Cost Containment, Individual Mandates, and Free Choice - Too Good to be True?
[See a comparison of the Giuliani and Clinton plans at Clinical Correlations.]
Hillary Clinton's health care plan is only a few pages long, but the difference between a health care plan and a piece of legislation is the difference between a paper airplane and a space station. Let's look at some of the details of her plan and see where complications might ensue. Clinton's proposed plan would require every individual to choose an insurance plan of some kind. Anyone could keep their current insurance if they were satisfied with it. If they weren't satisfied, two choices would be available: one a menu of private options offering the same benefits as the health insurance that members of Congress are provided with, the other a public plan similar to Medicare. Tax credits would be offered to working families to make it easier for them to afford insurance. How would this be paid for? One answer of Clinton's is a traditional claim of politicians from time immemorial: savings will be achieved through eliminating waste, fraud, and abuse - but with additional savings from the use of medical informatics.
The details aren't spelled out, and those are where the complications come in. (The following discussion owes a great deal to the blog Health Care Policy and Marketplace Review.) Through the two insurance options envisioned by Clinton - a private menu offering the same benefits as those available to members of Congress, and a government-run insurance plan similar to Medicaid - the government would do two things: establish an individual mandate (i.e., requirement) for health insurance - everybody would have to purchase some - and, second, place the government in direct competition with the private sector. How this competition would be legally implemented, and which side the eventual legislation would favor, is impossible to know. Clinton also promises a reduction in premiums. This will happen only if the promised reductions in waste, and increases in efficiency, translate into greater savings for the healthcare "consumer." Neither of these are guaranteed. In particular, Clinton mentions two routes to cutting costs which are trickier than one might imagine: preventive care and information technology. Preventing, you'd think, is cheaper in the long run than treating, and electronic medical records are cheaper than paper. But neither assumption has been borne out by the literature. (A third often proposed salvation, pay for doctors' performance, or for positive outcomes, is just as difficult - but it's not among Clinton's proposals.)
I mentioned earlier one of the key provisions of Clinton's plan: an individual mandate for health insurance. This is paired with other requirements that other participants in the system must follow. To quote:
- Insurance and Drug Companies: insurance companies will end discrimination based on pre-existing conditions or expectations of illness and ensure high value for every premium dollar; while drug companies will offer fair prices and accurate information.
- Individuals: will be responsible for getting and keeping insurance in a system where insurance is affordable and accessible.
- Providers: will work collaboratively with patients and businesses to deliver high-quality, affordable care.
- Employers: will help finance the system; large employers will be expected to provide health insurance or contribute to the cost of coverage; small businesses will receive a tax credit to continue or begin to offer coverage.
- Government: will ensure that health insurance is always affordable and never a crushing burden on any family and will implement reforms to improve quality and lower cost.
What "fair prices," "high quality," and "large employers" are taken to mean has been a source of debate even before the first Clinton health plan. How will affordable coverage be mandated when some estimates place the cost of family health coverage at $12,000 per year? If twenty-five employees is the cutoff definition for "large business" (as the Clinton campaign has indicated), what would smaller businesses be required to provide?
The two other pillars of Clinton's proposal are making health care affordable and fiscal responsibility. Health care affordability would be made possible by tax credits for families and for small employers, and for limiting the cost of premiums as a percentage of income. Affordability in this case means - affordable for the end consumers of health care, individuals or employers. This is different from affordability for the Payer of all Payers, the federal government, and, by extension, the individual taxpayer.
What about fiscal responsibility? The Clinton plan predicts that "most savings [will] come through lowering spending due to quality and modernization." As Robert Laszewski of the Health Care Policy blog says, this could be Clinton's most dangerous assumption. If quality and modernization cannot ensure savings by themselves, (a much safer assumption), if providers and payers cannot agree on cost-limiting measures, if more taxes on the higher brackets (i.e. the rich) will not be enough to balance the books (as Clinton assumes), what will happen to the Clinton plan?
Laszewski points out that "from thirty thousand feet," all Democratic healthcare plans look the same: lots of new spending to guarantee access for all Americans to some sort of health care plan, whether public, private, or in between. Republican plans, for their part, tend to invoke individual mandates, a vibrant free market of competing health care choices, and technological efficiency. Informed consumers with the proper incentives would know to allocate their resources efficiently. (Whether Medicare Part D proves this assumption is open to question.) If Clinton's health plan stakes out a centrist position in between these two, in what direction will the "sausage factory" of legislation push the finished product? We'll see . . . if she gets that far.