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I think the middle is probably where we
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ought to be if we want to get something
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done because I think the evidence shows
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that um although there are some people
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who are in favor of the extremes either
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complete government takeover of the
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health care system under a sing
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so-called singlepayer system or a
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complete market oriented system with
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little regulation and high deductible
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health plans with health savings
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accounts which has kind of been the
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right-wing's answer. U um although some
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elements of government uh intervention
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and health savings accounts are present
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in both candidates plans uh the the the
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evidence on what uh ordinary Americans
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want indicate that they don't want to go
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to either extreme. They want something
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kind of like what they have now only uh
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that's able to um deal better with
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people who uh at the moment are
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uninsured. And that's part that's
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actually somewhat feasible to deal with.
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The part that's of course much more
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challenging is they'd also like a system
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that gives them exactly the same
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benefits as they get now, just doesn't
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cost as much. Uh, and so both of the
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candidates, as you would kind of predict
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if you were a political theorist, have
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tended to occupy the middle of the
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distribution of preferences, uh,
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offering elements in their plans, uh,
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many of which are quite similar. Like
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both candidates would want to offer you
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a choice of health plans, not a single
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plan. Uh both candidates want to use uh
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the private sector to provide uh a lot
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of the insurance if not all of the
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insurance and uh and both of them uh
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envision uh uh putting in place uh some
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devices they hope will improve quality
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and lower cost like greater use of
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information technology more use of
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preventive care and things like that. So
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both in terms of their overall
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frameworks and in terms of kind of the
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specific interventions
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uh that they propose, they're actually
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more similar than different.
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The most important thing to know about
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the uninsured is there's no single way
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to characterize the uninsured. It's very
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heterogeneous group. Some of them of
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course are the kinds of people you see
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in the newspaper stories for the most
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part. uh very lowincome people, very
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sick, really sad cases and and we really
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uh you know it's hard not to read those
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stories and think somebody ought to do
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something about this. Uh but on the
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other hand, there are a fair number of
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uninsured people who are either or both
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either pretty well uh and well or pretty
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well off and still they decide not to
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take insurance and the uh the individual
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mandate in the Massachusetts plan was
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targeted at these people and the intent
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was to make them behave more
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responsibly. uh they don't do it in part
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because they have a misperception
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especially the poster child I often say
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for an uninsured person is Fonzi who was
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a healthy uh person in his 20s worked
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part-time at the motorcycle shop so
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didn't have access to group insurance
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and didn't think he would ever need
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insurance but even healthy young men uh
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may eventually need insurance but uh uh
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it's um um sometimes hard to persuade
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them that that's a better use of their
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funds than other things that they could
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spend money on. There's partly a value
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judgment there. How how much uh um do we
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think a person has to have as income
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before we be able to say they could
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afford insurance? Uh but at least one
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calculation we did, you can believe this
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or not, the definition was to say, well,
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if other people, if most other people
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like you already have private insurance,
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we would say you could afford insurance.
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And about half of the uninsured fell
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into that category. if you don't want to
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be quite that hard-nosed about it, you
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could get a smaller fraction. But, um,
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it it's it's certainly true that a um
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that a a sizable chunk of the uninsured
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uh depending on your definition of
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affordability probably could even pay
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for their own health insurance and not
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and and not be um totally unable to uh
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have adequate other consumption. Um, and
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so, uh, part of the impediment, I think,
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to covering the uninsured is that if you
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direct subsidies to all of the
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uninsured, you actually would end up
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paying a fairly large part of that
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subsidy to people who really don't need
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it. And for or and whose uh, otherwise
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similar um, uh, citizens wouldn't be
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getting the same kind of subsidy. So,
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it's it's hard to pick up everybody uh,
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with a single instrument.
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I think there's two uh at least two
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maybe more uh complicated issues that
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both candidates are trying to duck uh
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that probably a critical voter ought to
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watch for. The first one is they both uh
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want to say that they can cover the
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uninsured without um the typical
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American who after all is insured and is
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not in poor health and and um is not um
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if the person works for a large firm
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necessarily worried about their health
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insurance. They want to convince that
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person they're not going to have to pay
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much more in taxes. Uh and unfortunately
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the reality is um um according to
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nonpartisan estimates of the cost of
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these plans or even according to common
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sense uh if we want to um reduce the
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number of uninsured people in the US uh
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those of us who um have the ability to
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pay are probably going to be asked to
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use that ability to pay some amount. The
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round number I carry around in my head
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is if you're a taxpaying household in
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the US a and you want to make a dent in
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the number of uninsured neither of these
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plans will totally eliminate it. you
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ought to be thinking about an extra
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thousand dollars a year or so more in
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taxes. So people don't want to talk
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about that and the so that the mechanism
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that's actually going to collect enough
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money to uh fund the programs they're
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proposing hasn't been put in place. Uh
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the other thing that people don't want
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to talk about is that the uh primary um
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uh determinant of and driver on spending
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growth has actually not been
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inefficiency or waste or even
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conspiracies.
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Either take your pick of who you want to
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be your enemy, doctors, health insurers,
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employers trying to be nasty to workers.
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It's actually been um uh our ourselves
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who uh desire to have um improved
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healthcare technology which we have been
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able to get. Uh that's actually
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substantially improved life expectancy
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at all ages, but it's done so at a cost.
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And so if you really want to control
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cost, at least if you want to stop it
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from growing the way it's historically
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been growing, the the the difficult
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message is you may have to give up
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somewhat on um the uh rate at which you
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add beneficial but costly new
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technology. And only somebody with
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tenure actually could say that, not
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somebody running for office.
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So I don't want to be totally
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pessimistic here. each one uh has some
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things that might work and might help,
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although I'm somewhat skeptical whether
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they'll help enough. So part of the core
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of the idea that McCain is trying to
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pursue, one that I think he's had a hard
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time explaining in sound bites is that
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by um taking away uh the tax advantage
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that I get and that any employees whose
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employer provides health insurance gets,
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the tax advantage arises because Penn
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pays, I figure about $9,000 toward my
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health insurance. That's part of the
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reason why I work here, but I don't pay
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any tax on that. So, I get that tax
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break and um and I um uh because I do so
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I'm inclined to choose the most generous
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policy that's offered. I also get the
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tax break even on the part that I
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explicitly pay because we have a
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cafeteria plan. Well, McCain's idea is
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by taking away that tax break, replacing
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it with a credit, the $5,000 per family,
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2500 per person, but the credit is
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predetermined. It doesn't get any
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bigger. If you choose a more expensive
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plan, people will be incentivized to
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choose more frugal plans and that will
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help to at least lower the level of
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spending, maybe curtail it. Uh the other
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thing that actually is in both of their
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proposals is to put more effort into
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research on comparative effectiveness of
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new technologies to try to look more
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carefully at new technologies uh to
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judge which ones are really not only
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beneficial but beneficial enough uh to
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cover the cost. But as soon as you put
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in that last phrase, people start to get
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very worried. Uh what if there's a
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technology that's beneficial for me, but
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it has a really high cost. I'd really
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like somebody to pay for that for me.
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Even if I wouldn't pay for it myself, we
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kind of know uh what your mother always
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told you whenever you asked to do
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anything you shouldn't. Well, what if
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everybody did that? And that and in a
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way that's our problem. So uh that's one
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of the features that uh that is present.
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Um the the uh the main structural change
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uh and this maybe kind of shows you why
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it's implausible at least until things
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get a lot worse would be uh at least the
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way I've described it would be to think
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of people being offered a variety of
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health plans and the health plans uh
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offer as part of their product different
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attitudes toward new technology. There'd
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be the prudent care health plan that
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would wait for a while when new
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technology came out for one thing to see
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if there are side effects like there
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were with vio and wouldn't give you
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access to it right away and would limit
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access more. And then there could also
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be a plan with with of course a premium
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that rose more rapidly that would give
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you the the firstest with the mostest
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whatever you wanted and you and your
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doctor as soon as you agreed on it that
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other plan would pay for it. Uh and so
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the the at least the market solution
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would be that people would choose
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between these two plans, the high
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spending plan and the low spending plan,
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and we'd declare victory and pull out.
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They would have each gotten what they
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wanted. But um but health plans, for
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perhaps obvious marketing reasons,
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haven't been too eager to pursue
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offering the frugal plan. Most of them,
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whether they're frugal or generous,
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pretend they're generous. So, and it's
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to their advantage to do so, obviously.
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