Current Events Public Policy

The Century Forum

The Century Foundation has a very interesting debate on health care reform (transcript). Below I have cited some of the more interesting points.

  • ERISA. Jacob Hacker, professor of political science at Yale, claims that states attempts at health care reform may be limited by the Employees Retirement Income Security Act (ERISA) of 1974. According to Wikipedia, “ERISA Section 514 preempts all state laws that ‘relate to any employee benefit plan,’ with certain enumerated exceptions.”
  • Will providing universal health care attract low-income individuals are be a boon to a state’s economy? According to Jonathan Cohn, editor of the New Republic, “When it comes to, say, welfare, states that make their benefits generous run the risk of becoming a magnet for low-income residents, who (in theory) end up draining state coffers. But establishing statewide universal health care could (again, in theory) have all sorts of salutary economic effects. If a scheme actually eases the burden on business, for instance, it could attract more employers, create more jobs, and create a virtuous cycle of growth.
  • Is employer-provided insurance a good thing? The general consensus of the debate was that the U.S. should abandon employer provided insurance in the long-run; most Westernized countries in Europe (with the exception of Germany) do not base health insurance around the employer. Some of the forum participants worried about an adequate risk-pooling substitute if universal coverage was not implemented. Ezra Klein of The American Prospect proposed a community rating scheme. He also stated that “There’s no more unjust, inefficient, absurd, or perverse feature to our system than its tie to employment.” On the other hand, Jonathan Oberlander of the UNC department of Medicine stated “To paraphrase Churchill, employer-based insurance is the worst option for providing health insurance, except for all the others.”
  • Cost containment. Henry Aaron of the Brookings Institute claimed that “Universal coverage is a precondition for cost control, not the other way around. Only if all people are covered can regulatory measures exercise effective leverage on providers to hold down spending without creating intolerable incentives to deny care to weak payers—that is, the uninsured.” While universal coverage can reduce cost using a single payer system, it generally does so by restricting consumer choice and stymieing medical innovation. Pursuing a solitary goal of cost containment will not maximize society’s welfare in my opinion.
  • Health Care ceilings and floors. Should all individuals receive a minimum health care level (a floor)? Should individuals be able to purchase more comprehensive insurance than is offered by a government’s universal health care plan? Requiring catastrophic health insurance may induce poor individuals to avoid precautionary health services and thus may be more expensive in the long run. On the other hand, having insurance pay for all health costs creates a serious moral hazard problem. Ezra Klein wisely states: “In my ideal world, a national health service would cover basic services and private insurance—subsidized for those who need it—would cover above the limit. Like in France, a high floor and no ceiling is the way to go (by contrast, America has neither ceiling nor floor, and Canada has a high floor and low ceiling).”
  • Innovation. One problem with a single payer system is that it will stymie innovation. For instance, Leif Wellington Haase at the Century Foundation asserts, “In theory, private plans ought to have more flexibility to introduce new benefits, coordinate care, measure results, keep down costs, and promote information technology. The managed care ‘revolution’ of the 1990s produced some examples. Kaiser Permanente, the giant California-based HMO, is light years ahead in introducing practical uses of information technology and care coordination. In other countries, the existence of private insurance is a valuable safety valve for people who want to buy upâ€? from the government’s universal coverage plan. But most efforts by private insurers seem long on public relations and short on reality. The Veteran’s Administration and, increasingly, Medicare have been taking the lead on quality and care coordination.”

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