Why Obama'a Health Care Plan is Better

David Cutler, Brad DeLong, and Ann Marie Marciarille have an op-ed in the WSJ comparing the health care plans of Obama and McCain:

Brad DeLong: Bingo!

Why Obama's Health Plan Is Better

...Harvard Professor and Obama Health Care Advisor David M. Cutler and his coauthors show that John McCain's health-care reform plan burdens America's high-value businesses with extra taxes. In America today, high-value and high-wage jobs are also high-benefit jobs. John McCain taxes them. And when you tax something, you get fewer of them: fewer of the high-value jobs that take advantage of the skills of the American worker and produce high wages and salaries for workers and high profits for managers and business owners.

By contrast, Barack Obama's health-care reform plan lifts the health-care cost burden from the backs of America's high-value businesses in five ways: Learning how to eliminate the one-third of costs for services at best ineffective and at worst harmful. Rewarding doctors and hospitals for providing health rather than performing procedures. Pooling individuals and small firms to give them bargaining power vis-a-vis health insurers. Preventing illness through making it profitable to provide regular screenings and healthy lifestyle information, the most cost-effective medical services around. Covering more people and removing the hidden shifted costs of the uninsured by lowering premiums by $2,500 for the typical family, allowing millions previously priced out of the market to afford insurance.

The lower cost of benefits will allow employers to hire some 90,000 low-wage workers currently without jobs because they are currently priced out of the market. It also would pull an estimated one and a half million more workers out of low-wage low-benefit and into high-wage high-benefit jobs. And more workers currently locked into jobs because they fear losing their health benefits would be able to move to entrepreneurial jobs, or simply work part time. [Talking Points][Why Obama's Health Plan Is Better][Update: More on the McCain plan: McCain’s Radical Agenda - Bob Herbert]

Comments

[save_the_rustbelt]

Interesting, but supposition piled upon assumption.

I believe DeLong is on the record that we can cut health care expenditures in half (relative to GDP)and have better health care - which is suspect at best.

"The lower cost of benefits will allow employers to hire some 90,000 low-wage workers currently without jobs because they are currently priced out of the market. It also would pull an estimated one and a half million more workers out of low-wage low-benefit and into high-wage high-benefit jobs."

And what about the tens of thousands of health care workers who lose their jobs when spending is cut by 1/3?

Obama's plan may be better, but this wild optimism about clinical and financial outcomes is way over the top.

[robertdfeinman]

Apparently "economists" don't like either plan:

Economists take critical view of health plans
The critiques, published in the journal Health Affairs on Tuesday, reflect fundamental disagreements over how to improve access to health coverage. They also sound warnings about what could go wrong with each candidate's plan.

Read the summary.

[Alex Tolley]

Regarding the Obama plan.

1. Learning. The NIH already has a database of "best practices" and I believe Kaiser is compiling their own based on their patient base. So nothing new here, just implementation. However, here is the rub, physicians are very independent and do not have to make changes. Which leads me to point 2.

2. Rewarding. HMOs were supposed to do this, but gaming the system will still be rampant. Doctors and hospitals will refuse to treat patients who they deem "untreatable" as the costs cannot be recovered. This will lead to a "triaging" of patients, rejecting those who will incur unrecuperable costs. This will certainly be beneficial in shifting the treatments from "end of life" towards "beginning of life", but expect a voter backlash when hospitals refuse to put granny on life support.

I would also emphasize that universal health care would be highly liberating for small business and entrepreneurs, and allow older workers to leave their employers because currently they are captive to the employer's pooled risk health insurance.

[save_the_rustbelt]

I sent an email to Cutler and DeLong asking some questions about job losses in health care, transition problems, and etc.

If I hear anything interesting I will share here.

Alex is right about #1 for sure.

[50 Different Systems]

It would be nice to be able to buy health insurance that covers one across the entire United States. I buy a private Blue Cross policy, but it only applies in the state I currently reside in. If I want to move, I have to reapply for a new policy in another state, and hope that I still qualify. 50 different incompatible boutique health care systems make little sense.

[donna]

Read Herbert's NYT column today, too, on McCain's plan.

[donna]

Also more here:

http://thinkprogress.org/wonkroom/2008/09/16/health-affairs-study/

[Pierce Wettetr]

As a university prof, you're probably unaware of this, but most companies are desperately trying to shift their health care burden onto the employee. That is, companies can't keep up with the rising health care costs.

This is even worse with small companies, which already have issues with offering health care because of the small pool size.

Given that reality, the end result of the Obama Health Care plan will be to shift everyone in the country into a government health care system. In essence, we will become England.

Meanwhile, although the McCain health care plan nominally starts taxing health care benefits, when coupled with the accompanying tax credit, the real result will be that most companies will be give the employees a raise equivalent to the cost of their existing health care benefit. So while nominally, the employee is now being taxed on that money, unless you're spending more then $30,000/year in Health Insurance, for the employee benefit cash and regular salary are now equivalent. The idea seems to be that rather than have companies collapse out of employer-paid health insurance, the country would control the transition.

Realize that the transition is moot, given that so many companies are eyeing HSA health plans, which essentially turns out to be the same thing as getting a raise and being told to figure out you're own health insurance.

Meanwhile, Florida is doing something interesting. They changed their laws to allow a minimal level of no-frills health insurance. Its only $150/month, but covers pretty much all of the important things about health. It doesn't cover things like acupuncture, podiatry, etc.

The best Health Care plan would actually be a combination of the Obama plan (allow the government to compete in the health insurance arena), the McCain plan (end the fiction that health care is "free" and comes from your employer), and the Florida plan (allow insurance companies to offer a minimum insurance plan).

Too bad partisanship isn't going to allow that to happen.

So if I have to choose, I'd choose McCains, because he's solving not just the current problem, but the future problem.

[Real Person from the Real World]

One of our famous bloggers is not here, but I will repeat his refrain until he shows up: Health Care is a right and a social good, just like police and fire departments. Education ought to be one too. No, nothing is technically free, but a layer of middlemen (insurance) who take a cut for just being there adds to cost. Also, no technology is in stasis. As people get sick and are treated we learn about disease, and other things. While it sounds conservative and reasonable to say "we need to ration" we lose an input to medical (good) innovation. People thought going to the moon was a waste of money, but if you have the discretionary income to do it, the seeming wasteful exercise provided knowledge and expanded human experience. Perhaps Pierce (above), disliked his granny, but frankly, I say, you can learn from almost anything, and learning is worth spending. Also, who has the moral authority to say what right anyone has to say someone else is not worth some efforts at the end of life?

[Betsy L. Angert]

Dearest Mark and Donna . . .

I too think Bob Herbert's perspective is, was, will forever be great. I share his treatise on health care.
McCain’s Radical Agenda
By Bob Herbert
The New York Times
September 16, 2008

Talk about a shock to the system. Has anyone bothered to notice the radical changes that John McCain and Sarah Palin are planning for the nation’s health insurance system?

These are changes that will set in motion nothing less than the dismantling of the employer-based coverage that protects most American families.

A study coming out Tuesday from scholars at Columbia, Harvard, Purdue and Michigan projects that 20 million Americans who have employment-based health insurance would lose it under the McCain plan.

There is nothing secret about Senator McCain’s far-reaching proposals, but they haven’t gotten much attention because the chatter in this campaign has mostly been about nonsense — lipstick, celebrities and “Drill, baby, drill!”

For starters, the McCain health plan would treat employer-paid health benefits as income that employees would have to pay taxes on.

“It means your employer is going to have to make an estimate on how much the employer is paying for health insurance on your behalf, and you are going to have to pay taxes on that money,” said Sherry Glied, an economist who chairs the Department of Health Policy and Management at Columbia University’s Mailman School of Public Health.

Ms. Glied is one of the four scholars who have just completed an independent joint study of the plan. Their findings are being published on the Web site of the policy journal, Health Affairs.

According to the study: “The McCain plan will force millions of Americans into the weakest segment of the private insurance system — the nongroup market — where cost-sharing is high, covered services are limited and people will lose access to benefits they have now.”

The net effect of the plan, the study said, “almost certainly will be to increase family costs for medical care.”

Under the McCain plan (now the McCain-Palin plan) employees who continue to receive employer-paid health benefits would look at their pay stubs each week or each month and find that additional money had been withheld to cover the taxes on the value of their benefits.

While there might be less money in the paycheck, that would not be anything to worry about, according to Senator McCain. That’s because the government would be offering all taxpayers a refundable tax credit — $2,500 for a single worker and $5,000 per family — to be used “to help pay for your health care.”

You may think this is a good move or a bad one — but it’s a monumental change in the way health coverage would be provided to scores of millions of Americans. Why not more attention? . . .
Please read the rest. I, as Donna think this tome is worthy, but then I admit it, I love Bob Herbert!!!!!!!!

Betsy L. Angert
BeThink.org