“Health care is the No. 1 crisis in the country,” Republican U.S. Senate candidate Richard Burr says. “The model we have today is not sustainable.” Campaigning in western North Carolina, Burr visited hospitals in Asheville and Brevard to find out “how the federal government can help.” What he learned, apparently, is that his party’s got it right, especially when it comes to the GOP’s pet idea, health savings accounts (HSAs). “Tools like health-care savings accounts,” Burr said, according to an Asheville Citizen-Times article posted on his campaign Web site. “will allow patients to make decisions on the basis of their dollars.”
Nothing so clearly differentiates the two major political parties as their approach to health care. The Republicans, who believe in market forces, think that if people were required to pay their own way for medical services, they’d buy a lot less of them, and the costs would go down. “Make medical decisions based on how many dollars you have” is a pretty good summary of their thinking. Perhaps you’ve already spotted the problem with this view?
Democrats believe in social insurance. One of the great mysteries of this presidential campaign season is John Kerry’s failure to convey to the voters his one very excellent policy idea, which is that that the federal government should underwrite a “reinsurance pool” for catastrophic health-care costs–regardless how many dollars the patient has.
Reinsurance? We used to call it “major medical” coverage. It means, quite simply, that if you’re the unlucky one who gets cancer, or a crippling stroke, or any other very expensive disease, your insurance company doesn’t get stuck with the whole bill. A “reinsurer”–which could be Lloyd’s of London, but in this case would be Uncle Sam–picks up most of the tab. Under Kerry’s scheme, the federal government would pay 75 percent of the cost of treating these “highest-cost illnesses”; your insurer would pay the other 25 percent (minus any deductible or co-pay). That would cut the average health-insurance premium by $1,000 a year, Kerry estimates.
The N.C. Justice Center’s Adam Searing, who runs its Health Access Coalition (www.ncjustice.org/health), offers a clear comparison of the Kerry health-care plan and the one offered by President Bush (and backed by Burr). Not surprisingly, the Democratic plan is far more expensive–approximately $65 billion a year, versus the GOP’s $8.8 billion. That’s because the Democrats’ plan is fundamentally about insurance. Everybody chips in, via taxes, to cover the few unfortunate folks–you perhaps?–who’ll end up needing a lot of help. The Republican plan, on the other hand, is that everybody should buy their own catastrophic-coverage policy, helped by a 100 percent tax credit for the premiums.
The GOP plan sounds great, right–100 percent credit? What it means, though, is that people who already have catastrophic coverage (and most people with insurance do) are eligible for a big tax break; meanwhile, the vast majority of those who don’t have any health insurance, catastrophic or otherwise, get no help at all, or damned little.
Why? Because, as Searing writes, 90 percent of the uninsured either don’t pay any federal income tax in the first place, making the credit useless to them, or they pay in the lowest brackets, meaning it might trim their taxes by 10 percent. Remember, we’re talking about the working poor. They work (or else Medicaid would cover them), but they don’t make a lot of money, and their employers don’t pay for their insurance. (And before our Republican friends say, “Aha, tax chiselers,” let’s remember that these folks, and their employers, do pay Social Security and Medicare taxes on all of their income, which rich folks conveniently do not.)
Thus, “the Bush-Cheney plan does not estimate any decrease in the number of uninsured” as a result of these HSAs, Searing tells us drily.
Other elements of the Republican plan, Searing reports, would reduce the number of uninsured Americans from the current 44 million to–drum roll, please–42 million.
The Kerry plan, with catastrophic reinsurance at its heart, plus tax credits for the businesses that do offer insurance to their employees, would cut the 44 million uninsured by more than half, to approximately 18 million; Kerry’s plan would extend coverage to 100 percent of America’s children and an estimated 95 percent of adults.
Kerry proposes to pay for his expensive plan by rolling back the Bush-GOP income tax cuts for people making $200,000 a year or more. Bush’s more modest plan would be financed by–well, Bush actually has proposed no funding mechanism at all. Just add it to the deficit. But make those tax cuts permanent.
Insurance companies, of course, like the Republican approach because it would subsidize the products they’re already selling to people who can already afford them, whether easily or barely. No changes required. They do not like the Kerry idea, which would take away some of their business by making it a tax-supported public benefit instead.
As for doctors and hospitals, their bills for catastrophic treatments could be curbed by reinsurers selling to the well-heeled customers using HSAs. They’re also likely to be curbed by the federal government, which already runs a tight Medicare ship–albeit one with some new leaks courtesy of the small print in Bush’s prescription-drug bill, a major reason Medicare Part B premiums just went up 17 percent.
The difference is, the GOP approach would limit costs for the few, fobbing them off on the many. The Democratic approach might–might, if the government has any guts–cut them for everybody.
Here’s the bottom line: Health-care costs are soaring out of control, and Burr is right, the model of insurance we have clearly is not sustainable. It’s a model that invites insurance companies to cherry-pick the marketplace, looking for people who are young and healthy while avoiding folks who are neither. It’s a model that lets them jack up their charges on small businesses–where one employee’s catastrophic illness will cost more than all the others employees’ premiums combined. It virtually forces them–unless they want to go out of business–to avoid older customers like the plague.
Take, for instance, the “mostly healthy” Chapel Hill couple, ages 61 and 63, who retired pre-Medicare eligibility and were shopping for single policies. Their combined quotes, from Blue Cross Advantage, according to a note we got from the N.C. Council of Churches’ Barbara Zelter: $4,189.
That’s per month.
The average family of four pays $9,600 a year for insurance in North Carolina, Searing says, citing a Kaiser Family Foundation report. No problem if you’re making $200,000 a year. But if you’re making minimum wage–$10, 712 a year–big problem.
The Bush plan, on the other hand, is a classic case of “adverse selection.” People of means, who can afford to self-insure when it comes to ordinary health care costs, are helped to buy boutique plans that cover catastrophic costs only. So they get out of the insurance pool, leaving it that much chillier–and unsustainable–for everyone else.
Easley & Ballantine: Wow, Republican gubernatorial candidate Patrick Ballantine has the endorsement of SEANC, the state employees’, political action committee, thanks to his promise of 5 percent a year raises. And he’s for hiking teachers salaries to the national average.
Ballantine’s problem is that while he’s going one way, his party is going the other. Ballantine could take the position that the state should increase funding for low-wealth school districts and let higher-wealth counties pay more, in line with the landmark Leandro decision authored by Superior Court Judge Howard Manning and backed up recently by a unanimous N.C. Supreme Court.
If he did, Ballantine might have some money to pay for all his promises.
But while Manning is widely celebrated for his brilliant work on Leandro, when he runs for the Supreme Court himself, what does his party do? It endorses a “true conservative,” Paul Newby. (The seat opened up too late for the party primary elections.)
And the Democrats? In true non-party fashion, they endorse nobody in the eight-candidate race.