[lbo-talk] Krugman: Why Obama's healthcare will fall short of Clinton's

Michael Pollak mpollak at panix.com
Mon Feb 4 08:40:34 PST 2008


[His most novel arguments are towards the end and continued into the blogaddendum]

http://www.nytimes.com/2008/02/04/opinion/04krugman.html

The New York Times

February 4, 2008

Op-Ed Columnist

Clinton, Obama, Insurance

By PAUL KRUGMAN

The principal policy division between Hillary Clinton and Barack Obama

involves health care. It's a division that can seem technical and

obscure -- and I've read many assertions that only the most wonkish

care about the fine print of their proposals.

But as I've tried to explain in previous columns, there really is a big

difference between the candidates' approaches. And new research, just

released, confirms what I've been saying: the difference between the

plans could well be the difference between achieving universal health

coverage -- a key progressive goal -- and falling far short.

Specifically, new estimates say that a plan resembling Mrs. Clinton's

would cover almost twice as many of those now uninsured as a plan

resembling Mr. Obama's -- at only slightly higher cost.

Let's talk about how the plans compare.

Both plans require that private insurers offer policies to everyone,

regardless of medical history. Both also allow people to buy into

government-offered insurance instead.

And both plans seek to make insurance affordable to lower-income

Americans. The Clinton plan is, however, more explicit about

affordability, promising to limit insurance costs as a percentage of

family income. And it also seems to include more funds for subsidies.

But the big difference is mandates: the Clinton plan requires that

everyone have insurance; the Obama plan doesn't.

Mr. Obama claims that people will buy insurance if it becomes

affordable. Unfortunately, the evidence says otherwise.

After all, we already have programs that make health insurance free or

very cheap to many low-income Americans, without requiring that they

sign up. And many of those eligible fail, for whatever reason, to

enroll.

An Obama-type plan would also face the problem of healthy people who

decide to take their chances or don't sign up until they develop

medical problems, thereby raising premiums for everyone else. Mr.

Obama, contradicting his earlier assertions that affordability is the

only bar to coverage, is now talking about penalizing those who delay

signing up -- but it's not clear how this would work.

So the Obama plan would leave more people uninsured than the Clinton

plan. How big is the difference?

To answer this question you need to make a detailed analysis of health

care decisions. That's what Jonathan Gruber of M.I.T., one of America's

leading health care economists, does in a new paper.

Mr. Gruber finds that a plan without mandates, broadly resembling the

Obama plan, would cover 23 million of those currently uninsured, at a

taxpayer cost of $102 billion per year. An otherwise identical plan

with mandates would cover 45 million of the uninsured -- essentially

everyone -- at a taxpayer cost of $124 billion. Over all, the

Obama-type plan would cost $4,400 per newly insured person, the

Clinton-type plan only $2,700.

That doesn't look like a trivial difference to me. One plan achieves

more or less universal coverage; the other, although it costs more than

80 percent as much, covers only about half of those currently

uninsured.

As with any economic analysis, Mr. Gruber's results are only as good as

his model. But they're consistent with the results of other analyses,

such as a 2003 study, commissioned by the Robert Wood Johnson

Foundation, that compared health reform plans and found that mandates

made a big difference both to success in covering the uninsured and to

cost-effectiveness.

And that's why many health care experts like Mr. Gruber strongly

support mandates.

Now, some might argue that none of this matters, because the

legislation presidents actually manage to get enacted often bears

little resemblance to their campaign proposals. And there is, indeed,

no guarantee that Mrs. Clinton would, if elected, be able to pass

anything like her current health care plan.

But while it's easy to see how the Clinton plan could end up being

eviscerated, it's hard to see how the hole in the Obama plan can be

repaired. Why? Because Mr. Obama's campaigning on the health care issue

has sabotaged his own prospects.

You see, the Obama campaign has demonized the idea of mandates -- most

recently in a scare-tactics mailer sent to voters that bears a striking

resemblance to the "Harry and Louise" ads run by the insurance lobby in

1993, ads that helped undermine our last chance at getting universal

health care.

If Mr. Obama gets to the White House and tries to achieve universal

coverage, he'll find that it can't be done without mandates -- but if

he tries to institute mandates, the enemies of reform will use his own

words against him.

If you combine the economic analysis with these political realities,

here's what I think it says: If Mrs. Clinton gets the Democratic

nomination, there is some chance -- nobody knows how big -- that we'll

get universal health care in the next administration. If Mr. Obama gets

the nomination, it just won't happen.

To which Krugman adds on his blog:

http://krugman.blogs.nytimes.com/2008/02/04/health-care-thoughts/

February 4, 2008, 8:44 am

Just a note to explain where I'm coming from on all this.

I believe that universal health care has to be THE central item in a

progressive agenda -- not just because it's the right thing to do, but

because of its political economy implications. As I explain in

Conscience of a Liberal, Republicans went all-out in 1993 to block

health reform because they feared that success would reinvigorate the

progressive agenda. And they were right.

Now, if I had my way I'd just go to single-payer, Medicare for All. But

that's politically impossible, at least for now. What had me hopeful

was that the Democratic candidates seemed to be offering a more

feasible path that could work politically: regulation, subsidies,

mandates, plus public-private competition that could eventually lead to

single-payer.

Obama's plan fell short -- but I was initially willing to cut him

slack, figuring that it could be improved. But then he began making the

weakness of his plan a selling point, and attacking his rivals for

getting it right. And in the process he has systematically trashed the

prospects for actually achieving universal coverage.

The Obama plan is still vastly preferable to plans that rely on tax

credits and the magic of the marketplace. But from where I sit, a dream

is dying -- and progressive Obama supporters, caught up in the romance

of his candidacy, don't understand that he's actually undermining their

cause.



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