Clinton, Obama Both Flawed On Health Care

In the middle of the mandate pie-fight (which just had a big ole can of gas dumped on it today by Paul Krugman), I think it's important for folks to understand that - mandates aside - there's still issues with both Hillary Clinton's and Barack Obama's health care plans that need to be addressed. I'm going to pick the big, blank area of each plan that leaves it open to attack, because my primary goal is to have a viable universal health care plan introduced by whoever wins the Democratic nomination (and then hopefully the presidency) as quickly as possible.

I suggest first off that folks read up on both of these plans.

Hillary Clinton's plan is here: http://www.hillaryclinton.com/feature/healthcareplan/americanhealthchoicesplan.pdf

Barack Obama's plan is here: http://www.barackobama.com/issues/pdf/HealthCareFullPlan.pdf

First off, a little housekeeping. I've read a number of threads on these health care plans and I've seen folks making the argument that the Clinton plan would force folks into private insurance. That is not the case - both the Clinton plan and the Obama plan have a public option. From page 6 of the Clinton plan (I'm retyping directly from the .pdf, my apologies for any typos):

In addition to the array of public choices offered, the Health Choics menu will also provide Americans with a choice of a public plan option, which could be modeled on the traditional Medicare program, but would cover the same benefits as guaranteed in private plan options in the Health Choices Menu without creating a new bureaucracy. The alternative will compete on a level playing field with traditional private plans.

Now, that being said, the big problem with Hillary's plan is that it is vague on regulation. With another politician this may be less of an issue, but as Hillary has a policy of taking lobbyist money (and has been pretty vocal on that subject), this leaves her plan - which includes mandates - more open to the charge that it's "putting money in the pockets of the insurance lobby". Regardless of the public option, folks will (and already have) drawn the connection between mandates and Hillary's friendly relations with Big Insurance. This is the language Hillary uses in her plan that speaks to how she would regulate insurers:

The plan creates rules that all insurers must follow, ensuring that no American is denied coverage, refused the renewal of an insurance policy, unfairly priced out of the market, or charged excessive insurance premiums. Health plans will compete on cost and quality rather than avoiding patients who need insurance the most.

snip

Require minimum stop loss ratios: Premiums collected by insurers must be dedicated to the provision of high quality care, not excessive profits and marketing.

In order for Hillary to answer critics she must put in more specifics on stop loss ratios. "Excessive" is in the eye of the beholder, and if she is mandating that all people opt into an insurance plan, folks have to know that this isn't one big scheme to fleece their already strained budgets to aid the profits of insurance companies. Being more specific on how she would cap insurance industry profits would go a long way to building consumer confidence in her plan.

Now, let's turn to Obama's plan. Although Obama could also be more specific on industry regulation (his plan mentions capping industry profits in certain markets that aren't competitive and removing caps in other markets that are more competitive, which frankly sounds pretty convoluted - see pages 9-10 of his .pdf), he has a much bigger problem that he hasn't dealt with yet: penalties.

From his interview on Meet The Press, December 30 (my emphasis added):

MR. RUSSERT: In terms of candor, you're running a political ad in Iowa and elsewhere about healthcare. And this is what the ad says. Here's the Obama ad. Let's watch.

(Videotape)

SEN. OBAMA: I've got a plan to cut costs and cover everyone.

(End videotape)

MR. RUSSERT: "Cover everyone." Every analysis of your healthcare plan says there are 15 million Americans who would not be automatically covered because you don't call for a mandate.

SEN. OBAMA: But, but, Tim...

MR. RUSSERT: Let me just give you a chance to respond. Ron Brownstein, who's objective on this, wrote this for the National Journal, and then we'll come back and talk about it. He says this: "Obama faces his own contortions. He commendably calls for building a broad healthcare consensus that includes the insurance industry. But in the states, the individual mandate has been critical in persuading insurers to accept reform, including the requirement" "they no longer reject applicants with pre-existing health problems. If such a requirement isn't tied to a mandate, insurers correctly note, the uninsured can wait until they are sick to buy coverage, which" would "inflate costs for everyone else. By seeking guaranteed access without an individual mandate, Obama is virtually ensuring war with the insurance companies that he's pledged to engage."

SEN. OBAMA: Well, Tim, here's the philosophical debate that's going on. First of all, every objective observer says Edwards, Clinton, myself, we basically have the same plan. We do have a philosophical difference. They both believe the problem is the government is not forcing adults to get healthcare. My belief is that the real problem is people can't afford healthcare, and that if we could make it affordable, they will purchase it. Now, they assert that there're going to be all these people left out who are avoiding buying healthcare. My attitude is, we are going to make sure that we reduce costs for families who don't have health care, but also people who do have healthcare and are desperately needing some price relief. And we are going to reduce costs by about $2500 per family.

If it turns out that there are still people left over who are not purchasing healthcare, one way of avoiding them waiting till they get sick is to charge a penalty if they try to sign up later so that they have an incentive to sign up immediately.

MR. RUSSERT: Which is a quasi-mandate.

SEN. OBAMA: But--well, no, it's not a quasi-mandate because what happens then is we are not going around trying to fine people who can't afford healthcare, and that's what's happening in Massachusetts right now. They've already had to exempt 20 percent of the uninsured, and you're reading stories about people who didn't have healthcare, still can't afford the premiums on the subsidized healthcare, but now are also paying a fine. That I don't think is providing a relief to the American people. We need to make health care affordable. That's what my plan does. And The Washington Post itself said, for the Clinton campaign to try to find an individual who wanted healthcare and could not get it under the Obama administration would be very difficult because that person probably does not exist. If you want healthcare under my plan, you will be able to get it, it will be affordable, and it will be of the high quality.

link: http://www.msnbc.msn.com/id/22409176/page/5/

I've reviewed Obama's health care plan (and double checked it again this morning) and I have yet to find any details about these "penalties". Any plan for universal coverage has to deal - at some point - with adverse selection (the probability of more high risk people signing up for a plan than low risk people, thereby forcing the plan to pay out more money than it takes in). Hillary is proposing to deal with this on the front end through mandates. Obama is doing this on the back end through penalties (and before folks start on about "making insurance more affordable"...both plans do that. Both plans also have an enforcement mechanism for adverse selection, and Obama seems to have the trigger for the enforcement when the person who hasn't paid into the plan goes to access benefits).

However, as Obama has not been very specific about what these penalties are, how many past premium periods they may cover, whether or not interest is charged, whether or not there is a wage or income garnishment involved, whether or not these folks would be charged higher rates for not opting in sooner, etc. etc. this leaves his plan weakened. It is also unclear whether putting penalties in place on the back end would give people "an incentive to sign up early". The opposite could also be argued: that folks may put off seeking treatment because they don't want to pay these penalties. This would in turn increase, not decrease, the cost of care.

I want universal health care. I want Democrats going in with a strong plan so that - in the eventual compromise stage in Congress - many elements of the plan remain in place. When the plans start to get whittled down I want them made out of oak, not balsa wood or soft pine.

I'd like to see both candidates address the weaknesses in their plans for this reason. Let's not attack each other over universal health care; let's work together to get it done.