Health Break | Published June 5, 2006 | Written by Jeffrey A. Ratner, MD

The Economics of Universal Health Care

Between the time that the Clintons submitted their ill-fated health care plan in 1993 and Bush's re-election to the presidency in 2004, the overall costs in health care in America have doubled and the number of uninsured Americans continues to rise.

Business leaders who in the 1990s had been merely concerned about rising medical expenses now see them as the single greatest threat to American competitiveness. More importantly, the employer-based health-care system that functioned so well during the last century is now impractical if not unworkable in the global marketplace. It is absolutely mandated that we disentangle major employers from health care, transferring both government dollars and the responsibility for making choices to the consumer.

In the 1950s, national health insurance advocates shifted their attention away from the general population and toward the elderly a group unlikely to be reached by work-based or other private health insurance, but also politically attractive as "deserving" of public protection. The political compromise was to establish Medicare as universal social insurance for the elderly and also establish Medicaid as a means-tested health insurance for certain population groups, low income and disabled. The overall result was a creation of a public health insurance system targeted to people not expected to work and built around the private (tax subsidized) insurance system for workers and their families.

The primary political and policy problem in our face is that it is almost impossible to insure "have-nots" without in someway disrupting the status quo of the "haves." The Clinton plan before 1993 was built on a strategy explicitly aimed at avoiding redistribution with private to public coverage shifts. These results would have been achieved by securing and extending existing employer-sponsored coverage and by relying on financing arrangements that would have not required tax increases on the already insured.

The plan was built on an employer mandate. All employers would have been required to provide coverage for their workers at benefit levels that matched benefits held by the well insured; thus, avoiding the need to impose new taxes on the already insured.

This approach would have provided financing subsidies for lower income families without the imposition of new taxes i.e., subsidies that would lessen employers' premium obligations. These subsidies were to be generated through requests of cost containment programs.

The theory behind these labeled "alliances" would be that insurers would compete for consumers by keeping their costs down. Prohibited from competing on benefit levels or by avoiding high-risk enrollees, plans would be forced to compete by securing the efficient delivery of quality care.

The Clinton proposals were attacked as "big government" interference with employer sponsored insurance.

One can only imagine the scenario in which universal health care systems might be politically viable in the United States. For example, if our employer-based health insurance system continues to implode.

We are already seeing employers replacing well subsidized defined benefit health plans for poorly subsidized ones, thus the uninsured or seriously underinsured continue to grow. At some point, a critical mass of these persons will consist of politically active middle class Americans who will demand a response from the government. Hospitals will face an increasing uncompensated care burden.

The sentiment will then swing, with more Americans becoming more comfortable with a larger role for government in the American health care system. Thus, businesses will no longer oppose national health insurance. When this happens, our legislators will have the opportunity to take positive steps forward for universal health care.

In a follow-up Health Break column next week, we can investigate how this process can begin.

Jeffrey A. Ratner, MD specializes in pulmonary and internal medicine. He is in private practice in State College and is a member of the medical staff at Mount Nittany Medical Center.

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