Tuesday, September 08, 2009

Regarding Hillary's 2008 plan, and individual mandates

I posted this at Dead Horse, in response to Buzzcook, a commenter who encouraged me to read a blog post(referenced below):

OK Buzzcook, I read the lengthy(4,000+ wd) post you referred to in the comments,
"An analysis of Clinton's [2008]Health Plan Proposal"

Robert Laszewski talks about how H. Clinton's 2008 healthcare plan(hereafter I'll just call it HRC-08)says that there will be a public option allowing regular people to buy a plan that's the equivalent of the "Federal Employee Health Benefit Program", something a lot of pols talk about.

Yes, the healthcare plan for federal employees is pretty good, but SO WHAT? If you've ever actually looked at buying health insurance on your own, you'd see that the major companies don't offer a one-size-fits-all plan for everybody, but rather a pretty wide array of plans, with the economy plans offering negligible coverage with high deductibles, and the top of the line plans offering at least as much coverage at the "FEHBP" plan, sometimes more. If you're curious, go to www.ehealthinsurance.com and plug in your personal data and see what's available to you. Blue Cross and Humana, for example, offer an especially wide range of plans, but the prime ones are well out of my reach.

(incidentally, the reason I recommend you look at ehealthinsurance is because they don't ask you, as of this writing, for an email or home phone number, which many of the other online comparison services do, presumably so agents in your area can subsequently pester you. For the record I have not purchased anything from them, just window-shopped.)

Laszewski also discusses the HRC-08 approach to individual mandates,

"Limit Premium Payments to a Percentage of Income: The refundable tax credit will be designed to prevent premiums from exceeding a percentage of family income, while maintaining consumer price consciousness in choosing health plans."

OK, the devil in her plan finally shows itself. Tax credits are all well and good, but what if they're not enough to purchase decent coverage? Then you have to purchase sub-standard coverage(I guess that's where "consumer price consciousness in choosing health plans" comes in.)

I'm a male in my 40s, and from what I've looked at, it would cost me at least 250/month to purchase meaningful coverage, as opposed to plans with 3,000/yr or 5,000/yr deductibles* that don't cover dr's visits until the deductible is satisfied, which are often more "reasonable."

Except they're not. The canard that individual mandate proponents often trot out is that individual mandates will force healthy people to buy coverage when they're well, and quit gaming the system by waiting until they're sick, implicitly suggesting that is what the bulk of the nation's 45 million plus uninsured are doing.

I don't believe that for a moment. If I had a spare 250 dollars a month I would buy a policy, but I'm really poor. I'll wager that most people who don't have health insurance just can't afford it, and some have looked at the bargain-basement policies and figured out they're essentially worthless. And of course some had insurance and were bumped by their insurance companies, and can't find anybody who'll cover them, except at exorbitant rates.

Let's say you are a cashier or a short-order cook, earning 8.50 or 9 bucks an hour. (Let's also assume you have no dependents and no pre-existing conditions.)

Sure, maybe you could, with some difficulty, afford to enroll in a plan that only costs 80 or 90 bucks a month, assuming you can stay healthy and don't actually need that 80 or 90 bucks that month, should you actually need to see a doctor and buy some medication, something the economy plans generally wont help you with, or will only help you a spitting-in-your-poor-face, token amount.

Let's see. You're paying 80 bucks a month, 960 dollars a year, the doctor charges 80 bucks for a visit, and the 80 bucks a month plan reduces your out-of-pocket expense to 45 bucks? Wow! But you don't have 125 bucks to spare on healthcare for the month, not if you want food, and some electricity? You're a bum.

And since you're making, say,18,000 dollars/yr, that 960 bucks a year is still too little to deduct off your income tax, because even if it's more than 7.5% of your taxable income, you still don't make enough to be able to itemize.

My point, buzzcook, is that plans with individual mandates are eminently gameable-- they're designed so the politicians can take credit for dramatically reducing the number of uninsured folks while forcing a large segment of society to buy junk policies, by defunding vouchers so they only pay for worthless coverage, or by making eligibilty for tax credits that phases out below a certain point, in the same way that making something tax-deductible means only people who make enough money to itemize may benefit.

Do I know HRC created a plan with this aspect designed to be a deliberate gimmick? No, but I don't have to. It's not about her, any more than it's about Obama now that he's president. It isn't even about the democrats. It's a systemic vulnerability that's built into individual mandates and that's why it's foul public policy, period. I'm sure you've heard of unfunded mandates in other contexts.

They won't call it cutting the plan off at its knees;

they'll call it "reaching a bipartisan solution" or

"allowing the private sector breathing room to innovate"

and when a New York Times story about some Duke or University of Michigan study questioning the effectiveness of individual mandates comes out 3 or 4 years later, it will studiously avoid connecting the dots, to prove that the democrats deliberately created legislation to "allow" themselves to be played by the other guys, as they both wink at each other from across the aisle.

That's why I think my criticism of HRC-08(and BHO-09) is legitimate.

Later this week I'll post about my thought on how to fix healthcare. Maybe my ideas will be just as flawed, just differently flawed. We'll see.

(*I've even seen some companies offer 7,500/yr deductible plans, although they're still rare.)

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