Looking at HillaryCare

Hillary Clinton rolled out her healthcare proposal this week. Michael Tanner, Director of Health and Welfare Studies at the CATO Institute says “it doesn’t have all those boxes and charts” but it remains the same “government managed competition” with a heavy dose of government regulation. Our interview with Tanner, a noted expert on market based health care reform, explains what is wrong with HillaryCare and how Republicans may have made the argument against her plan more difficult.

Clinton’s plan includes an individual requirement to carry insurance, a subsidy for small business to provide coverage, a phase out of the exclusion from income for gold plated plans for individuals making more than $250,000 and a number of restrictions and regulations placed on insurers including requirements to insure all and to prevent individuals from being “unfairly priced out of the market.” While light on details her plan includes dictates such as “drug companies will offer fair prices and accurate information” and promises such as “health insurance is always affordable.” It also includes an $110B price tag which will be collected by tax increases (i.e. repeal of the Bush tax cuts due to expire in 2010) that will be used to subsidize healthcare for the poor. (Tanner notes that the Bush tax cuts are “the gift that keeps on giving” since Democrats like Clinton intend to use this money not only for healthcare but for social security and new social spending.)

Republican presidential candidates blasted her plan. Rudy Giuliani’s communication director released a statement :“If you liked Michael Moore’s ‘Sicko,’ you’re going to love HillaryCare 2.0. Senator Clinton’s latest health scheme includes more government mandates, expensive federal subsidies and more big bureaucracy – in short, a prescription for an increase in wait times, a decrease in patient care and tax hikes to pay for it all.” Mitt Romney also criticized it, claiming it moves it the direction of European socialized medicine.

However, Tanner notes that the plan is “a lot like Massachusetts” – referring to Romney’s Commonwealth Care- which is not surprising since the same guru, MIT’s Jonathan Gruber advised Clinton, Obama and Romney in developing health care plans that eschew a single payer system but regulate insurance and require government bureaucracy to enforce its edicts. Tanner notes that Clinton has tried to mask the degree of government control by repeatedly referring to “choice” and declaring that anyone can keep their current plan if they like. This, he says, is simply false. By requiring individuals to maintain their own insurance Hillary ( like similar Democratic plans) must then set out “a minimum definition of what insurance is.” Therefore, if your current plan doesn’t measure up to Clinton’s minimum guidelines “you do have to give it up.”

What is wrong with requiring individuals to carry their own insurance? Tanner notes there is a certain appeal to individual responsibility in that “if you get hit by a bus we have to subsidize you” when you go into an emergency room. However, he notes that uncompensated costs are generally inflated by health care experts and represent only about 2 ½% of healthcare costs. Tanner contends that this problem hardly justifies the drawbacks of an individual mandated insurance system.

He points to two problems( in addition to the philosophical objection that government should not force citizens on penalty of fine to carry insurance). First, he notes that in practice it has not worked well. In Massachusetts for example 20% of individuals were immediately exempted from the coverage requirements and despite threats of fines fewer people than expected are signing up, opting instead to pay the fines. Second, you need “ a huge bureaucracy” to track every citizen, determine whether they have coverage and whether their plan meets the government’s minimum requirements, and then “punish them” if they don’t have a government approved healthcare plan.

Trying to avoid the John Edwards approach – which requires everyone who has insurance to get verifiable check ups — Clinton, in an interview yesterday, denied that there was “anything punitive” in her plan. This despite the requirement for all individuals to purchase health insurance. However Clinton did allow that there will be a time when employees would have to provide proof of insurance to their employers in order to get (or presumably keep) their jobs.

For now, Clinton is mum on what type of enforcement measures (e.g. fines) would be used to meet her plan’s stated goal –mandatory insurance for all.

Tanner is critical of Republicans like Romney in Massachusetts and Arnold Schwarzenegger who “conceded this argument that you must cover everyone” which inevitably led to individual mandate based plans. Tanner says that conservative should focus on bringing down costs and improving quality through market based reforms including which move away from employer based insurance coverage to individually purchased insurance. In that regard he says that Rudy Giuliani’s plan “is a very good proposal” in that it avoids mandates and encourages interstate insurance sales. He also favors block grants to states which Giuliani and the new Romney plan encourage.

Tanner also cautions Republicans not to “refuse to engage” Democrats on the issue. Conservatives, he says, have the “better of the argument” that government mandated healthcare, however styled and sold, doesn’t work. This, it seems, is sound advice for Republicans in a presidential year.