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A fresh look at Clinton, Obama, and insurance

The principal policy division between Hillary Clinton and Barack Obama involves health care. It is a division that can seem technical and obscure — and I have read many assertions that only the most wonkish care about the fine print of their proposals.

But as I have tried to explain in previous columns, there really is a big difference between the candidates’ approaches. And new research, just released, confirms what I have 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 Ms 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 us 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 does not.

Mr. Obama claims that people will buy insurance if it becomes affordable. Unfortunately, the evidence says otherwise.

After all, we already have programmes 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 enrol.

An Obama-type plan would also face the problem of healthy people who decide to take their chances or do not 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 penalising those who delay signing up — but it is 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 is what Jonathan Gruber of the Massachusetts Institute of Technology, one of America’s leading health care economists, does in a new paper.

Professor 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 a year. An otherwise identical plan with mandates would cover 45 million of the uninsured — essentially everyone — at a taxpayer cost of $124 billion. Overall, the Obama-type plan would cost $4,400 per newly insured person, the Clinton-type plan only $2,700.

That does not look like a trivial difference to me. One plan achieves more or less universal coverage; the other, although it costs more than 80 per cent as much, covers only about half of those currently uninsured.

As with any economic analysis, Professor Gruber’s results are only as good as his model.

But they are consistent with the results of other analyses, like 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 is why many health care experts like Professor Gruber strongly support mandates.

Now, some might argue that none of this matters, because legislation Presidents actually manage to get enacted often bears little resemblance to their campaign proposals. And there is, indeed, no guarantee that Ms Clinton would, if elected, be able to pass anything like her current health care plan.

But while it is easy to see how the Clinton plan could end up being eviscerated, it is 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 demonised 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 will find that it cannot 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 is what I think it says: If Ms Clinton gets the Democratic nomination, there is some chance — nobody knows how big — that we will get universal health care in the next administration. If Mr. Obama gets the nomination, it just will not happen.

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