Obama’s Health Care Reform Plan Out of Balance

Senator Barack Obama has been on the defensive concerning his health care reform proposal for much of the past several months. Senator Hillary Clinton and, while he was in the race, former Senator John Edwards pounded Senator Obama for failing to seek universal coverage by mandating Americans to obtain health insurance. If you don’t start off with a plan for universal coverage, Senator Clinton claims in nearly every speech she gives, you won’t get it. She goes further, claiming universal coverage is a moral obligation of the nation and a litmus test Democrats.

Senator Obama counters that Senator Clinton would have to garnish wages to force people to buy coverage. He notes that Senator Ted Kennedy, the dean of Congressional health care reformers, is comfortable enough with the Obama approach to endorse the Senator. Finally, Senator Obama claims his reform package, by lowering  the cost of coverage, will result in Americans getting covered because they will finally be able to afford it.

Unfortunately for Senator Obama, his logic doesn’t hold up to any meaningful scrutiny. Virtually every study done shows Senator Obama’s approach resulting in fewer insured Americans than does Senator Clinton’s. Arguing that they’re equal in terms of “universal coverage” defies logic and experience.

But there’s a worse gap in in Senator Obama’s health care reform plan: his refusal to consider a mandate to buy coverage, coupled with his plan’s inclusion of requirement that carriers sell policies to all applicants, undermines his claim to making coverage more affordable. The carrier mandate (often called “guarantee issue”) raises the cost of insurance unless all residents are required to buy. That’s how New York and New Jersey approached health care reform — carriers there have to sell to all comers, but the purchase of coverage is voluntary. The result: premiums are twice as high in those states than in California.

This shouldn’t come as a surprise. Imagine a system in which homeowners could wait to buy fire insurance until after their house burned down. Or one in which drivers could wait until after their accidents to buy car insurance. The cost of these policies would be astronomical. After all, if consumers can avoid paying a premium until they need the coverage, they’ll wait. That’s not being irresponsible, that’s human nature.

There’s no reason to think introducing this imbalance nationally will produce any other result when it comes to health insurance. Without including both, a mandate for carriers to sell and for consumers to buy coverage, Senator Obama’s plan will increase health insurance costs in spite of other provisions in his reform package.

Senator Obama no doubt is aware of this reality. He may be in denial about it, but he’s bright and so are the people around him. In an ideal world he’d address the imbalance in his health care reform plan now, during the primaries. But doing so would open him to charges of flip-flopping. It would demonstrate that Senator Clinton’s experience dealing with health care reform led her to a more responsible conclusion (at least on this aspect of their plans). Senator Obama might be interested in bringing a new approach to politics, but even he’s not ready to hand his opponent a cudgel on an issue as important to voters as health care reform.

My guess is he’ll wait until after he’s secured the nomination — if he does, indeed, secure it. Then, sometime in the summer he’ll introduce a willingness to consider guarantee issue in combination with an “affordability exemption” to assure it doesn’t bankrupt consumers. And if it doesn’t happen during the campaign, guarantee issue is certain to find its way into his Administration’s reform package.

If Senator Obama is lucky, Senator Clinton will continue to level only the “lack of universal coverage charge” against him. That line of attack is getting old, but she seems unwilling to abandon it, even though she’d be far better served by forcing Senator Obama to defend an indefensible imbalance in his plan.  

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