29 February 2008

Clinton v. Obama On Health Care

The Washington Post has a nice comparison of the health care plans of Barack Obama and Hillary Clinton, the two leading Democratic candidates for the Presidential nomination in 2008. Among most people whom I have heard express an opinion on a particular issue that distinguishes the candidates, this has been the most commonly expressed one and the most heart felt concern. Most Democrats whom I have heard express a strong opinion on this prefer Clinton's plan.

The health care plans proposed by Senators Clinton and Obama are similar in many ways, but they differ in several important respects. The Clinton plan "mandates" health insurance for everyone. The Obama plan requires that all children have insurance, and subsidizes health care for other Americans who are presently uninsured. Clinton estimates that her plan will cost in the region of $110 billion a year; Obama has put a $50 to $65 billion price tag on his proposals.

[N]either the Obama plan, nor the Clinton plan, guarantees "universal coverage" for all Americans, although they both aspire to this goal.

[T]he Clinton plan [is] . . . a "universal coverage" plan, in contrast to the Obama plan, which he terms a "universal access" plan. But he also acknowledges that the Clinton plan will not include everybody. "Any system that does not have a single payer will not have 100 per cent coverage," he told me, when I reached him after the Las Vegas debate. "But you can come very close."

By "single payer," Gruber means a national health insurance system along the lines of Britain or Canada, which do provide universal coverage. The system proposed by Clinton is more analagous to the government-subsidized private insurance system in the Netherlands, where roughly one and a half per cent of the population is estimated to fall through the cracks.

The Clinton plan is also comparable to the health care plan introduced in Massachusetts by Governor Mitt Romney (who is opposed to extending the experiment to the rest of the United States.) It provides various incentives and penalties for uninsured residents of Massachusetts to subscribe to a health plan. Known as "The Connector," the Massachusetts plan has so so far enrolled 200,000 out of 400,000 uninsured residents. The big unknown is how many of the remainder will sign up once health insurance becomes "mandatory" at the end of this year. Some Massachussets residents have already been exempted from the "mandatory" health insurance requirement. . . .

[T]he Obama plan will not cover all the uninsured, at least to begin with. But he claims that Obama will do a better job than Clinton in reducing the cost of health care premiums. He says that Obama might consider a mandate at a later stage, if his present plan does not achieve its goal of universal coverage. . . .

The Urban Institute, a Washington-based think tank, gamed out various different models for health care reform in Massachusetts several years ago. According to John Holohan, one of the authors of the study, "we estimated that we would probably get half the uninsured without a mandate." Extrapolated to the whole country, that would leave 22 million out of 45 million people still uninsured. Since the Obama plan provides for mandatory insurance for children, the total number of uninsured would probably come down to around 15 million.

There are 188,400,000 adults under the age of 65 in the United States. If 1.5% weren't covered under the Clinton plan, as her advisor suggests in the article quoted above, the number of uinsured would be on the order of 3 million. Thus, based upon the guestimate of the Urban Institute, the Obama plan would cover about 30 milllion more Americans, while the Clinton plan would cover about 42 million more Americans.

But, the distinction depends upon how many adults will not get health insurance when they have access to a plan and receive significant premium subsidies. Will 15 million out of 30 million adults who lack health insurance now opt out? To a great extent, the number who opt out is a devil in the details that depends upon how rich the subsidy is, and how easy it is to make it through the paperwork necessary to get a plan with a subsidy.

One place to look is at the fact that 15%-25% of families eligible for the Earned Income Tax Credit (about 3.5-7 million households) fail to claim it. The average household that claims the EITC received about $1,766 in 2002, and a fair estimate would recognize that those will below average EITC amounts are less likely to claim it than those with above average EITC amounts. Also, it is worth noting that EITC beneficiaries are among the least bureacratically astute taxpayers.

The dollar value of a health insurance subsidy is likely to be greater for most eligible individuals than the EITC amount due to those who fail to claim it. And, I suspect that the average uninsured individual may be somewhat more bureacratically able than the average EITC beneficiary, although there is significant overlap as both groups involve large numbers of working poor families.

Another place to look is at SCHIP and Medicaid enrollment. The experience of those programs is that marketing significantly impacts enrollment even when the benefit is similar in different places:

In 1999, 72 percent of Medicaid-eligible children and 45 percent of SCHIP-eligible children were participating in these programs. Medicaid and SCHIP participation rates varied significantly by state and some states have been able to achieve very high coverage rates for eligible children.

Even free health care under the Medicaid program is hard to give away, unless an effort is made to inform people about the option and get them enrolled.

Either way, a new Democratic president means a significant improvement in access to health care for tens of millions of Americans, including every child. In contrast, President George W. Bush vetoed even a modest expansion of the income limitations to qualify for SCHIP, a program that allows moderate income families to buy health insurance at a subsidized rate for their children.

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