Wading Pool

by Jonathan Cohn | May 28, 2007

In Iowa on Tuesday, when Senator Barack Obama gave a speech about health care, he started by introducing Amy Chicos and telling her story. It seems that Amy and her husband, Lane, run a small business providing broadband Internet access to their small town. Twenty years ago, Lane was diagnosed with cancer--and ended up losing a lung, a leg bone, and part of his hip. He's in complete remission now, which is the good news. But, as a cancer survivor, he has sky high insurance premiums. The Chicos now pay 40 percent of their income for health insurance. They struggle to pay for the basic necessities, like food and gas. They have no savings, either--just huge credit card debt and the prospect of bankruptcy looming in the near future.

After recounting this saga, Obama suggested that "This is not who we are. And this is not who we have to be." He then proceeded to unveil a plan designed to help the Chicos and the millions of other Americans who face financial hardship because of medical bills--by reducing the cost of medicine and by helping people to pay for insurance.

Exactly how many people would he help and by how much? Is his proposed scheme the best possible way to achieve that? Those are two important questions, but before we get to them let's step back for a moment.

In the context of a primary campaign, with policy proposals flying left and right, it's easy to forget the simple message all voters should take away--particularly if Barack Obama really does end up as the Democratic nominee for president. That message is this: He thinks it's wrong that people have to go through what the Chicos have gone through. He thinks society has an obligation to fix that problem. And he's got a plan that would help accomplish this.

These are all good things--and, at least relative to whatever Republican he runs against in 2008, they more than recommend him for the job.

 

Still, it is not November 2008 yet. It's May 2007--at the early stages of the presidential primaries, when we have the luxury of deciding between multiple candidates. And, while proposals like these are not the sole basis on which to make decisions about who we would like our parties to nominate, they offer us a lot of valuable insights.

Indeed, when evaluating a health care proposal like the one Obama put out on Tuesday, the plan's details matter most for what they tell us about the candidate who settled upon them. All policy decisions require making trade-offs. So what trade-offs has the candidate made? What does that reveal about his priorities and political instincts? What can we discern about his management style? And does the package as a whole suggest this is somebody who knows how to sell an idea? Here is where the verdict on Obama's plan--or, more accurately, Obama--is mixed.

The best thing you can say about his plan is that he places a great deal of emphasis on actually making medical care less expensive by eliminating waste. His initiatives for doing this--like stressing disease management, investing in information technology, and creating an independent institute to evaluate the effectiveness of treatments--are detailed and well-thought out. This reflects, among other things, the fact that Obama has surrounded himself with some of the leading experts in this field, like economist David Cutler and physician David Blumenthal.

But what about his approach to expanding coverage? From afar, it looks a lot like the plan already put forth by former Senator John Edwards. Rather than provide all Americans with basic insurance from the government--the way a single-payer system would--Obama has opted to leave current health insurance arrangements in place.

His plan assumes that most people who already have private health insurance will hold onto that coverage. As for the people who don't have insurance--or might lose it sometime in the future--Obama would offer several alternatives. Some people would qualify for coverage under expanded safety-net programs like Medicaid. Others would have the opportunity to buy coverage through a new purchasing pool that Obama would create, choosing between closely regulated private insurance plans or a new, government-run program that Obama would offer as an alternative. (Small businesses could also buy into the government-run plan.) Along the way, Obama would throw in subsidies--a lot of them, as a matter of fact--to help people who struggle with medical bills pay for their insurance.

This is all fine and good. There's an undeniable political logic to increasing coverage this way: You're telling people who don't have insurance they'll finally have a realistic chance to get it. And you're telling people who do have health insurance they don't have to feel threatened in any way--they'll get to keep what they already have, only it will be cheaper (because of all the money Obama would save through new efficiencies).

But there are some differences between what Obama and Edwards have proposed. And by far the biggest, most important one is the fact that Edwards has a "mandate" in his plan: He would require every single American to get insurance. That means his plan is truly "universal." Obama says he, too, is committed to covering everybody by 2012. And he has a mandate that all children get insurance. But there is no similar mandate on adults. There is, in other words, no requirement that every adult American have health insurance. And that means his plan is not universal--at least not in the same sense that Edwards and his advisers mean it.

 

Why does this matter? Obama's advisers, for what it's worth, think it doesn't. Not much, anyway. They believe that their initiative will help cover most Americans within two or three years. After that, they say, they can come back to the problem and, following through on Obama's promise, cover that relatively small portion of the population that still doesn't have coverage. If that requires passing some sort of mandate then, so be it. They're prepared to do so.

I think they mean it. But can they do it? The best studies out there--by Urban Institute researchers, the RAND Corporation, and MIT economist Jonathan Gruber--suggest that, without a mandate, improving affordability will cover roughly one-third of the people who don't have coverage. Mandating that kids (but not adults) have coverage bumps that up to about a half. Obama's advisers think that, by really loading up on the subsidies--and making enrollment a lot easier by, for example, having an automatic enrollment with voluntary opt-out at your place of work--they can goose that up to two-thirds. But that's getting optimistic--and, even then, you still have around 15 million people who are uninsured.

In other words, the "mop-up" job at the end would quite likely be more than a mop-up. It'd be a substantial task, maybe even a huge one. That's why most health care experts believe you can't get that close to universal coverage without some sort of a mandate.

So if it's going to take a mandate to really cover everybody, why not include it up front?

Obama's logic here starts with a policy concern--namely, fearing that a mandate will create more problems than it solves. Obama doesn't want to make people buy insurance until, first, he's sure he's made it affordable. Otherwise, he fears, some working-class people would be forced to buy insurance when, in fact, doing so would impose real financial hardship. Lest this fear seem purely hypothetical, Obama's advisers say this is pretty much what has happened in Massachusetts--where, having passed a mandate, the state has struggled to deliver a good insurance product at rates everybody can afford.

This is a real problem, for sure. But it's also an eminently solvable one. (And, in fact, some would argue Massachusetts is solving it.) You can browbeat the insurers into providing cheaper private coverage; you can spend more money on subsidies; or you beef up public programs as alternatives. In a real pinch, you can even loosen the mandates temporarily, to buy a little extra time. Whatever--the point is that, once the mandate is in place, you've pretty much locked yourself in to providing insurance to everybody, one way or another. And that's precisely what should happen.

Obama's other concern seems to be political--and I don't mean that in a nasty, these-guys-are-so-craven sort of way. Like so many in the Democratic Party, Obama's advisers remember all too well how excessive ambition killed the Clinton plan politically. They don't want to make that mistake again. They fear a mandate sounds scarier to the public, particularly middle-class voters. If, on the other hand, they create the structures for expanding coverage, people will get accustomed to having those mechanisms around--and requiring that everybody get insurance wouldn't be such a big deal.

Like all political arguments, this one comes down to a judgment call. But I, for one, don't see it the way Obama does. Everybody talks about mandates now. Remember, the plan that Mitt Romney passed in Massachusetts and the one Arnold Schwarzenegger has proposed for California both involve mandates. The idea just isn't that controversial anymore.

What's more, there's a good reason you have conservatives, as well liberals, touting this: It's a way of stressing individual responsibility. To people with insurance, the ones you really have to worry about losing in a health-care fight, it signals that you're requiring everybody to start paying their fair share. It's also a way to buy some love from the employer community, for whom the words "individual mandate" seem (mysteriously, in my view) to wash away fears of government involvement in health care.

 

Does this mean Obama's plan is fatally flawed? Of course not. It still would represent serious progress. (That said, if you want to get into more of the details, Ezra Klein has put his finger on some other valid concerns here.) But, for those of us who will vote in the Democratic primaries, again, the question is how Obama's plan compares to other approaches--and what it tells us about Obama's abilities, as both a candidate and lawmaker-in-chief, relative to his rivals.

With that in mind, let me make one last point via a summertime analogy: Going into your swimming pool on a day when the water might be a little chilly. You can wade in a step at a time, or you can jump into the deep end. The advantage of the former approach is that you minimize the temperature shock at any one time. The downside is that it takes a lot longer to get in, and there's always the chance that, for one reason or another, you won't go all the way. You might chicken out at your waist; or something else might capture your attention and you might forget about swimming altogether.

By contrast, jumping in the deep end involves a little more risk: You might feel really cold for a few seconds. But you'll probably get comfortable pretty quickly. And, once you've made the decision to jump, you're guaranteed to be in the water. You can't get un-wet.

When it comes to achieving universal health care, Obama wants to wade into it: He doesn't want to move everybody into universal coverage until the arrangements are all in place and people feel totally comfortable with it. Yes, he's promising to cover everybody. But the promise is only as good as his word, sincere though it may be.

Those who prefer mandates--a category that, again, happens to include rival John Edwards--prefer to jump in the deep end. They want to seize this opportunity and get the mandate on the books from day one (even if, as practical matter, it's phased in so it becomes fully effective only after a few years). In so doing, they are offering what is, in effect, a stronger guarantee.

Reasonable people can disagree on which approach makes the most sense. And, needless to say, this shouldn't be the only criterion on which to judge these two candidates--or any of their rivals. (We're still waiting to see what Hillary Clinton has to say about coverage and access; her proposal to reduce costs, like Obama's, was impressive.) Still, it'd be foolish to ignore this altogether. As far as I'm concerned, Obama definitely showed us something good on Tuesday. It's just not as good as what I've seen elsewhere.

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