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September 17, 2007

The Hillary Plan

Let me try and give a quick sketch of the Clinton proposal before I have to run for a meeting. Here's the thumbnail: Clinton's plan is of the "individual mandate" variety, in which universal coverage is achieved by mandating that every American purchase health care. In order to ensure that that's both possible and affordable, the Clinton plan creates a few new coverage options, reform the insurance industry, limits coverage costs to a percentage of income, and washes your car.

Okay, it doesn't wash your car. It does open the Federal Employee Health Benefits Program to everybody, ensuring that anyone can access the same menu of regulated private options that federal employees get. FEHBP is the program that already insures millions of current government employees, including the members of Congress, by offering a variety of regulated private options to choose from. Throwing the doors to that program wide open is the most basic and ubiquitous of coverage solutions.

More importantly, the plan also creates a new public insurance option, modeled off, but distinct from, Medicare. That's a big deal: The public insurer offers full coverage and is open to all Americans without restriction. Public insurance is what I feared her plan would avoid, and instead, she embraced it wholeheartedly. The concern with a plan like this (as with the Edwards plan), is that insurers will market coverage to the young and healthy and subtly tilt the public plan's risk pool towards the old and sick (the check is that governmental plans are, for reasons related to administration costs and care incentives, cheaper). At the end of the day, there's not much that can be done about that, unless you want to tax insurers with overly healthy pools, as they do in Germany. Come to think of it, that's exactly what they should do -- it was even in the 1994 bill.

And if you don't go through the newly expanded FEHBP or the public option, preferring to keep your current insurance, you'll still be dealing with a heavily-regulated and reformed insurance industry, which can no longer price discriminate based on preexisting conditions or demographic characteristics, refuse you coverage, or deny renewal of your policy -- including if you change your job. So if you like your current insurance but quit your cubicled existence at MegaCorp, your insurer can't drop you. All this matters because it keeps the private programs from having too much capacity to undercut the risk pools of the other options. It also destroys the elements of the insurance industry's business model that rely too explicitly on screwing you over.

There are a variety of affordability measures, the most important of which, by far, is a refundable tax credit limiting the cost of insurance to a certain percentage of family income. The plan doesn't yet define what that percentage of income is, but it'll presumably be reasonable. In this, the plan differs from Edwards' plan, which uses sliding scales of subsidy up to a certain level of income. On the other side, the employer tax deduction will now be limited to standard plans for middle-income folk, while gold-plated health care for wealthy individuals at will be subject to taxation.

So the policy is very, very sound, and includes other sundry goodies like a Best Practices Institute that will vastly accelerate the amount of research done and distributed on the cost-effectiveness of treatments, better chronic care incentives, and so forth. The rhetoric is interesting too, being entirely about "choice." It's called the "American Health Choices Plan." The first section, on the opening of FEHBP and the creation of a new public insurer, is titled, "Providing a Choice of Insurance Plans." The first bullet point assures readers that every American will be able to keep their current coverage if they so desire. Etc, etc. This is very distinctly aimed at the criticisms of the 1994 plan, which is that it would reduce choice and constrain medical freedom. This plan won't, and its ability to expand options is laced through the document, and through the statements her advisors have made.



The plan is more ambitious than her 1994 effort in some ways, less in others. The 1994 plan fully integrated the health care system into a whole new structure. It was probably a better structure -- particularly in its global budgets and growth caps, which would forcibly arrested the absurd growth in health costs -- but it would've caused far more disruption for most families, and was thus easier to attack. This plan leaves intact most every current program, including Medicaid and SCHIP (which come in for expansion), and offers a public option, which the 1994 plan didn't.

The only question is how serious of a proposal it is, i.e, whether it's what she plans to fight for from her first day in office, or whether it's to keep Edwards and Obama from opening up an advantage on her left flank. For now, there's no way to know. But given how smart she's been about neutralizing the other candidates' potential advantages -- including, with this plan, cutting their legs out on health care -- we're likely to find out.

September 17, 2007 | Permalink

Comments

the question isn't whether she can say pretty things. it is whether she means it.

Posted by: akaison | Sep 17, 2007 2:13:58 PM

So the policy is very, very sound.

Couldn't agree more, especially given political realities. My quick reading is that it gets us to 99.9% coverage, and it's politically feasible, at least if the Democrats do reasonably well in 2008. I'm thinking Clinton might have considered throwing a bone or two to the insurance industry, because they won't like the plan (at least based on my quick reading). Maybe some reinsurance could be offered as a sweetner to buy their consent.

Posted by: Jasper | Sep 17, 2007 2:16:49 PM

What a complete crock of sh!t.

Posted by: John L | Sep 17, 2007 2:18:51 PM

Happy to hear that public insurance will be offered as one of the "choices". Very pleased to hear HC commit (in public) to a plan that includes this.

Posted by: Robin Ozretich | Sep 17, 2007 2:23:35 PM

Where is the public option? I trust that its there, I'd just like to be able to read about it myself.

Posted by: Leah | Sep 17, 2007 2:23:56 PM

Oh, now I see it; no details yet, but I agree that it's important that she's included the option.

Posted by: Leah | Sep 17, 2007 2:26:23 PM

I can't believe that any progressive would find this plan "sound." This plan leaves in place the worst actor in our health care system, the insurance companies, and even partially subsidizes them. If you really want a plan that gives people "choices," single payer is the way to go. Instead, we get "choices" about which personal insurance plan we want to be forced to buy! That's not choice. Individual mandate plans are completely antithetical to social justice, and present the most blatant opportunity for "capture" I've ever seen. I'm sure that the "public-private" entity regulating new devices will be subjected to significant political influence, just as whatever regulatory body that sets the "income percentage" will be.

In addition, Senator Clinton's plan appears to impose a regressive tax on the middle class! I know coastal elites won't understand this, but forcing a family of four in the midwest to pay $1200 per month for health insurance will be poorly received. This plan is an insurance company giveaway, and if this is the best the Democrats can offer, its time for progressives to start a new party. This is a neo-liberal joke.

Posted by: Father Figure | Sep 17, 2007 2:29:49 PM

akaison nails it.

Clinton's biggest healthcare initiative since the collapse of Hillarycare has been to stand with Newt Gingrich in favor of healthcare IT. That's doesn't smell like progressive leadership so much as it stinks of opportunistic triangulation.

If Edwards hadn't thrown down the gauntlet with a near-identical plan, do you think she'd even be having this discussion?

Posted by: anonymous | Sep 17, 2007 2:33:17 PM

I've got a better idea. Forget about the complex stuff, the individual mandate, the new regulations, the pay or play, and the giveaways of our money to Hillary's campaign contributors in the insurance industry.

Instead, we'll just create that new public program, modeled on Medicare. Everyone will be eligible for it, and we will use the money that would be paid to private insurers under Hillary's plan to enroll everyone in it.

It won't cost anymore, it won't be as complicated, and it will cover everyone without a mandate.

The question for Hillary and everyone else is, why is it necessary to give our money away to insurance companies to get us to universal coverage?

Posted by: Dilan Esper | Sep 17, 2007 2:35:55 PM

Sounds like it is calibrated to undercut the opposition talking points. Who can disagree that the average citizen should have access to the same plan the Congress and Executive branch has? (rhetorical, of course they will disagree)

So, politically this scores high. Single payer universal is still my first choice, but that is politically unrealistic. If she is able to enact something like this plan (with the public insurance program as an option - a truly viable plan it must be) then we could over time end up with a sizeable public insurance program as an alternative to private insurance. That's a welcome prospect.

I'm still hung-up on the 'mandate'. How is this enforced? Without a workable enforcement method we will still have folks going to the ER without insurance.

One way to enforce: You must declare your insurance on your income tax (with policy number, etc.) and if you don't have insurance, you get a membership card for the public insurance plan, and the IRS figures out if you owe more taxes or get a refund. Without IRS-like enforcement, the mandate is not a mandate.

Posted by: JimPortlandOR | Sep 17, 2007 2:38:23 PM

"Sounds like it is calibrated to undercut the opposition talking points."

That's exactly what it's meant to do. Win or lose Edwards has redefined the debate- hence why she's feel the pressure to say this. A few months back you couldn't even get a straight answer out of her.

Posted by: akaison | Sep 17, 2007 2:43:05 PM

I can't believe that any progressive would find this plan "sound." This plan leaves in place the worst actor in our health care system, the insurance companies, and even partially subsidizes them.

I can't believe any progressives still cling to the notion that our political culture bears any resemblance to that of Canada or Denmark. Of course, when you're a progressive who possesses your own robust health insurance coverage, I can see why it might be a tad easier to cling to said notion.

Posted by: Jasper | Sep 17, 2007 2:45:16 PM

fehbp isn't public, though, right? It's a collection of private for-profit or nonprofit plans that must meet certain coverage requirements set by the govt. Now, maybe that's fine, or maybe I'm wrong.

I am getting tired of back-door social engineering through the tax code. "The IRS's comparative advantage is using random terror to elicit voluntary compliance with the tax code on the part of relatively rich people." I mean, I get the Summers argument that people need help, and sometimes you have to worry about getting them help first and economic efficiency second, but it's going to cost tons to administer this through the IRS.

We also have to ask the magic six words: "how do you pay for it", though that's somewhat secondary.

Posted by: Nicholas Beaudrot | Sep 17, 2007 2:50:09 PM

JimPortlandOR-

My sense is that most people without insurance have incomes that are too low for them to be paying income tax (and many of those do not file) so I'm not sure this makes sense as an enforcement mechanism. Presumably, uninsured people could be reported by emergency rooms and receive an initial warning together with info on plans and subsidies, to be followed by small fines for subsequent "violations." This strikes me as a weirdly punitive approach, but it would work.

On the broader question, I think Hillary views health care in much the way that George W. Bush viewed Iraq: she sees it as her husband's failure, which she will redeem. So I don't think there's any question she would push hard for reform, but who knows what the actual legislative strategy would look like.

Posted by: Rich C | Sep 17, 2007 2:50:20 PM

Having seen "Sicko" by M. Moore, I have no faith at all in any of the candidates. The health care lobby gives everyone plenty of money. No insurance, a true universal system based on England or France systems is the only answer. Get HMO's out of the loop. Can universal health care be any more 'socialist' than universal public education? No Democratic candidate has the guts to go universal, they are all beholding to the HMO lobby. Maybe Hillary or someone else would like to pay for the mammogram that my wife's doctor says she needs twice a year. My caring HMO won't. But they get a nice bonus at the end of the year, and candidates get more cash from the lobby. Hillary has no new plan. Same old stuff, money in, favors out, consumer left paying more, getting less.

Posted by: Charles Corn | Sep 17, 2007 2:53:30 PM

what you view and what she has said is two different things. she said earlier in the year that she would wait until her second term to attempt healthcare reform. doesn't sound like an urgent priority to her despite the pretty rhectoric now, except as I said for the fact that Edwards has pushed her to respond because she was losing traction in the early states with his message.

Posted by: akaison | Sep 17, 2007 2:55:18 PM

Edwards doesn't accept any money from DC lobbies, especially on healthcare. You can look it up.

Posted by: akaison | Sep 17, 2007 2:56:28 PM

Like Atrios, I still don't understand the point of individual mandates. If you're going to make everyone buy insurance, why not just do it the same way everyone 'buys' national defense - through our taxes?

Other than that, I think it's a good plan. I agree that she'd have put forward something considerably weaker if John Edwards hadn't driven the discussion, but I'm willing to believe she's going to fight for it. Since her name is already strongly associated with health care, she'd look pretty damned wimpy if she didn't try to get this program through Congress.

Posted by: low-tech cyclist | Sep 17, 2007 2:56:45 PM

"I can't believe any progressives still cling to the notion that our political culture bears any resemblance to that of Canada or Denmark."

Yeah, Canada has nothing in common with the United States.

Senator Clinton hasn't udnercut the opposition talking points. She has undercut the centrist/beltway talking points. This plan is not socially just, nor will it be feasible for right-wing zealots. But I'm sure David Broder and the DLC folks will love it.

On a serious note, our "political culture" is far more open to progressivism than the neo-liberals want to admit. The public wants us out of Iraq. The neo-liberals scream, "we can't leave now, or we'll be called defeato-crats!" The public hates health insurance companies. The neo-liberals whine, "we can't advocate single payer or nationalized insurance, or we'll be called socialists!" The Republcians don't have to deal with this. When their politicans speak at Bob Jones, or Adelphia Mississippi, they show the country that they don't think their base is crazy. Democratic politicans hide from or criticize the base at every possible oppurtunity. If Hillary is the nominee, this plan may be the final blow that pushes progressives out of the Democratic party.

Posted by: Father Figure | Sep 17, 2007 3:03:20 PM

I am a republican, but I was all set to vote for Hillary until I saw her health plan. Any plan that keeps the insurance companies involed ot the point they are subsidized by the US Govt means one thing,

more money for the Insurance companies, and less insurance for the people. I have one question for Hilary, If somebody is homeless, has no job, no money,

files no income tax, and has no medical saving plan,

what kind of healthcare do they get,,,the answer is

"NONE", no health care. I was fortunate enough to use

several of europes "universal helth care plans, France,

UK, and Italy,, all of them are better in treating all

of their citizens than the USA. And of course, if you had money, you could pay for even better care, but everybody was covered, weather you had a job or not.

The USA is the only Industrualized country that has no

true universal healthcare for our citizens, and from the canditates we have to choose from, it looks like

our health care will not imprive either.





Posted by: stan | Sep 17, 2007 3:11:23 PM

Dunno... my [admittedly cynical] take is that the public, Medicare-parallel part would be the first thing ditched in the name of an 'acceptable compromise.' Since, as akaison pointed out, she's already said that she doesn't actually plan to address healthcare until her second term (the one I think she won't have, but that's another discussion), that makes this proposal nothing more than an attempt to neutralize others' attacks... if she's proposing something now that she doesn't plan to pick up again until 2013 or so, she knows perfectly well that it would have been picked to death by then.



Posted by: latts | Sep 17, 2007 3:21:55 PM

Ezra,

Your post back in May:

While on the subject of Hillary, she's released her plans for cost control (though not, as of yet, her plans for coverage or quality). I've sort of been waiting for the whole proposal before diving into it, but those who want to go piece-by-piece should certainly do so. My snap reaction is that Hillary knows a helluva lot more about health care than any of the other candidates, and her initial focus on cost control is actually quite smart. If given a choice between passing mediocre health reform and strong cost control measures, I'd go with the latter, saving universality for another day and not discrediting the goal by wrapping it in a plan that's likely to fall apart. I haven't spent enough time looking into her proposal to decide whether it's strong enough on controlling costs, but it's an interesting approach, and a strain of incrementalism I could actually imagine getting behind. More later, as they say.

I wholeheartedly agree that that cost control is and should be the pre-eminent issue. I don't think she's addressed it adequately-- you've seen the plan now, how about you?



Posted by: wisewon | Sep 17, 2007 3:38:24 PM

stan,

it's funny i have a lot of republican friends like you. this is why i think my party, the democrats, fundamentally don't understand how things have changed on this issue.

Posted by: akaison | Sep 17, 2007 3:44:16 PM

ezra

i only see her limiting the employer exclusion for very rich people (250k and above) with expensive plans (undefined).

i'm fine with this, and, i like that the limitation is income-based, not just plan-cost based (since a lot of what looks like cadillac insurance in terms of cost is actually pretty basic coverage sold to higher-risk people), but, this can't save much money, i don't think, so, i'm a little unclear why she's doing this.

Posted by: josh bivens | Sep 17, 2007 3:51:48 PM

You guys bemoaning the fact that insurers still have a major seat at the table are delusional. There is no way a person right now, in the year 2007, can put forward a plan that eliminates private insurers *and get elected*. Sure, Kucinich might have that plan, and he's awesome for that, but is he gonna get a chance to implement it? If not, who cares?

Don't let the perfect be the enemy of the good. First, everyone gets insured. Then, insurance companies get phased out as Americans realize the government *can* insure people better and cheaper.

It's the only way it's gonna happen here.

Posted by: Joshua | Sep 17, 2007 3:56:21 PM

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