KERRY
VS. HEALTH CARE By MICHAEL CANNON, July 27, 2004 --
PROMINENT liberal colum
nist Paul Krugman re cently wrote that "consid ering its scope, [John] Kerry's
health plan has received remarkably little attention." Krugman may not enjoy watching
it get the attention it deserves: The Kerry health plan would undermine health
coverage and reform more than any proposal since President Clinton's Health Security
Act, and deserves as much scrutiny.
First off, Kerry would greatly expand
eligibility for Medicaid, the government health program originally devised to
provide coverage for the poor. This move would:
* Spend hundreds of billions
of dollars to provide coverage to millions who already have it. * Increase the
cost of private insurance.
* And cause many to lose their current coverage
involuntarily, leaving them with worse coverage or none at all.
According
to Rand Health (the health-care division of Rand Corporation, the nonpartisan
think tank), up to half of those who enroll in Medicaid under eligibility expansions
already have private insurance but drop it or are dropped by their employer
when they become eligible. Combined with estimates from former Clinton health
official Ken Thorpe, this suggests that under the Kerry plan, taxpayers would
spend $300 billion over 10 years to provide Medicaid coverage to as many as 18
million people who already have private coverage today.
Those who end up
on Medicaid may find it a poor substitute: The Kaiser Family Foundation reports
that women on Medicaid have twice as much difficulty finding a doctor who will
see them as women with private insurance. And draining 18 million
And draining
18 million paying, risk-spreading customers from private pools would make the
coverage even more expensive which in turn would cause more workers to lose
the coverage they now have.
Second, Kerry proposes a "health alliance"
where all employers and individuals could purchase taxpayer-subsidized coverage
from a menu of options, much like federal employees do. This move:
* Is
unlikely to expand coverage.
* Could eliminate federal workers' choices.
* And would serve as a platform for a government takeover of private health
insurance.
Rand Health found that when states tried similar reforms, "alliances
did not have their intended effects. They did not increase the percentage of small
businesses that offered health insurance, nor did they reduce small-group market
health insurance premiums."
Under the Kerry proposal, insurers would have
to offer the same plans to both federal workers and those in the Kerry health
alliance. Any plan that proves unprofitable in one would be taken away from the
other which could take away from federal workers the coverage they now enjoy.
Finally, the proposal's lavish subsidies seem designed to draw all insurers
and insured into the Kerry health alliance, where they would meet Kerry's third
and final proposal.
For health plans in the alliance, Kerry proposes having
the federal government pay three-fourths of all claims over $50,000 that is,
he'd nationalize a large share of the health-insurance industry. Over time, this
would lead to nationalization of the entire industry.
With the deficit
growing and health-care costs climbing, the federal government would need to limit
its exposure (for claims below $50,000 as well, to ensure patients do not "unnecessarily"
reach that threshold). The most likely tools would be those used in Medicare:
coverage standards, price controls, administrative bureaucracy and fraud prosecutions.
As a preview of things to come, Kerry already proposes allowing the federal government
to approve premiums within the health alliance.
By starting small, over
time Kerry could achieve what Clinton could not: an effective government takeover
of the health-care sector.
Thorpe's widely cited cost estimate of what
the Kerry plan would cost $653 billion over 10 years also doesn't withstand
scrutiny. First, Thorpe's projections cover nine years, not 10. Second, they implausibly
erase much of the cost by assuming the Kerry plan would so increase efficiency
that taxpayers would get back 30 cents of every dollar spent.
Without those projected savings and with a 10th year added
in, Thorpe's projections suggest the Kerry plan would cost $1.1 trillion over
10 years which most agree would require a broad-based tax increase.
Despite
all this, Kerry's most alarming policy is his long-standing opposition to health
savings accounts, a new coverage option made available this year. Since January,
tens of thousands of uninsured Americans have gained coverage with health savings
accounts, and millions more could do so soon.
Kerry has voted against health
savings accounts in the past and today likens them to the tax relief he seeks
to eliminate. His allies in the Senate have introduced legislation to repeal them,
even though that would cut off the surest way to make health insurance affordable.
America is not without her health-care problems, and serious changes are
needed. Certainly no presidential candidate has perfect answers. But a status
quo that includes health savings accounts is far better than the vision put forth
by Sen. Kerry.
Michael F. Cannon is director of health policy studies at
the Cato Institute.
* * *
The
Case against John Kerrys Health Plan NCPA Study No. 269 Friday, September 10,
2004
A fascinating read by John C. Goodman, President
National Center for Policy Analysis
and by Devon M. Herrick,
Senior Fellow National Center for Policy Analysis.
* * *
