Debating health care

Paul Krugman has been correct about the recent rightward drift of the Obama campaign, especially on health care, as the Illinois senator attempts to separate himself from Hillary Clinton and John Edwards and potentially draw in some independents. And Krugman is right that health care is probably the most important domestic issue of this campaign.

But, as this post from Scarecrow on FireDogLake demonstrates, the Clinton and Edwards plans are only partial fixes, better than Obama’s incomplete plan and everything that has been offered by the GOP.

A key point is that “mandates” require penalties, and you need economic experts to design a “good” penalty system that will lead companies (or individuals) to make rational decisions that are consistent with the result you want to achieve, without adding significantly to the total cost.

Individuals also face these kinds of choices. If they confront a “mandate,” the rational thing to do is to consider the “penalty” for non-compliance versus the cost and benefits of complying. In Massachusetts, the Legislature was leery of imposing tough penalties on the uninsured, so the first year penalties are quite small — only a fraction of what it would cost to purchase insurance on your own. Result: many people are deciding, quite rationally, not to purchase insurance.

Finally, there’s the state subsidized pool. The rational thing for employers and individuals to do is to avoid providing/paying for insurance on their own, pay the small penalty, and move those who choose this route to rely on the subsidized insurance pool. Perfectly rational; perfectly predictable; and that’s what’s happening.
Because of the incentives, thousands of people are winding up in the state subsidized pool, and the Legislature is looking at $150 million or more in unanticipated costs. And that apparently has been the pattern in other states that have tried “mandate” approaches to universal coverage, but gave up because they weren’t willing to raise taxes to cover the rising costs of state subsidies. You need a broad tax base for that, and progressive taxation.

And that’s OK, as far as it goes. But penalties and taxes — especially when taken together — leave the insurance companies in place. Despite what Krugman says about there being a public option, mandate-based programs still rely on insurance companies to cover the bulk of Americans — while also creating a potential situation in which the poorest people are forced into the public portion of the program. That could raise the cost of a public program artificially, making a move to a full public system difficult down the road.

And make no mistake, if we are to ensure that all Americans have adequte insurance — and the issue isn’t just about the 47 million without coverage, but also about the millions who are underinsured — then we need to move to a single-payer system.

Unfortunately, only Dennis Kucinich among the presidential hopefuls is talking about this. And he isn’t being taken seriously by the news media, meaning that single-payer has been removed from the table.

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Author: hankkalet

Hank Kalet is a poet and freelance journalist. He is the economic needs reporter for NJ Spotlight, teaches journalism at Rutgers University and writing at Middlesex County College and Brookdale Community College. He writes a semi-monthly column for the Progressive Populist. He is a lifelong fan of the New York Mets and New York Knicks, drinks too much coffee and attends as many Bruce Springsteen concerts as his meager finances will allow. He lives in South Brunswick with his wife Annie. View all posts by hankkalet