Friday, April 10, 2009

On healthcare

How horrendously socialistic is Obama's Healthcare proposal? Well here is the current policy:

Make Health Insurance Work for People and Businesses -- Not Just Insurance and Drug Companies.

  • Require insurance companies to cover pre-existing conditions so all Americans regardless of their health status or history can get comprehensive benefits at fair and stable premiums.
  • Create a new Small Business Health Tax Credit to help small businesses provide affordable health insurance to their employees.
  • Lower costs for businesses by covering a portion of the catastrophic health costs they pay in return for lower premiums for employees.
  • Prevent insurers from overcharging doctors for their malpractice insurance and invest in proven strategies to reduce preventable medical errors.
  • Make employer contributions more fair by requiring large employers that do not offer coverage or make a meaningful contribution to the cost of quality health coverage for their employees to contribute a percentage of payroll toward the costs of their employees' health care.
  • Establish a National Health Insurance Exchange with a range of private insurance options as well as a new public plan based on benefits available to members of Congress that will allow individuals and small businesses to buy affordable health coverage.
  • Ensure everyone who needs it will receive a tax credit for their premiums.

Reduce Costs and Save a Typical American Family up to $2,500 as reforms phase in:

  • Lower drug costs by allowing the importation of safe medicines from other developed countries, increasing the use of generic drugs in public programs, and taking on drug companies that block cheaper generic medicines from the market.
  • Require hospitals to collect and report health care cost and quality data.
  • Reduce the costs of catastrophic illnesses for employers and their employees.
  • Reform the insurance market to increase competition by taking on anticompetitive activity that drives up prices without improving quality of care.
Highlighted in red above are the policies that would essentially cost millions, but most of these are actually tax breaks. Highlighted in blue above are regulatory provisions, which, if mismanaged could prove draconian. Highlighted in green above is a provision that envisages using market forces and government subsidies to do for the healthcare sector what Fannie Mae etc. have done for the mortgage industry.

This is an old analysis of the healthcare plan comparing McCain's and Hillary's plans with Obama's. The reason I added this is that in many ways, his plan has changed.

Is Obama's plan nationalized healthcare? Not really. Most of the government spending comes from a bunch of tax credits and assistance that shifts part of the responsibility for healthcare onto tax payers.

Is it anti-business? Somewhat. There are several provisions that could be viewed as draconian. He requires all large employers to provide employees healthcare. So, companies that don't currently provide healthcare or short shrift employees, may find their costs rising. He wants insurance companies to cover pre-existing conditions - which could cause healthcare costs to go up, or the profitability of many plans to go down. He makes it easier to import drugs. So, companies that charge less for drugs overseas, and more in the US, may suddenly find their ability to differentially price may recede - which is bad for the companies that profit from this.

Interestingly, he does not introduce price controls. The basic plan is designed to introduce more competition and provide some government assistance to get poor people onto some sort of healthcare plan. This is not nationalized healthcare a.k.a. UK, but government subsidized health insurance.

Of course, the plan is only a set of principles, and the real issues will surface only when Congress gets too it. However, prima facie, the only socialist aspect about the plan is its intent - i.e. that government has a responsibility to ensure that everyone has access to affordable healthcare. Once you accept that, the plan is about as non socialist as you can get in meeting the twin objectives of ensuring everyone has access to affordable healthcare and ensuring government has a limited role in people's healthcare.

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