The Defining Issue

For liberals, it's the lost crusade. For conservatives, it's the emblematic case of overweening big government. Perhaps more clearly than in any other issue, federal action to achieve universal health coverage brings out ideological and partisan differences in America. In the early 1990s, health care became a defining conflict for the nation, and so it remains today. The uninsured figure prominently in the debates between Al Gore and Bill Bradley, but they're only a marginal issue for the Republican presidential candidates.

Polls indicate that Republican as well as Democratic voters are concerned about the abuses of managed care and the affordability of drugs and health services. But the ideal of health care for all has a more powerful emotional resonance in Democratic ranks. In a generally prosperous time when many other economic issues have become more muted, universal health care remains one cause that many people feel is worth fighting an election over.

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Bill Bradley tapped into those passions when he made health care the defining issue of his campaign. He deserves great credit for reopening the national debate, but the specifics of his health plan have put liberals in a quandary. While the proposal would cover many of the uninsured, its defects are serious--though not, in my mind, serious enough to preclude it from serving as an initial framework for reform.

Like conservative proposals in the past, Bradley's relies primarily on voluntary enrollment in private health insurance, stimulated by new income-related subsidies and tax breaks; to facilitate enrollment, he would open up the Federal Employees Health Benefit Plan for other groups and individuals to use as a purchasing pool. The new subsidies for private insurance premiums would replace Medicaid and the Children's Health Insurance Plan (CHIP). Instead of these shared federal-state programs, the federal government would assume full responsibility for subsidizing acute health care for the poor, while the states would pay for nursing home and other long-term care. The proposal also includes prescription drug coverage for the elderly and additional funds for public health. Altogether, his campaign puts a price tag on the program of $65 billion in federal funds in the first year.

This is a substantial budgetary commitment, though it actually overstates the cost to taxpayers ($18 billion of the total represents a net shift of funds to the states as a result of switching responsibilities for acute and long-term care). According to Bradley's advisers, the plan would extend coverage to 30 million people who are now uninsured, raising the proportion of Americans with insurance from 84 percent to 95 percent. The plan would also create a more uniform level of support for low-income health care than does the current Medicaid system, which is generous in states like Vermont but stingy in states like Mississippi. And it would reduce the disruptions in coverage the poor experience when their earnings exceed the threshold of eligibility for Medicaid.

While endorsing universal coverage as a long-range objective, Gore proposes, in contrast, to extend CHIP to more children, to open that program to low- income parents, and to allow people aged 55 to 64 to buy into Medicare. (President Clinton's State of the Union proposals follow the same lines, with one additional element--a 25-percent tax credit for COBRA premiums to make health insurance less expensive for workers leaving jobs.) The vice president has repeatedly criticized Bradley's plan as fiscally reckless and likely to lead to a tax increase. But with projected surpluses growing, Gore's charge itself seems excessive. Moreover, if we are ever going to get universal coverage, we must be willing to pay for it--and, in fact, a majority of Americans say they would be. An ABC News/Washington Post poll in December asked voters which was more important, "holding down taxes" or "health care for all"? Eighty-two percent of Democrats said health care was more important; so did 75 percent of independents and 57 percent of Republicans.

Gore's approach received a major boost, however, from a study by the economist Kenneth Thorpe suggesting that the vice president's program could achieve nearly as much expansion of coverage as Bradley's at much lower cost. Thorpe's estimate put the proportion of the population insured under Bradley's plan at only 89 percent, compared to 88 percent under Gore's, with the cost of Gore's program running at less than one-third of Bradley's. But as Bradley's economists have pointed out in their own analysis, Thorpe's projections ignore a requirement under Bradley's proposal that all parents insure their children as well as a provision for an automatic "default" plan for all adults entitled to a full subsidy who do not obtain coverage on their own. My own reading of the studies is that Bradley's advisers have the better case and that his plan would extend coverage to substantially more people than Gore's.

Nonetheless, Bradley's plan would probably make many low-income peo-ple worse off. Though the former senator denies it, his proposal would "voucherize" Medicaid, converting the current set of "defined benefits" into a "defined contribution" for buying private insurance--but without any guarantee that the contribution would be enough for poor people to enroll in a decent health plan. The proposal calls for a maximum subsidy of $1,800 per adult, which would fall as income rises. Even if understood as a national average, this is too little to buy the coverage that most Medicaid beneficiaries currently receive. The plan also raises concerns because it does not link the value of the subsidy to the cost of premiums--that is, it doesn't actually guarantee that health insurance will be affordable to the poor. Many poor people would initially find coverage too expensive, and if health costs grow faster than federal subsidies--scarcely a farfetched possibility--the proportion of the population without health insurance would rise again.

These are the concerns that provide the legitimate basis for Gore's criticism of Bradley's plan as a threat to the poor and minorities. Although some observers have labeled this criticism "demagogic," Gore's basic point seems to me to be correct: Bradley would eliminate Medicaid in favor of a subsidy program that would be inadequate to replace Medicaid from the start.

Other features of Bradley's proposal are also troubling. Hoping to minimize opposition, Bradley calls for no mandates on employers or individuals (except for the requirement that parents insure their children). Many employers with low- income workers would rationally stop providing them coverage (why pay for it if the government will?). Firms could opt into the federal employee system, but those that did so would generally have higher-than-average costs, most likely because of a relatively older work force. As a result, the federal employee program would find itself with rising burdens. And some individuals would rationally decline to buy insurance, knowing they could obtain it when they get sick. If we made Social Security and Medicare voluntary, we would have similar problems.

Of course, liberals have been through this debate about making health insurance compulsory before--and we have lost. Some of us can make the arguments in our sleep (and put others to sleep too). To make progress toward universal coverage, there is no choice but to accept compromise. We don't have to take Bradley's proposal as if it were final, especially since he has presented it only as a basis for discussion. Even if something like it were enacted, we might view it just as a first step whose defects would become obvious and open up further possibilities for reform.

What are some of the changes that the plan would need? Here are my top three. First, the value of the subsidy should be linked to the cost of premiums, with the subsidy for the lowest-income families being sufficient to enroll them in a plan comparable to a good Medicaid program. Second, there should be a minimum employer contribution for health insurance, set like the minimum wage as a fixed amount per hour of work (say, 50 cents an hour). Think of this as a "health care minimum wage." This revenue would limit the ability of employers to dump their responsibilities; it would cut the cost of subsidies and help pay for decent coverage. And, third, individuals should be required to participate in health insurance even when they are healthy, to avoid the risk of "free riders" taking out insurance only when they get sick.

Such provisions would not be essential from the start. In an era of rising budget surpluses, the most practical course may be to enact a subsidy program like Bradley's and to focus later on remedying the structural weaknesses. Bradley's program would make universal health care an unambiguous federal responsibility; the means of carrying that out would necessarily evolve.

Despite the attention it has received in the Democratic contest, universal health care might not figure that prominently in the general election. The likely Republican nominee continually mentions his achievements as governor of Texas, a state where 25 percent of the population still lack health insurance. The Democratic candidate could ask voters across the country whether Texas health policy is what they want for the country. But George W. Bush, like Gore, says he supports expanding CHIP; the differences between the two of them on health care might seem minor. If Gore ends up the Democratic nominee, he may want to consider a bolder, Bradley-like initiative of his own--that is, if he intends to make health care a defining issue in November. ¤


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