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News Article

Dec 6, 2007

The Economist: Arguing over the cure

Reforming America's health-care system is a thorny election issue


IT IS obvious to anyone that the patient is ill. But the physicians agree on little else: not the underlying cause, certainly not the appropriate course of treatment and least of all which among them is best qualified to administer it. As they argue, the patient just gets sicker.


Health care, along with the economy in general, immigration and the whole alarming nexus of war, terror and security is, according to pretty much every poll, one of the issues that American voters consider most important. And next year, in both the primaries and the general election, it will have particular resonance. Iraq may even fade as an election subject, if the number of Americans killed in action continues to decline as a result of the “surge” of troops into the area around Baghdad. Meanwhile, uncertainties about the economy tend to feed through into a preoccupation with health care. A majority of Americans (around 54% last year, according to the Kaiser Family Foundation, a Washington, DC, think-tank) get their tax-exempt health insurance through their employers, so losing a job often means losing cover. Even for those who remain in work, tightening market conditions are forcing employers to downgrade the insurance they offer.


But when it comes to health care—as opposed to the economy, or security—voters are at least being offered clear choices. All the Democratic candidates, for instance, and none of the Republicans, are proposing some version of universal health coverage in an attempt to end the anomaly whereby some 47m people, a sixth of the population of the world's most powerful nation, have no health insurance. A YouGov/Polimetrix poll for The Economist this week shows that half of all voters would like to see everyone get coverage, even if that means a tax increase, with only 36% opposed (see chart). On the campaign trail in New Hampshire recently John Edwards, a Democrat, won waves of applause every time he threatened to take away the health insurance of members of Congress if they did not provide something similar for all Americans.


There is, however, no consensus among Democrats on how to achieve universal cover. In fact, health has become a lively battleground in the increasingly edgy war between Hillary Clinton and Barack Obama—so much so that Robert Reich, who was labour secretary in Bill Clinton's administration, publicly rebuked her this week, adding that he thinks Mr Obama's model for reform is better than hers. Mrs Clinton (along with Mr Edwards, the third-ranked Democrat, but unlike Mr Obama) has proposed a detailed plan that relies on a “mandate”—a legal requirement that everyone have an approved form of insurance, just as they are required to have if they drive a car.


The idea is to make sure that younger people, who may feel they are unlikely to get ill and can do without cover, are required to join the insurance pool, making it healthier and supposedly bringing down premiums. They will also be more likely to get preventive treatment at an early stage if they do get ill, rather than becoming expensive emergency cases later on.


Mr Obama's supporters contend that there are problems with this model. First, people often simply ignore the mandate—usually because they cannot afford health insurance. Subsidies are to be made available under the Clinton and Edwards plans: but they will not cover everyone. And independent voices like Robert Reischauer's at the Urban Institute, another Washington think-tank, complain that many of the complexities in both these plans have yet to be worked out. Who will resolve disputes, of which there are certain to be many, between patients and government-approved insurance providers? What if people default on their payments? And will costs really come down? The experience in the only state to run a universal mandate so far, Massachusetts, has not been wholly positive.


And, of course, mandates are perceived as bossy, which is why Republicans, in particular, hate them. Mr Obama's refusal to prescribe one may serve him well with centrist voters with bad memories of Mrs Clinton's first attempt at health-care reform in 1993-94, a political disaster on an epic scale. Mr Obama's plan focuses on providing a larger pot of cash to help the uninsured take out insurance, rather than trying to force them to do it.


To Republicans, the Democrats' insistence on concentrating on universal care is perplexing. Of the 47m uninsured, perhaps 10m are illegal immigrants. Of the others, many will be younger people who simply choose not to have insurance. Others are only uninsured temporarily. Mitt Romney, the former governor of Massachusetts who set up its universal health scheme, does not want to extend it to the whole country now that he is running for the Republican presidential nomination rather than election in a liberal state. Arnold Schwarzenegger, California's Republican governor, favours mandates; but he is not running for the top job.


Republicans prefer to concentrate on the cost side of health insurance, which makes sense. Health-care costs have risen, on average, 2.5 percentage points faster than GDP annually for four decades. That means, among other things, that the costs of the government-funded medical programmes—Medicare for the elderly and Medicaid for the poor—will bust the budget unless they are radically reformed. The Republicans further charge that Democratic plans to stop insurers excluding people with pre-existing medical conditions will hugely increase the cost of premiums.


Republicans focus much more closely than the Democrats do on using market mechanisms to bring down costs. John McCain, for instance, suggests allowing more competition across state borders. Along with Rudy Giuliani and Mr Romney, he also favours a much wider use of tax deductions. This would allow more people than just those lucky enough to have jobs that offer health insurance to benefit from what is, in effect, a large government subsidy. Mr Giuliani, for instance, would allow those without employer-provided insurance a tax deduction of $15,000 to help buy it.


Voters think cost is a bigger problem than coverage. But none of the Republicans is stressing health to the same extent as the Democrats are. Maybe that is why our poll shows almost twice as many people prefer the Democrats on the issue.

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