Hillary Health Care II

Still not the right prescription for America's health care woes

Democratic Presidential frontrunner Sen. Hillary Clinton (D-N.Y.) outlined her health care plan on Monday. "I believe that everyone—every man, woman and child—should have quality, affordable health care in America," Sen. Clinton declared in a speech in Iowa. The senator is responding to polls that show that health care is the number one domestic issue in the 2008 presidential race. In addition, the Census Bureau released new figures that found 47 million people in the United States do not have health insurance. And premiums have risen 78 percent in the last six years, to an annual cost of $12,106 per family.

At the center of Sen. Clinton's plan is a requirement that every American get and keep a health insurance policy. The good news is that such an individual mandate could be the cornerstone for a thorough-going reform of health care into a private consumer-driven system. The bad news is this is not the direction that Sen. Clinton's plan takes. The senator is right when she declares, "Part of our health care system is the best in the world, and we should build on it; part of the system is broken, and we should fix it." Sadly, she's misdiagnosed what part is broken and what part is best.

The chief broken part of health insurance in the United States is the faltering system of employer-based health insurance. Since 2000, firms offering their employees health insurance have dropped from 69 percent to 60 percent. Clinton's plan maintains the employer-based insurance system by mandating that large employers continue to buy health insurance for their workers.

As Harvard business school professor Regina Herzlinger notes, such a mandate is indistinguishable from a payroll tax. Currently, the big companies that don't offer health insurance to their employees tend to be retailers and banks. Herzlinger points out that if they are required to pay an additional $5,000 for health insurance for a clerk earning $22,000, the companies will immediately start substituting capital for labor. In other words, economically vulnerable clerks would be fired and replaced by automated systems or by offshore workers. Instead of just lacking health insurance they would now be out of a job.

Sen. Clinton's plan would also allow Americans to purchase their health insurance through the Federal Employee Health Benefit Program (FEHBP) or through another government program modeled on Medicare. "Under Clinton's plan if you're uninsured you're going to go to one store, the Federal Employee Health Benefit Program," says Herzlinger. The problem, as Herzlinger sees it, is that this one store offers products designed by federal bureaucrats. She likens FEHBP insurance policies to going to buy a car and finding that only two-door subcompacts by various manufacturers are available. The cars offer different colors and hubcaps, but they are all two-door subcompacts. In other words, there is little consumer choice. The situation is even worse for the Medicare option.

Stretching the car analogy a bit further, Sen. Clinton compares her health care plan to the mandate that all drivers carry car insurance. But it's a bad comparison. Employers don't buy their workers' car insurance or home insurance. Why should they buy their employees health insurance? When someone leaves his or her job, they don't have to change or lose their car insurance. It's portable. A modern health insurance system would really make insurance the personal responsibility of each American.

Another worrying feature of Sen. Clinton's health insurance plan is that she would mandate "fair prices" for pharmaceuticals. This implies the imposition of limits on drug company profits. It is true that the drug companies have given themselves a black eye by abusing the patent system in some cases to prevent competition and keep prices temporarily high. That should be stopped. However, imposing price controls on drugs would dramatically slow the development of new and more effective drugs which is certainly not in the best interests of patients.

In addition, the outline of Sen. Clinton's plan is decorated with a number of vague promises such as reducing costs by stressing prevention and a focus on efficiency and modernization, asking providers to work collaboratively with patients and businesses to deliver high-quality, affordable care, and reducing wasteful health spending. Who could be against any of those good things? Clinton says that the $110 billion needed to pay for her plan would come from raising taxes on people with incomes over $250,000 and from $56 billion in costs savings. "Claiming that she can save $56 billion through the marvelous efficiency of the U.S. government is just absurd," retorts Herzlinger.

How would Clinton make sure that everybody complies with the new mandate? A Clinton campaign spokesperson, Laurie Rubiner suggested that one penalty could be the loss of the standard deduction on their income tax filings. This would mean that the IRS would have to monitor compliance.

Individual mandates could be the cornerstone of a complete privatization of health insurance, giving consumers more choices and much greater control over their health care needs. The first step is allowing employers to pay workers the money the companies have been spending on health insurance. Workers could then buy health insurance fitted to their own specific needs, not the bottom lines of they firms for which they work.

For Americans who can't afford health insurance, why not offer them vouchers so that they can buy their own private health insurance? Such income-based vouchers would be self-enforcing since recipients could spend them only on health insurance and health care. The vouchers could be paid for by reprogramming funds now spent on government programs like Medicaid and the State Children's Health Insurance Programs.

In such a thoroughly privatized system, Herzlinger argues, consumers who would now experience directly the actual costs of their medical insurance and medical care will begin to drive down those costs, just as they do in other markets. Right now health insurance is made more expensive by some 1800 state and federal mandates. "It's like I'm shopping for a car and my state mandates that all cars have heated seats," says Herzlinger. Car buyers would not long stand for a heated car seat mandate that raises the price of a car by $1,000, and similarly individual health insurance shoppers would object to unnecessarily expensive insurance mandates.

Ultimately, Sen. Clinton's plan would greatly expand government control over the health insurance market. She mandates that employers buy insurance; offers a menu of cookie-cutter health insurance policies designed by federal bureaucrats; and expands government insurance schemes like Medicare. Her plan is the wrong prescription for America's health care woes because it would result in poorer quality health care, lost jobs, less consumer choice, and higher taxes.

Ronald Bailey is Reason's science correspondent. His most recent book, Liberation Biology: The Scientific and Moral Case for the Biotech Revolution, is available from Prometheus Books.

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  • ||

    Oh crap. Here we go.

  • ||

    "At this point, we don't have anything punitive that we have proposed," the presidential candidate said in an interview with The Associated Press. "We're providing incentives and tax credits which we think will be very attractive to the vast majority of Americans."

    Is that scary language or what? "At this point" there is nothing punitive meaning "I won't say it now in the middle of a campaign but once I get into office you better believe that it will be punative and you can kiss your freedom and atonomy over your healthcare and finances goodbye"

  • ||

    Hugo Chavez in a pants-suit.

  • carrick||

    Compassionate Conservatism's approach to health care.

  • ||

    Let me just say that I admire sage's persistence with that line. Well done, sir.

  • ||

    haven't finished the article but wanted to let you know about this typo:
    by mandating that large employers to continue to buy health insurance for their workers.

  • ||

    The paranoia of Richard Nixon.

  • ||

    This is the shit that burns holes in my innards. Unless RON PAUL (and a pony) is then next president (and vice president), I don't see how anything can stop Hillary. She WILL be the Democratic candidate and I don't see the country electing another Republican (unless it's RON PAUL). I think the Democrats will increase their majority in congress and possibly take over the Senate.

    Watch the Republicans squeal as she uses the imperial presidency to turn America into a Limousine Liberal playground.

  • walmart shopper||

    I would rather get all my medical care from aisle 12 at the local wally-world than let hillarious specify my insurance coverage.

  • ||

    I didn't RTFA but my guess is that Mr. Bailey probably finds many faults with Sen. Clinton's plan.

  • carrick||

    Dan, stating the obvious is not a public service

  • ||

    Well worth the comment, Dan T.

  • ||

    I heard elsewhere that under this proposal, health insurance, like a social security number, will be required for employment.
    So, if you don't have your federal insurance card (and, by year 2 of the Clinton [or Giuliani, or Romney, or whatever] presidency, your national ID card), you can't get a job.

  • ||

    I don't like this plan.

    The link between employment and health insurance is a big part of the problem, not the solution to it.

    I predict that the Universal Health Care plan that gets passed in the next few years will come out of Congress, not the White House, and will look more like France's universal health care system than like the Romney/Clinton model.

    Which is going to raise the intriguing possibility of Hillary Clinton and Nancy Pelosi getting into a hair-pulling catfight. Hillary's got more bulk, but Nancy's sort of wiry and quick. Five quatloos on the Californian!

  • ||

    Hm. Well, if it's any consolation, single-payer appears to be off the table. Thank the gods you pray to for small mercies.

    (The Ontario Health Insurance Plan still haven't sent me my replacement health card. Now would not be a good time for me to be hit by a truck.)

  • ||

    Uh... maybe I'm missing it, and this is not generally my area of concern but... what about the homeless (unemployed, not paying income taxes so uninterested in tax credits)? For that matter, what about the "at this moment unemployed", whether by layoff or personal choice?

    So the plan really doesn't address anyone but the "currently employed by an employer who doesn't provide health insurance"; meaning... it's just a payroll tax. Oh well.

    CB

  • Danny||

    I didn't RTFA but my guess is that Mr. Bailey probably finds many faults with Sen. Clinton's plan.

    Me neither, but I have already found many faults with RB's grammar... I had to re-read quite a few sentences to make sure that I didn't need a new perscription.

  • ||

    Cracker's Boy,

    The plan subsidizes the purchase of health insurance by the unemployed, or those whose emoployers do not provide and insurance plan. It pays for it out of funds currently used to cover the uninsured when they end up in the emergency room, and by imposing a fee on employers above a certain size who don't provide health insurance.

    Like the Romney Plan, only federal.

  • ||

    "I predict that the Universal Health Care plan that gets passed in the next few years will come out of Congress, not the White House, and will look more like France's universal health care system than like the Romney/Clinton model."

    I predict that the public rejects socialized medicine just as they did in 1994 when they see that cost savings will come about though rationing.

  • ||

    " Right now health insurance is made more expensive by some 1800 state and federal mandates. "

    Government tinkering drives prices higher? I'm shocked.

  • ||

    _|_
    ----о--Ô--o----

  • ||

    Rattlesnake Jake,

    Like they did in 1994?

    In 1994, on the day the Senate killed health care reform, between 55% and 60% of the public wanted it to pass. Time Magazine released an issue showing their last minute polling, which came out just after Dole killed the final bill through a procedural maneuver.

  • ||

    Isn't it true that FEHBP health insurance is a fall-back for those who can't get or afford coverage elsewhere? If so, I don't understand Regina Herzlinger's criticism that there isn't enough consumer choice. FEHBP seems like it would be bottom-of-the-barrel coverage, and that kind of coverage doesn't provide consumer choice whether private or public. The choice is between coverage or none.

    Am I missing something here?

  • Gilbert Martin||

    "Stretching the car analogy a bit further, Sen. Clinton compares her health care plan to the mandate that all drivers carry car insurance. But it's a bad comparison."

    Indeed it is , first because it is the state's and not the federal government that mandate car insurance and second the car insurance mandate is for liabilty coverage for the potential damage that a a driver could inflict on someone else (either to their person or vehicle). There is no mandate to carry collision coverage to pay for damage to your own car.

  • ||

    I want to believe Jake, but I don't. I don't think people will hesitate to take a big fat dump on medical innovation and would put up with lines to get free stuff.

    My only hope is that the ripple effects on current national systems are horrific when their sugar daddy dries up. When the cost argument leaves, the issue will die.

  • ||

    I can't get past the homeless thing here.

    "The plan subsidizes the purchase of health insurance by the unemployed,"

    The homeless aren't going to "buy" health insurance, even if it's "subsidized" (meaning free). Or maybe I'm just not giving them credit. Do the homeless vote?

    So the homeless will still be showing up at the Emergency room, getting free health care (as they do now). Where is the savings that is "currently used to cover the uninsured" coming from? They're still showing up?

    Color me confused... and skeptical... I want SOMETHING... I just don't know what it is yet. (So I'll wait... I don't have to DO something... I just WANT something).

    CB

  • ||

    "In 1994, on the day the Senate killed health care reform, between 55% and 60% of the public wanted it to pass. Time Magazine released an issue showing their last minute polling, which came out just after Dole killed the final bill through a procedural maneuver."

    That isn't a large enough consensus to radically change our health care system.

  • ||

    "In 1994, on the day the Senate killed health care reform, between 55% and 60% of the public wanted it to pass. Time Magazine released an issue showing their last minute polling, which came out just after Dole killed the final bill through a procedural maneuver."

    Voters didn't really seem to hold it against republicans when they killed it though. The hillarycare club seemed to be useful enough to beat on democrats with, at least for a while.

  • ||

    Boy, the picure of Hillary? on drudge right now speaks volumes.

  • ||

    Rattlesnake Jake,

    1. We can quibble about the definition of "radically."

    2. Support for health care reform has only grown since then.

    3. That 55-60% was for "HillaryCare," not health care reform in general.

    JasonL,

    Voters didn't really seem to hold it against republicans when they killed it though. The 1994 elections featured the lowest turnout in history, largely because Democrats were demoralized because health care reform didn't work.

  • ||

    apparently the "elsewhere" where I heard about requiring health care to work was the AP.

  • ||

    "I don't understand Regina Herzlinger's criticism that there isn't enough consumer choice."

    She believes in people buying their own insurance as opposed to receiving it on the job. The policies would be paid for with tax breaks and subsidies would be given to the poor. This would encourage shopping around for the best policies which would tend to drive their prices down.

  • ||

    "2. Support for health care reform has only grown since then."

    If people learn that socialized medicine means rationing and that there are alternatives to socialized medicine, I believe support for socialized medicine will decline.

  • ||

    Any form of socialized medicine is going to suck, but HillaryCare II is one of the most gimmicky, unwieldy things I've ever seen.

    Of course, I suppose there is no good way to steal from one person to pay for another's health care.

  • ||

    Me neither, but I have already found many faults with RB's grammar... I had to re-read quite a few sentences to make sure that I didn't need a new perscription.

    It's a blog, not a term paper!

  • ||

    I have already found many faults with RB's grammar... I had to re-read quite a few sentences to make sure that I didn't need a new perscription.

    Perhaps Ron would hire you as his editer.

  • ||

    Rattlesnake Jake,

    Universal health insurance is not Socialized Medicine, if we're using words with their common meanings. National Health Care, a la Britain, where the providers work for the government, is very unpopular already.

    And plenty of people have plenty of experience with HMO-based rationing as it is. You mean some bureaucrat might decide to deny payment for my procedure? Not really an effective counter-argument there.

  • How does Hillary define \"Amer||

    I don't know why Reason would be complaining. This plan would probably cover IllegalAliens and thus would be a massive giveaway to not just crooked employers but to the MexicanGovernment as well.

  • ||

    I knew there was some angle to this I was missing. The Mexican Government. Yeah. It all makes sense to me now.

  • ||

    But will it include MentalHealthCoverage so that Lonewhacko can get TheTreatmentHeNeeds?

  • ||

    "Universal health insurance is not Socialized Medicine, if we're using words with their common meanings. National Health Care, a la Britain, where the providers work for the government, is very unpopular already."

    When the government takes control of the health care system, it's socialism. Maybe fascism would be a better name for it when the doctors aren't hired by the government, but leftists would be even more upset with that title.

    "And plenty of people have plenty of experience with HMO-based rationing as it is. You mean some bureaucrat might decide to deny payment for my procedure? Not really an effective counter-argument there."

    HMO's were created by an act of Congress in 1973. Socialized medicine is nothing but a big HMO. All the problems that we have with our health care system are problems that were created by the government. Why have more government involvement? Why not give power back to patients and doctors where it belongs? Why would government know better what is best for us? Do we really want more of a nanny state which isn't really taking good care of us when in order to control costs, they engage in rationing of services.

  • ||

    Joe,

    If you would, elaborate more on your prediction. Why is Congress interested in passing their own plan?

  • ||

    I want kyle and Eric Dondero to fight to the death.

  • ||

    Kyle, I didn't watch that video from your previous thread postings and I'm not going to watch it now. Get a life.

  • ||

    Donderoooooooooooooooooooooooooooooooooo would be the winner. At least he acutally has comment of sorts.

  • ||

    Besides the announcer wants to say. "And the winner is Donderooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo"

  • ||

    JasonL -

    The Mexican Gov't angle makes sense, if that poster is currently in.... Peru:

    Giant Meteorite hits Peru - Mysterious fumes "sicken" Villagers and mutate them into Natasha Henstridge-like Species People (ok, I just added taht last part)

    http://www.msnbc.msn.com/id/20838944/?GTI=10357

  • ||

    Let's be very clear on what that cunt intends to do: this is a proposal for a massive power-grab, that will kill people.

    -jcr

  • ||

    Yeah, our health care outcomes might come to resemble those in France or Germany.

    Why, the death toll could be in the negative thousands annually!

  • ||

    SP,

    For one thing, because every health care reformist is going to have their own plan, and there are a lot of them in Congress.

    Also, because there are so many problems with the Hillary/Romney model.

    Third, because the passage of the bill in Congress will require it to move through a large number of chairmen and other power brokers, who aren't going to like having a bill handed to them.

    And fourth, because Nancy Pelosi is more liberal and less corporate than Hillary, and also more popular.

  • TLB||

    Obviously, any form of NHC is a sweet, sweet deal for foreign governments, even including those that aren't open about their plans to send people here to get money back. In the case of Mexico, they get money back and they avoid having troublemakers around who'll try to reform their system. And, with NHC they'll get even more money and it will be easier for their citizens to live here illegally.

  • Gilbert Martin||

    Another thing about all these socialized medicine schemes is that the cost to the taxpayers for the program is always vastly underestimated at the outset.

    Hillary claims it will cost $110 B a year. It's likely to be far more than that.

    Just go back and look at the costs per year projections for Medicare put out by it's propenents in 1965 when they were trying to get it passed.

    Those actual annual costs far far exceeded those projections.

  • Lavinia Weissman||

    Excellent analysis. Thank you.

  • ||

    TLB-

    IF this plan passes it actually wouldn't be that different from how Mexico handles health insurance.

  • ||

    Cesar

    Don't confuse the lonewhackjob with facts.

  • ||

    Isaac-

    Actually, I probably said the wrong thing. Since this bill isn't too different from how the IMMS (The Mexican health care system) is, he will think the bill was written by Calderon in a nefarious attempt to make our laws more like theirs.

    Also, he wouldn't listen to me anyway. I've been to Mexico. And have Mexicans in my family. And even have a latin name! I could be OneOfThem.

  • ||

    So tell me, which is worse, libertarians, a one in a million chance that someone will listen to your phone call to Pakistan in Urdu or a 100% chance of a tax hike and the government controlling your health care?

    And you people complain about Guilliani!

    Jesus fucking Christ, when the pantsuited bitch is micromanagaing our lives you all will be just as much to blame as anybody.

  • ||

    Chalupa, this health plan is actually very "Republican". I don't see how its different from Romney's ideas.

  • ||

    Fuck Romney too. Gimme Guilliani, or any other Republican. The Repubs need to control congress but if we can't have that we must do everything in our power to make sure the Democrats never control both branches.

  • ||

    I thought you liked Romnney? Anyway I think Giuliani has similar ideas about health care, too. There seems to be a Republican-Democrat consensus on health care now, unfortunatley.

  • ||

    I'm not to keen on going to war with every Muslim country on the planet as Giuliani wants to do, either.

  • ||

    Guilliani earned a special place in my heart when I heard him say at a debate we must resist the urge to "socialize medicine". Romney got universal coverage in Massachusetts, no Republican has come out and said we need universal coverage at the federal level.

  • ||

    Guilliani earned a special place in my heart when I heard him say at a debate we must resist the urge to "socialize medicine".

    And Bush told me in 2000 he'd like a "humble foreign policy". I'm not going to be fooled again.

  • SIV||

    Cesar,

    There seems to be a Republican-Democrat consensus on health care now, unfortunatley.

    I'll disagree with the Republicans on that.
    I answered your question back on yesterdays RP thread.

  • ||

    I'll disagree with the Republicans on that.

    Me too, and this adds to another disappointment I've had with the GOP. If Team Red would act like they did in 1994, I'd be more than happy to vote for them. But they've been way to "compassionate conservative" for me in the last eight years.

    I answered your question back on yesterdays RP thread.

    And I've responded to it.

  • ||

    Does anyone think the unstated freedom of association can be used to rule this unconstitutional? If I start a religion that forbids health care can I tell McHillaromnobamniani to go pound sand? Will Christian Scientists be required to pay up for something they may never use? I for one will be happy to convert just to take it to the Supreme Court of Jebus and the United Statists.

  • ||

    And Bush told me in 2000 he'd like a "humble foreign policy". I'm not going to be fooled again.

    Bush DID have a humble foreign policy, that is before 9/11.

    Anyway, what's your point? If your not going to believe anything then why pay attention to what the politicians say at all? Guilliani has never shown or stated anything that indicates he wants the federal government more involved in the HC system.

  • iih||

    Heard HRC on NPR today saying that her health care program will not involve any new government agencies and is essentially privately run -- the Massachusetts way that Romney signed into law. And the dishonest Romney jumped today to accuse her of being a socialist (which she is, but I am criticizing the hypocrisy and flip flopping of Romney).

  • ||

    Bush DID have a humble foreign policy, that is before 9/11.

    Are you saying 9/11 "changed everything?" I don't buy that line of shit.

    If your not going to believe anything then why pay attention to what the politicians say at all? Guilliani has never shown or stated anything that indicates he wants the federal government more involved in the HC system.

    Wait until after the primary.

  • iih||

    If I start a religion that forbids health care can I tell McHillaromnobamniani to go pound sand?

    Why invent one? Islam forbids outright socialized health care (and most kinds of insurance policies -- cars, homes, etc-- that involved "distributing the cost of the risk"). But that is for another thread.

    All foreign students and alien residents (legal of course!) have to have health insurance -- at least that was what I was told when I first came to this country, even though I did not want it.

  • ||

    Are you saying 9/11 "changed everything?" I don't buy that line of shit.

    It didn't change "everything", it changed Bush. The record backs it up.

  • ||

    Chalupa-

    Do you feel like going to war with every nation between the Indus River and Suez? Elect Giuliani.

    War does more to expand the scope of the state than any other government action.

  • iih||

    Greenspan's on John Stewart -- that is quite a scene!

  • iih||

    And Obama is proposing Taxes by $80B:

    http://blog.washingtonpost.com/the-trail/2007/09/18/obama_proposes_80_billion_in_t.html?hpid=topnews

  • iih||

    Should read: "And Obama is proposing taxes cuts of $80B"

  • Gilbert Martin||

    "War does more to expand the scope of the state than any other government action."

    I don't think so. Government domestic social programs expand it more than any other action. Far more money has been spent on Social Security, Medicare and Medicaid than has been or will be spent on the Iraq war.

  • Not A Pirate||

    TrickyVic | September 18, 2007, 4:56pm | #

    Kyle, I didn't watch that video from your previous thread postings and I'm not going to watch it now. Get a life.
    TrickyVic | September 18, 2007, 4:57pm | #

    Donderoooooooooooooooooooooooooooooooooo would be the winner. At least he acutally has comment of sorts.
    TrickyVic | September 18, 2007, 4:58pm | #

    Besides the announcer wants to say. "And the winner is Donderooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo"


    Sheesh, talk about getting a life...

  • Greg Scandlen||

    Ron,

    You wrote: "Individual mandates could be the cornerstone of a complete privatization of health insurance, giving consumers more choices and much greater control over their health care needs."

    The first choice is the choice to buy the product at all. Right now consumers are saying they do not find value in the health insurance products that are available. They are not wrong. Forcing them to buy something they don't value eliminates their ability to send an important signal to the insurance industry.

    Greg Scandlen

  • ||

    Not to be too much of a cockeyed optimist, but it may be that people in the future outsource their medical care. There already is a substantial "tourist" medical industry in India and Thailand, which will probably increase. A doctor overseas handling your care over the internet, with an office stateside with a nurse/physian's assistent will be an option, just as most goods people buy are made overseas.
    What will government do? Pay sky high prices for domestic care and consequently deny care due to lack of funds, or reimburse foreign providers? At some point, true costs and true value will become apparent

  • ||

    "Stretching the car analogy a bit further, Sen. Clinton compares her health care plan to the mandate that all drivers carry car insurance. But it's a bad comparison."

    Indeed it is , first because it is the state's and not the federal government that mandate car insurance and second the car insurance mandate is for liabilty coverage for the potential damage that a a driver could inflict on someone else (either to their person or vehicle). There is no mandate to carry collision coverage to pay for damage to your own car.


    That's one good point. Another is that there's a world of difference between the government mandating that you buy insurance as a condition of being permitted to own a car that operates on the public highways and the government mandating that you buy insurance as a condition of living.

  • ||


    I don't think so. Government domestic social programs expand it more than any other action. Far more money has been spent on Social Security, Medicare and Medicaid than has been or will be spent on the Iraq war.


    Economic planning didn't become vogue until after World War I. A lot of the New Deal "reforms" were based on war time planning.

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