Make It Happen: Health Care For All

Jacob S. Hacker
http://www.tompaine.com/articles/2006/12/13/make_it_happen_health_care_for_all.php

December 13, 2006

Jacob S. Hacker is a political science professor at Yale University and fellow at the New America Foundation. His latest book, The Great Risk Shift, analyzes the destruction of America’s economic safety net and offers ways to restore opportunity and security to working-class people. He spoke about his book Tuesday at a discussion sponsored by the Campaign for America’s Future.

In recent years, a “perfect storm” of rapidly rising medical costs, declining median wages, and mounting business desperation about health benefits have produced a dramatic deterioration in the scope and generosity of American health insurance. Meanwhile, runaway health costs have become an increasingly grave threat—not just to family finances, but to corporate America’s bottom line. A decade ago, insistent voices proclaimed that the system was healing itself, that managed care and business vigilance would finally rein in costs, reversing the long-term slide in coverage. No one can believe that today. A system that was barely treading water is now sinking fast.

Americans want this to change. The 2006 midterm was more than a repudiation of the current course in Iraq. It was also an affirmation of the need for government to address the pressing economic concerns of the middle class: above all, the pervasive sense of insecurity that working Americans feel despite the overall growth of the economy. Among nearly every demographic and political group—whites, blacks, women, men, older voters, younger voters, working-class earners, middle-class earners, Democratic and swing voters, and even some reliable Republican voters—there is overwhelming support for providing affordable health care to all Americans. Although Americans like much about U.S. health insurance, dissatisfaction with how present arrangements affect family finances and security is broad, deep, and growing.

These trends are pushing comprehensive reform of U.S. health finance back onto the agenda of American politics, after more than a decade of reluctance to tackle the issue. And yet, nothing guarantees that this looming debate will end differently from past debates. Again and again in the 20th century—most recently, in the early 1990s—efforts to make health insurance an integral piece of the American social fabric have been stymied. The stakes are too high to allow them to be stymied again.

Now is the time, therefore, for advocates of reform to map out their strategies and develop their ideas for providing affordable, quality health care to all Americans. The central goal should be simple, ambitious, and direct—health security for all. The means should be straightforward, too. Rather than coming up with complex “compromise” schemes that try to please everyone (à la the Clinton health plan of 1993) or seeking to turn the entire framework of American health financing upside down overnight, reformers need to think about how they can build on the positive example set by America’s largest, most popular, and most successful health insurance program, Medicare, to provide health security to all Americans without secure workplace coverage.

It would, of course, be more difficult to make the case for change if our antiquated financing structure delivered huge competitive benefits to American business. But who can believe that today? Corporations may have multiple and conflicting views about what should be done, but none is satisfied with the status quo. Most believe that the present system hurts the international competitiveness of multinational companies and creates an unfair competitive playing field at home. Far from hurting business, a proposal for true health security would immensely benefit corporate America, and especially those elements of corporate American most committed to the welfare of their employees. A new social contract laying out the roles of employers, government, and workers is clearly and desperately needed.

This contract must ensure that all workers have access to health insurance, even if their employers decide not to offer it. But it need not eliminate the employer role in health financing altogether. The biggest problem with American health financing is not that employers sponsor coverage. It is that employers decide whether workers get coverage at all. So why not give employers the option of providing low-cost coverage to their workers through a new public program modeled after Medicare? If employers want to provide comparable private coverage, they can. But if they do not provide basic insurance, their workers should be automatically enrolled in the new Medicare-like program, with employers required to make a modest contribution toward its cost. (The self-employed would have the option of purchasing coverage through the program as well—on the same terms as other employers.)

A few years ago, I developed a proposal along these broad lines, and it has been extensively analyzed by the Lewin Group, the leading private firm that does cost and coverage estimates for groups developing reform plans. (Currently, I am developing a revised version of the proposal for the Economic Policy Institute in Washington.) The estimates show that if employers were allowed to purchase public coverage for their workers by paying a modest wage-related premium, roughly half of Americans younger than 65 would be in the new Medicare-like plan and the other half would remain in private insurance. All Americans with direct or family ties to the work force would be guaranteed affordable coverage, at a cost (in 2002 dollars) of around $110 per person in increased health spending.

Expanding public insurance in this way would not eliminate private employment-based insurance. It would simply give employers a new option (while requiring that they make at least a minimal commitment to financing coverage for their workers). In higher-wage firms and unionized industries, companies would still see it as in their interest to provide broad coverage—although some might decide it was better to supplement the new Healthy America program than provide coverage directly. Yet the new framework would ensure that everyone who works has secure health insurance with at least a standard package of benefits, that many more workers have a choice of health plan (including a plan with free choice of doctors and specialists), and that firms that now struggle to provide health benefits, or cannot provide them at all, have an attractive, low-cost option for doing so. Because the public insurance pool would cover nearly half of nonelderly Americans, moreover, it would have strong leverage to bargain for low prices on behalf of covered Americans and their employers.

Labor unions are increasingly attracted to a public-private partnership of this sort. Business groups are another matter, but the idea that they might warm to it is not so far-fetched. After all, this proposal lets employers continue to provide coverage if they want to, preserves a substantial role for private insurance, and saves many companies serious money. At the same time, it ensures that all workers have good, affordable coverage in the public or private sector. That’s the kind of bargain that could give compromise a good name.