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Are You Confused Yet?

April 27, 2008 |
Stark contrast depicted by either Clinton or Obama aside, the overall costs of their health care plans, their essential structure, and their overarching logic are all but identical.
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Polls show that health care ranks near the top of voters’ concerns, especially among Democrats. And for those who say “the economy” is the top issue, health care is usually a major part of their financial worries.

And yet, voters must be awfully confused about where the Democrats stand on health care. On the one hand, both Barack Obama and Hillary Clinton say they want to insure everyone -- and in much the same way. On the other hand, they are beating each other up at every turn. Before the Pennsylvania primary, Mr. Obama ran yet another ad arguing that Mrs. Clinton’s plan would force people to buy insurance even if they couldn’t afford it. Meanwhile, Mrs. Clinton fired back with her familiar accusation that Mr. Obama’s plan would fall well short of universality.

So what’s the main story: (1) a basic Democratic consensus about what should be done, or (2) a widening policy divide fueled by presidential ambitions? The answer is (1), but unfortunately, the reality of (2) is increasingly upstaging this welcome development. And, unfortunately, this unnecessary and self-defeating conflict could ultimately derail efforts at reform, confusing and turning off the very voters Democrats need to woo.

To see the basic consensus, we need to go back to its immediate source: John Edwards’s campaign proposal. Mr. Edwards’s plan, released in early 2008, had three elements. The first, and by far most important, was a requirement that employers either cover their workers or help pay to cover those workers through a public framework (an approach known as “play-or-pay”). The second core element was the creation of a new government-overseen insurance pool that would give workers whose employers didn’t provide secure coverage a choice of public or private insurance. The third core element was a requirement that everyone have coverage (a so-called “individual mandate”).

Senators Clinton and Obama followed John Edwards’s script almost to the letter. Mr. Obama took the biggest departure: His proposal did not include the requirement that everyone have coverage. Instead, he said he would require that all children be covered, and see how affordable coverage was before considering a mandate for everyone. His decision seem to have reflected fear of the potential backlash against an individual mandate, as well as a belief that few people would shun coverage if it were affordable and available. Mrs. Clinton, by contrast, embraced the individual mandate.

The main argument for the mandate is that you need it to ensure that healthy people -- not just those in poor health -- will sign up for insurance. Indeed, it’s a key demand of private insurers, which fear being saddled with high-cost (read: less healthy) subscribers. In Massachusetts, these arguments convinced reformers to enact an individual mandate.

Yet Massachusetts has taken a very different route than Senators Clinton and Obama envision. Massachusetts basically adopted an individual-market model: People without coverage from their employer need to actively seek it out. The cornerstone of both candidates’ plans, by contrast, is the play-or-pay requirement: employers cover their workers, or their workers are automatically enrolled in a single insurance pool to which employers are required to make contributions. (Both candidates have said they would exempt small businesses from this requirement, which could pose a big hurdle to universal coverage, since most of the uninsured work for small firms.)

Done correctly -- with businesses reporting whether they cover their workers to the federal government, which then enrolls uninsured employees and their dependents -- a play-or-pay requirement makes covering people much less complicated. The more than 90 percent of non-elderly Americans (and more than 80 percent of the uninsured) who live in a family in which someone works would be enrolled automatically through the workforce. Many of those missed are already covered through public programs, and aggressive outreach could reach those who still remain without coverage. Thus, Mr. Obama’s plan could well cover almost everyone even without the individual mandate.

But, of course, that hasn’t stopped the individual coverage requirement from becoming a flashpoint of disagreement. Hillary Clinton has savaged Barack Obama for leaving out an alleged 15 million Americans -- an oft-repeated estimate, the precision of which belies the huge uncertainty about how an individual mandate would be enforced and how many people it would actually cover. (In Massachusetts, for example, roughly half of the uninsured remain without coverage despite the individual mandate and major state spending.)

For his part, Mr. Obama has repeatedly charged that Mrs. Clinton will force some people to buy unaffordable coverage, an incendiary charge. Presumably, his attacks concern those who are not poor enough to receive generous subsidies for lower-income Americans, yet not well-off enough to pay for coverage without major hardship. But Senators Obama and Clinton’s proposals are so similar it’s hard to see how Mr. Obama can suggest that everyone will voluntarily sign up under his plan while Mrs. Clinton’s will impose unbearable costs on middle-income folks.

The truth is that the overall costs of the two plans, their essential structure, and their overarching logic are all but identical. Neither would force people to give up employment-based plans they’re happy with. Both would give people without coverage from their employer a menu of different plans, including a predictable, simple and attractive public plan modeled after Medicare. And both could cover all or virtually all Americans for a relatively modest cost. (Lest there be doubt about this, the Lewin Group, a health consulting company, recently determined that a proposal I’ve developed that is quite similar to the candidates’ plans would cost the federal government just $50 billion to cover everyone, and save our health system serious money over time.)

But unfortunately, the fierce debate has pushed both candidates toward rigid positions and extreme pronouncements, elevating a modest disagreement into a confusing melee. In the process, one of the least inherently attractive issues (for example, should people be required to obtain coverage?) has obscured more important ones (how do we ensure that people are signed up for coverage that’s affordable?). Meanwhile, John McCain (whose limited proposal to give broader tax breaks for private health insurance was the topic of my last post) has gotten a free ride.

The overheated attacks serve neither Democratic candidate. Rather than impugning each other, they should be saying how they would ensure affordability and enrollment. Mrs. Clinton took an important step in this direction by committing to a limit on how much Americans will have to pay for insurance. Mr. Obama should make a similar commitment, and make clear he will automatically enroll employees and their dependents through the workforce, which is essential if his plan is to cover virtually all Americans.

Most important, Senators Clinton and Obama should be talking less about how they would cover the uninsured as an isolated group and more about how they would provide health security to all Americans, ensuring that everyone has affordable coverage that doesn’t disappear if they are laid off or change jobs. That’s, after all, what matters to most voters, who may not lack insurance but worry about paying for it and about losing it down the road. Senators Obama and Clinton have a health care prescription for these folks that’s much more attractive than John McCain’s skimpy tax credits for coverage -- if only they would speak about it in clear, simple and attractive terms.

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