2007 September 16 Sunday
HillaryCare Round 2: Mandatory Medical Insurance

This is like Jason and Friday the 13th. Last time around Hillary Rodham Clinton and Ira Magaziner had secret meetings and cooked up a monstrous unwise proposal to restructure American health care on a massive scale. Well, she's back.

WASHINGTON, Sept. 15 ó Senator Hillary Rodham Clinton on Monday will lay out a plan to secure health insurance for all Americans while severely limiting the ability of insurers to deny coverage or charge higher premiums to people with chronic illnesses and other medical problems, her aides and advisers say.

If government subsidizes health insurance purchases by poor people then fewer small companies will offer medical insurance and will instead expect government will provide coverage.

My guess is she will require everyone to buy medical insurance but subsidize the purchase of medical insurance by poor people.

A big difference from last time: She's proposing to build on the existing system of insuring Americans -- a mix of private coverage and government-subsidized care -- not remake it altogether.

Still, Mrs. Clinton's plan, described by people familiar with it, would involve sweeping change. It would create new federal subsidies to aid those who couldn't afford the required health coverage. And it would impose new mandates on large employers to provide health coverage or help pay for it.

But look at it on the bright side. Hillary's proposal might cost less than the Iraq war.

The price tag for the Clinton plan will be closer to Obama's $50 billion to $65 billion estimate than Edwards' $90 billion to $125 billion plan, sources said.

It's not clear if Clinton will finance her proposal by repealing the Bush administration's tax cuts for the wealthy, as Edwards and Obama have proposed. On the campaign trail, Clinton has hinted that she would save money by fostering efficiencies and squeezing savings from .insurers and drug companies.

If insurers are prevented from denying coverage to those with existing conditions then we'll enter a new era in which insurers try to avoid getting applications for medical insurance from people who are sick. Oops, we disconnected our phone number. Oops our web site is down. Oops we moved out of areas that have lots of sick people. Ooops, we don't advertise in areas which have lots of sick people.

But maybe Red Hillary isn't as dangerous now as she used to be. We can hope that perhaps pharma companies which have been trying to buy her influence have at least partially succeeded.

One former insurance company executive recalled Clinton summoning top drug company executives to the White House for a dressing-down. "She storms into the meeting and 'The days of profiteering in the pharmaceutical industry are over!'" the lobbyist recalled. "There were no handshakes, no 'How was your flight' ... It was ugly, nasty. From that point on I knew her plan was dead."

Clinton, who says she still bears "the scars" from the experience, is a less fearsome figure these days. Since being elected to the Senate, she's enjoyed a good relationship with in-state drug companies such as Pfizer and has delivered federal funding to the hospitals she once demonized. Her rhetoric, particularly against Big Pharma, can still be fierce, but her pariahs are now patrons: The industry .contributed more than $850,000 to her re-election campaign, the second highest level of .contributions to any senator.

Has the comrade reformed? Has she embraced Perestroika? Somehow I doubt it. She still seems angry deep down. She might take out her frustrations with Bill on us. If only the woman could get laid regularly maybe she could lighten up.

She sounds like she has her long knives out for the insurance companies.

"Nobody is going to be surprised when I unroll my coverage plan that I intend to dramatically rein in the influence of the insurance companies because, frankly, I think they have worked to the detriment of our economy and our health care system," Clinton told interviewer Charlie Rose during an Internet forum co-sponsored by Slate and The Huffington Post earlier this week.

Those evil insurance companies. Well okay, they are not saints. But keep in mind some of the other reasons why we have problems with health care finance:

  • Employer provided health insurance is not portable between jobs. Getting laid off is a big problem because paychecks stop coming in at the same time when you need to start paying health insurance premiums yourself. If you develop a condition on one job then you can't go out and become self employed because you can't get personal insurance.
  • Medical care is so expensive and lower skilled people are worth so little in the job market that poorly paid people can't afford medical insurance.
  • A lot of people who can afford medical insurance would rather not spend money on medical insurance to have more money to spend on fun stuff. They count on government funding to pay for their medical costs.
  • Technological advances make more kinds of treatments for more maladies possible and therefore costs rise.
  • Insurance, by reducing the cost to patients for treatments, actually increases demand for medical care. If government mandates forms of insurance with low deductibles then medical spending will go up a lot.

What I worry: If the US government requires some minimal mandatory level of medical insurance then whatever they define as a minimum becomes something that everyone must have, not just the poor uninsured of today. That could result in more unnecessary and even harmful treatments. Economist Robin Hanson argues that we could cut the total amount of health care in half with little harm to health.

Regions that paid more to have patients stay in intensive care rooms for one more day during their last six months of life were estimated, at a 2% significance level, to make patients live roughly forty fewer days, even after controlling for: individual age, gender, and race; zipcode urbanity, education, poverty, income, disability, and marital and employment status; and hospital-area illness rates. This same study, using the same controls, also estimated that a region spending $1,000 more overall in the last six months of life gave local patients somewhere between a gain of five days of life and a loss of twenty days of life (95% confidence interval). (Iím using a fifty days lost per 1% added mortality rule of thumb.)

Read Hanson's full article for information about health care spending efficacy.

Update: Arnold Kling argues that insurance should only cover higher cost and more rare treatments.

Real insurance would pay for treatments that are unavoidable, prohibitively expensive, or for illnesses that occur relatively rarely. Instead, insulation reimburses even relatively low-cost services, such as a test for strep throat or a new pair of eyeglasses. Insulation pays for treatment even if it is commonplace or discretionary.

...

The problem with insulation is that it is not a sustainable form of health care finance. Individuals, employers, and government are all under stress.

Share |      By Randall Parker at 2007 September 16 09:53 PM  Economics Health


Comments
Wolf-Dog said at September 16, 2007 11:27 PM:

The main problem is that medical care itself is artificially made much more expensive than it really needs to be. For one thing, it appears that medical schools have colluded to admit a lot less students than the nation really needs (even though there are more than enough qualified candidates that would make good doctors if admitted to medical school), for the purpose of keeping the salaries of doctors very high.

Additionally, much of the medical equipment is ridiculously expensive. This is one reason outsourcing will start hurting the US medical industry for reasons similar to what happened to the US automobile companies. Many middle class Americans, are going to other countries to get surgery and other services, even though these countries obviously have inferior surgery equipment and in many case bad doctors.

Note that an increasing number of upper middle class Americans or even middle class Americans, are seriously considering moving to Europe, because they think that their children will get better high school education, and also free medical care. This is not socialism, but a reasonable "national social glue" that keeps people together. Otherwise, we are going to end up with a feudal society, which is what the Bell Curve book implies will happen.

But in any case, there are studies that seem to suggest that for the average citizen, MOST of the medical bills are occurring during the last few weeks or months of life, due to very expensive life sustaining treatments, even though the patient really does not want to live in agony and humiliating suffering. Much of the revenue of the medical industry comes from this intentionally ignored phase of the human life, since we just cannot think of death and old age when we are young.

Ned said at September 17, 2007 4:46 AM:

Wolf-Dog -

Medical schools do not "collude" to limit the number of students. To do so would be a gross violation of anti-trust law. The number of students each school may admit is regulated by the Liaison Committee on Medical Education (LCME), which you have obviously never heard of (http://www.lcme.org/). The schools would generally like to admit as many students as possible, but they are constrained by the size of their facilities, number of teaching beds, availability of laboratory space, number of teaching faculty, etc. Educating doctors is a very expensive business. The LCME sets very high standards, and requests to increase class size must be thoroughly justified or they are turned down. How many doctors the US (or any other country) really needs is a difficult question, but the number of qualified applicants far exceeds the number of admitted students because medicine is a very prestigious and well-rewarded profession, not because the medical school deans "conspire" in some back room to keep the numbers down.

Wolf-Dog said at September 17, 2007 9:16 AM:

Clearly it is taking a lot of time to get an appointment with many specialists, even when I have a sinus problem, it may take a couple of months to get an appointment. And many doctors are complaining that they have to work incredibly long hours at the hospital, sometimes unable to sleep for more than a day. These are signs that there is a shortage of doctors. Whatever fancy names (such as the Liaison Committee on Medical Education (and impressive esoteric acronyms like LCME that make it sound as if these organizations cannot do anything wrong) that these groups have, in the final analysis, given the incredible accumulation of net wealth in medical organizations, it is simply not justified to say that it is expensive to train doctors and that there is not enough capacity in medical schools. The capacity can be expanded very easily, but they are doing so very slowly, because it is in their interest. During meetings, these organizations will not write in their records that today is the "collusion day to maximize their prestige", they are not so unsophisticated, since they would use fancy words to justify everything.

And when you said that medicine is a prestigious field and that this is the reason it is hard to enter medical school, the reverse is also true: since there is a shortage of doctors, and since people do worry about their health, doctors are somehow worshiped, making this profession "prestigious." If we had a better ratio of doctors to citizens, this medical field would be less "prestigious", but we would be getting better care.

Here is a chart for the distribution of doctors to residents:

http://www.issuespa.net/scorecards/383/486;jsessionid=27732952856C0369A73AE5F967DDFE30

Bled Dry in 2008 said at September 18, 2007 10:29 AM:

I'll make a deal with the liberals and Hillary. If they throw out the illegals (and a good bit of the legal) "immigrants" here and prevent any more from coming into the country, I'll be all for the gov't healthcare. I'd also like cash payments for certain demographic groups to have abortions and be sterilized. I'll gladly pay for that as well.

anonymous said at September 18, 2007 6:53 PM:

"Single Payer" is a tax on men. Specifically, white men.
When men are young, their first goal is to buy a car.
Then later, to buy a new car. Then to save up for a
down-payment on a house.
Ripping off 15% more out of every young man's salary
delays this process for several years. It delays
family formation. It's already severly retarded in
"blue" states, due to the high cost of living. This
additional tax will just about finish it off. Expect
every blue state to become largely third world, due
to the "single payer" tax.


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