Thursday, September 20, 2007

So What's Wrong With HillaryCare?

Somehow Hillary Clinton's opponents on the Right have managed to make HillaryCare sound pejorative. But it's Hillary and John Edwards who have come out with healthcare plans that can tackle the biggest issue of the uninsured or underinsured in the US. Hillary's plan has been recently announced and positively addresses the three basic questions that determine if it is meaningful and workable:
(a) Does it commit to ensure everyone has coverage? Any plan that doesn't is insufficient.
(b) Does it require pooling of risk (i.e., are the healthy forced to get coverage and thus pay into the system?) Without pooling the concept of insurance does not work. This is where Obama falls short.
(c) Is it sensibly funded , i.e., doesn't necessarily lead to breaking the bank of public and private resources? This is the toughest challenge for Edwards and Hillary, but their repeal of tax cuts and forcing large employers to pay into the system or cover employees seems that it can do the trick.

The Republican candidates can only answer positively to "c" above, so their plans are hardly worth talking about - they too seem to realize this and try to avoid the subject or fall back on "Beware HillaryCare" slogans.

Hillary has even left a role for private insurers, saying that they can provide the necessary coverage, even to the currently uninsured. That's quite a contrast from the Michael Moore "Sicko" denunciations. Yet her proposals make sense. Private insurers need to make a profit, which imposes a cost on the system, as Michael Moore and economist Paul Krugman rightly point out. But on the other hand, private insurers can offset these factors and earn their keep if they can discharge the payment and reimbursement function more efficiently, and curb fraudulent billing by providers more efficiently than the government. And the "risk pooling" requirement that insurers cannot turn down or charge more from sick applicants or those with pre-existing conditions removes a big source of inefficiency.

Hillary's plan says nothing about some other big factors behind the high healthcare costs - malpractice and litigation fears; drug pricing and doctor shortages. The first of these is the biggest (and the one that Democrats are least likely to address through tort reform) but it is encouraging to see this Businessweek article of April 30th about the vanishing jury trials.

Mitt Romney has been denouncing Hillary's plan which largely incorporates the features of his own Massachusetts State plan. Romney is the ultimate Chameleon candidate - he seems to have reversed himself on nearly every big issue since his quest for the White House. On healthcare I think he would have been better served even during the primaries by sticking to his earlier stance. After all many Republicans too are worried about healthcare and want meaningful solutions. But this may be a moot point as Romney's so far behind the front-runners.


kenrod said...

Hillarycare is a pejorative. It represents high costs, red tape, mandates, generic drugs, one-size-fits-all mentality. The GM deal with the UAW in September 2007 should point out that Hillarycare is already obsolete. Employer based static systems are cumbersome and abused by the rank and file. The citizens want portablity and market forces. Once people have tasted liberty they won't go back.

She's taken bits and pieces of Canada and Europe and tried to push it down our throats. Even Pres. Sarkozy of France says their country's system is broken. Why should we want to copy them?

Sandip Madan said...

Kenrod, good to have you back. Well, I thought Hillary and Edwards plans basically addressed all the objections of the "Pro-Choicers" - on the healthcare provider issue I mean, not on abortion. They "let you keep the plan you have" but provide the safety net of an alternative if you need it.

And about French healthcare, may be we should copy many (not all) of their features because, um, they're No. 1 in WHO rankings in healthcare?

But I was in Paris recently and owe a post based on my personal observations. One point that you will like to hear - for someone with all the money and no expense constraints, the best US healthcare is preferable to the best French healthcare.

kenrod said...

Well, I was talking to some European doctors and they tell me that their systems are riddled with problems. First, everyone wants the private patients because the govt. will not pay more than 15 Euros per patient per month. So if the patient comes back 3 times that month, they still get the same capitation. So nobody wants to be a doctor anymore. When you take into account medical school and the intensive training, and cannot support an office, why do it?

Now if the patient goes on the private insurance system they have to stay there for the rest of their lives. So you have skimpy coverage until you need a specialist. Then you get stuck with the high premiums for the rest of your life.

Besides, the uninsured problem in this country is exaggerated. Ron Williams, who is CEO of Aetna says 7 million more are eligible for Medicaid but don't take advantage of it.

Moreover, 85% of whites have insurance; 87% of Asians are covered. But only 57% of Hispanic are insured. So it is largely an illegal immigration issue. If we start covering those than we would have to drastically drop the standards to HMO for everyone. I cannot see how Hillary will lower costs if she wants universal coverage. I say universal access, not universal coverage, which is why I think Guiliani's system will prevail regardless of the next election.

Sandip Madan said...

Kenrod, Of course European doctors would like to be in the shoes of their American colleagues who have pumped up compensations due to artificially created shortages. I talked from the patients' perspective. There's no mass exodus of European doctors as you imply. In fact physician density per 1000 patients is 3.3 for Europe as compared to 2.4 for USA.

European doctors don't starve. Where did you get that 15 Euro per patient per month limit? Doctors are either salaried or have a fee for service arrangement. In France the old fee (under revision now) was 20 Euros ($28) and 35 Euros ($49) for an office visit to a primary care doctor and a specialist respectively.

By your own figures 15% of whites are uninsured (that's over 30 million whites alone, not counting other "true American" ethnicities) and then say it's a Hispanic / illegal immigrant problem? I also don't understand this distinguishing universal "access" from "coverage." It's like GWB saying that the uninsured can always go to emergency rooms so there's no problem...

kenrod said...

No, doctors in Europe are not starving. But the profession is not attracting the young bright minds it used to. The European doctor I talked to told me she had to stop seeing people with govt insurance because when she ordered follow up visits, the govt never paid her. So now she only treats those with private insurance.

However, the private citizen I talked to told me they take out 6.5% out of his paycheck, and the company matched 6.5% for the govt plan. However, if he joined the private plan he would have to pay an additional 150 euros. And he could never get off that plan for the rest of his life.

My niece is studying to be a doctor in Canada and she tells me the doctors' incomes are limited from $80k to $120k depending on their specialization and experience. While that is above average pizza delivery guy it isn't attracting many young people. In fact my neighbor is a Canadian doctor who came to the US because the money is better here.

While I do think doctors make too much here, I think the remedy is to import more and liberalize immigration of that profession. Artificial caps like they do in Europe and Canada only serves to limiting their own supply.

The difference between "Universal Access" and "Universal Coverage" is that the former allows a person to apply for any plan by using tax law incentives, underwriting modification etc. In other words, take charge of your own health plans and the govt will try to make insurance companies treat you fairly, and you will get a tax break. Universal Coverage says everyone gets Medicare, or Schip, or Medi-Cal. It's a one size fits all approach. Not only can we afford the former but it makes sense. We definitely cannot afford the latter and doesn't make sense.

Sandip Madan said...

This is the ultimate flaw in the "tax-break-and-take charge-of-your-own-healthcare" story. The poorest people pay little or taxes, so how are tax breaks going to help them get healthcare? I'm pretty sure the "tax break" crowd including the Repub Presidential hopefuls know this score but think (or hope) they can get away with mouthing some catch phrases.

Between universal access and universal coverage as you define it, I'd rather have universal coverage, though you don't have to choose unless you're talking about Canada. Europe offers both. It just happens that 85%-90% of the people prefer the government option. You keep harping on a "one size fits all" theme but no leader of note including the three democratic frontrunners is espousing this.

We agree at least about inflated doctor salaries here, and the need to free up restrictions that create this artificial scarcity. Average doctor salaries in the US are 2+ times higher than that of engineers, whereas they're about on par elsewhere - about 3 times the median salary which seems reasonable.

Naturally all doctors want to come to the US, but the very cap that sustains abnormally high salaries here and avoids free market play in physician supply also keeps such foreign doctors out.