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Monday, July 31, 2006

John Kerry: Health Care Reform

Here's one of those ideas that, supposedly, Democrats don't have. This is John Kerry's plan for health care reform from an editorial in today's Boston Globe. There's also a plan to pay for it:

Getting moving on healthcare, by John F. Kerry, Commentary, Boston Globe: People say nothing is happening in Washington on healthcare. They say the only thing that has happened is that the crisis has gotten worse. They're right. But while Washington waits, Wall Street has acted. Too many big businesses are deciding that to compete and win in the global economy, many jobs no longer will come with healthcare.

While companies such as General Motors struggle under enormous healthcare obligations, companies such as Wal-Mart are opting out of employers' traditional healthcare responsibilities. Wal-Mart currently insures fewer than half of its employees ... It's not right, but it shouldn't be a surprise. Good corporate citizens are coping with a competitive disadvantage in the global marketplace. ...

We're stuck with a 20th- century healthcare system that just doesn't work for a 21st- century economy. The traditional employer-based healthcare system can no longer meet all our needs. Costs are too high, and businesses overseas are operating on a whole different playing field.

Healthcare for a family of four now costs more than a minimum-wage worker earns in a year. ... This affects all of us. It matters if the kid down the block isn't immunized. It matters to your tax burden when simple, treatable illnesses turn into expensive emergency room visits -- often the only option for those without insurance. And it matters if we care about our moral obligation to others.

We need to cut healthcare costs. And we need a healthcare system that ensures quality, affordable healthcare for every American man, woman, and child. ... Right now the most expensive 0.4 percent of insurance claims account for 20 percent of all healthcare costs. We need to lower costs to businesses with a new federal reinsurance plan for catastrophic care -- those with the most serious, and expensive, illnesses. Reinsurance is a simple concept: It's insurance for insurers; a way for health plans to manage their risks and lower your costs.

Second, no child in America should lack health insurance. Leaving 11 million American children uninsured is wrong and, from the administration that brought us "No Child Left Behind," it is breathtakingly hypocritical. Most single moms raising two kids on $36,000 a year don't qualify for any help. My ... plan would change that, covering all children up to three times the poverty level.

Finally, it is untenable for 35 million adults to go without insurance. We need to use every weapon in our arsenal until everyone is covered ... with targeted tax credits for small businesses, middle-class families, and people between jobs. ... All of this and more could be paid for by simply repealing President Bush's cripplingly expensive tax cuts for those making more than $200,000 a year...

I understand the politics won't allow it, at least not yet, but an even larger restructuring to achieve universal coverage and a single payer system would be my preference. However, here's Paul Krugman's reaction to the Kerry plan from a column written before the 2004 election and as he points out, the plan has attractive features:

Health Versus Wealth, Paul Krugman, Commentary, NY Times, July 9, 2004: Will actual policy issues play any role in this election? Not if the White House can help it. But if some policy substance does manage to be heard over the clanging of conveniently timed terror alerts, voters will realize that they face some stark choices. Here's one of them: tax cuts for the very well-off versus health insurance.

John Kerry has proposed an ambitious health care plan that would extend coverage to tens of millions of uninsured Americans, while reducing premiums for the insured. To pay for that plan, Mr. Kerry wants to rescind recent tax cuts for the roughly 3 percent of the population with incomes above $200,000. George Bush regards those tax cuts as sacrosanct. ...

Mr. Kerry's health plan has received remarkably little attention. So let me talk about two of its key elements. First, the Kerry plan raises the maximum incomes under which both children and parents are eligible to receive benefits... This would extend coverage to many working-class families, who often fall into a painful gap: they earn too much money to qualify for government help, but not enough to pay for health insurance. As a result, the Kerry plan would probably end a national scandal, the large number of uninsured American children.

Second, the Kerry plan would provide "reinsurance" for private health plans, picking up 75 percent of the medical bills exceeding $50,000 a year. Although catastrophic medical expenses strike only a tiny fraction of Americans each year, they account for a sizeable fraction of health care costs. By relieving insurance companies and H.M.O.'s of this risk, the government would drive down premiums by 10 percent or more.

This is a truly good idea. Our society tries to protect its members from the consequences of random misfortune; that's why we aid the victims of hurricanes, earthquakes and terrorist attacks. Catastrophic health expenses, which can easily drive a family into bankruptcy, fall into the same category. Yet private insurers try hard, and often successfully, to avoid covering such expenses. (That's not a moral condemnation; they are, after all, in business.)

All this does is pass the buck: in the end, the Americans who can't afford to pay huge medical bills usually get treatment anyway, through a mixture of private and public charity. But this happens only after treatments are delayed, families are driven into bankruptcy and insurers spend billions trying not to provide care.

By directly assuming much of the risk of catastrophic illness, the government can avoid all of this waste, and it can eliminate a lot of suffering while actually reducing the amount that the nation spends on health care.

Still, the Kerry plan will require increased federal spending. Kenneth Thorpe of Emory University, an independent health care expert ... puts the net cost of the plan to the federal government at $653 billion over the next decade. Is that a lot of money? Not compared with the Bush tax cuts...

The Kerry campaign contends that it can pay for its health care plan by rolling back only the cuts for taxpayers with incomes above $200,000. The nonpartisan Tax Policy Center, which has become the best source for tax analysis now that the Treasury Department's Office of Tax Policy has become a propaganda agency, more or less agrees: it estimates the revenue gain from the Kerry tax plan at $631 billion over the next decade.

What are the objections to the Kerry plan? One is that it falls far short of the comprehensive overhaul our health care system really needs. ...

    Posted by on Monday, July 31, 2006 at 12:33 AM in Economics, Health Care, Policy, Politics | Permalink  TrackBack (0)  Comments (7)


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