternoon, on her way to the treadmill at the Fitness Factory in Midtown Atlanta. “I looked at Blue Cross Blue Shield. But the only thing I could see myself really needing it for are prescriptions and dental because there are so many free clinics, or a hospital visit really isn’t all that expensive.”

She continued, “The insurance premium was more than what I would pay for my prescriptions, so I just decided not to deal with it.”

Senator Hillary Rodham Clinton contends that the only way to achieve universal health coverage, and to make the marketplace fair and efficient, is to require that everyone have insurance. That would include people like Ms. Coons, who may not currently rank health care above other needs and wants.

Senator Barack Obama , Mrs. Clinton’s rival for the Democratic presidential nomination, shares her goal of insuring all Americans. But he says that a mandate could mean financial devastation for middle-class families if the government did not first adequately reduce the cost of insurance.

Both candidates express confidence that by pumping at least $110 billion into subsidies and tax credits they can make policies affordable for all. The difference is that Mr. Obama insists he will be able to lure all of the uninsured simply by dangling the carrot of low premiums; Mrs. Clinton believes there will always be some free riders who respond only to a government stick.

Neither campaign has provided enough detail about its plan to enable more than guesswork about how it might influence consumers like Ms. Coons. They have not detailed what kind of subsidies would be needed or who would be entitled to them. Mrs. Clinton has not fully explained how she would make everyone comply with her plan or exactly how she would cap the amount a family would have to spend on premiums.

Each candidate would raise the money needed to subsidize premiums by rolling back President Bush’s tax cuts for high earners, taxing businesses that do not insure their workers and reducing costs through electronic record keeping, preventive medicine and chronic disease management.

But there is little certainty about how much those initiatives might save, or when. Nor can it be known if the savings would offset the potential cost of new technology and drugs and the cost of providing care to the newly insured. There are also questions about whether the new savings and tax increases would be enough to subsidize insurance for all who need help.

Both candidates are backed by teams of prominent economists from top universities and policy groups. But with little real-world precedent to guide them, their assessments are necessarily an amalgam of statistical modeling and back-of-the-envelope calculation.

“In a campaign, people put out proposals that aren’t highly specified, that don’t have enough detail to model them effectively,” said E. Richard Brown, director of the Center for Health Policy Research at the University of California, Los Angeles, and an Obama adviser. “These numbers are based on a lot of assumptions.”

In speeches, debates and dueling advertisements, Mrs. Clinton and Mr. Obama have brandished projections that even their originators acknowledge are tenuous.

Mrs. Clinton, for instance, has charged repeatedly that Mr. Obama’s plan would leave 15 million people uninsured. Doing so, she has said, amounts to Democratic apostasy. “I don’t want to leave anybody out,” she said in Thursday’s debate in Austin, Tex.

But the economist who devised that number, Jonathan Gruber of the Massachusetts Institute of Technology , said that while he felt strongly that a mandate was needed to achieve universal coverage, he was less firm about his projection. “There is a lot of margin for error around that estimate,” Mr. Gruber said.

Mr. Obama, meanwhile, maintains in a television advertisement that his plan will “cover everyone.” That claim is disputed by some of his own advisers, including Mr. Brown, who recently calculated that the Obama plan might leave behind two million free riders.

“That’s the number we would expect to continue to be uninsured unless they’re forced to buy coverage,” Mr. Brown said.

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