TONY COX, host:
So with more and more people finding themselves in the same position as Jesse, just how will President Obama's health care plans help them? Here's how he outlined some of his health-care agenda during his address to a joint session of Congress on Tuesday.
(Soundbite of speech)
President BARACK OBAMA: Our recovery plan will invest in electronic health records, in new technology that will reduce errors, bring down costs, insure privacy, and save lives. It will launch a new effort to conquer a disease that has touched the life of nearly every American, including me, by seeking a cure for cancer in our time.
COX: Of course, there are varying thoughts on President Obama's plans and his policies. Let's turn now to Robert Moffitt, director of the Center for Health Policy Studies at the Heritage Foundation, a public policy research institute, and Linda Blumberg, she is a senior fellow at the Urban Institute's Health Policy Center. Linda, Robert, welcome.
Dr. LINDA BLUMBERG (Senior Fellow, Health Policy Center, Urban Institute): Thank you for having me.
Dr. ROBERT MOFFITT (Director, Center for Health Policy Studies, Heritage Foundation): How are you?
COX: Linda, let's start with you. We just heard from Jesse Alexander, one of thousands of Americans struggling with health-care costs. You've analyzed the president's health-care plans so far. What are some of the key reforms being proposed that would help Jesse?
Dr. BLUMBERG: Well, there's a number of the reforms that are being proposed that will directly assist him and his family. First of all, under the Obama plan, there would be a new national health insurance exchange which would be set up to contract with private insurance plans and that would also likely have a competing public insurance plan for individuals to purchase coverage from. And those plans would be available at a subsidized cost so that individuals who were low-income or who had lost jobs, even temporarily, could get financial assistance to make sure coverage is affordable to them.
And those plans that would be available through the exchange and in the market in general would no longer be able to exclude pre-existing conditions, something that the other person talked about being a problem for him and his family, and would not be - the plans would not be allowed to rate insurance coverage based upon the health status of the individuals enrolling. So they would take the health-care risks of all the people and spread them much more broadly than we see in the insurance market today.
COX: Now, Robert, the plan that the president is proposing carries a $634 billion price tag for a reserve fund to be put in place over the next decade, a fund that could balloon to as much as $1 trillion. And the president also has spoken in fairly broad terms about how he would like to tackle health-care reform. What do you make of his vision? Is it feasible, in your estimation?
Dr. MOFFITT: Well, yes, it's feasible. I mean, we've just - we've bailed out banks, we've just passed a trillion-dollar stimulus package. His estimated projected reform, as you say - as you point out, is $634 billion. Most experts think it's going to be a trillion over the 10-year period.
I got to tell you, though, Tony, government officials rarely get it right when it comes to the true cost of government health policy proposals, especially with Medicare and Medicaid and certainly this new one. Invariably, it usually costs a lot more than they tell you that it is going to cost. That's the historical record. So we're looking at an expensive proposal here.
The president says that he wants to save the typical family $2,500 annually in health insurance premiums. I think that is unlikely. I think it is more likely that the overall cost of this will result in higher taxes across the board, not just taxes on the rich.
COX: Now, in a paper that you wrote, Robert, in December, called, "How a Public Health Plan Will Erode Private Care," you say that, quote, "The vast majority of American voters oppose any kind of government controlled health plan if it means that they have to change their own health insurance coverage." But what about the people who just can't afford or don't have health insurance, or people like Jesse Alexander who are just barely hanging on?
Dr. MOFFITT: I'm very familiar with Jesse's case. He's from Maryland. I was on the Maryland Health Care Commission. I'm very familiar with the health insurance market in Maryland, and I can tell you, I sympathize deeply with him because frankly, the government policy in Maryland has made it very difficult for people like Jesse to get affordable health insurance.
In the state of Maryland, there are 62 benefit mandates on individual health insurance, so you have to buy all kinds of benefits whether you want them or not, just benefits - not just benefits to protect you and your family against the normal health-care costs that we run into.
The other point is, too, and one of the most disappointing facts about the Obama's proposal is that while he wants to tax the rich to pay for this, he leaves the most regressive feature of the federal tax code, which is basically unlimited tax breaks for people regardless of where they work or regardless of their income, in place in the current system. Well, this undercuts affordability for millions of Americans.
A person like Jesse can get unlimited tax breaks if they get health insurance through the place of work. But if he has to buy individual insurance, he has to pay for it with after-tax dollars that can add as much as 30 to 40 or even 50 percent to the cost of the premium. So, if we would provide direct and immediate tax relief to people like Jesse so they can get the health insurance that they want, they would be a lot better off. Certainly they'd be a lot better off than being stuck in a program like Medicaid or some other government program where you get what the government gives you.
COX: What about that, Linda? How complicated and complex is the issue of trying to enact health-care reform when issues such as the health insurance companies, as well as the tax structure, play such a vital role?
Dr. BLUMBERG: Well, whatever we do to create a more comprehensive system of health insurance coverage is going to be complex. We've got an incredibly complex base that we're starting from, and so all of the problems that we see in the market, to redress them is no simple task because we've really created what I consider pretty much of a mess in term of the patchwork pieces here.
So, things that are going address all the problems we have are going to feel complex. But we do have a good deal of experience looking at what we can do now, and I think there's a growing consensus around the types of approaches that the Obama plan is suggesting that we take.
COX: For example - for example, a growing consensus, for example, over what areas?
Dr. BLUMBERG: That we cannot have a system of insurance covers that discriminates by health status and excludes those that were - or hampers their ability to get reasonable coverage as a consequence of their past health status.
We need to have a system in place where insurance coverage is available to everyone, regardless of their health status; that we're not discriminating the way we do in private markets. To just give people a subsidy they use as individuals in the current non-group market in the vast majority of states does not help all of the people who, like Jesse and his family members, who have past health conditions and who would likely be excluded from those market as a consequence of them.
So, what we need is a purchasing pool-type system where we've got insurance market reforms that open up the system to all of those regardless of health-care risk, that provides subsidies in order to make coverage affordable, and that spreads the health-care risk of the sick very broadly across the population in order to ensure consistent, comprehensive coverage over time.
COX: Let me direct this question to the both of you, Robert and Linda. The role of the private insurance carrier, what responsibility do they bear, in your view, for the predicament that we are in? What responsibilities do they have in terms of trying to get us out of that? And I'm reminding you both of what Jesse said, that he thought that the restructuring should involve some sort of universal health care singlepayer program. Robert?
Dr. MOFFITT: Well, I'll go first. I think that the private insurance companies are responding to the incentives that are given them. The fact is, is that health insurance is one of the mostly highly regulated sectors of the American economy. It is regulated in such a way where the government in effect picks winners and losers.
Jessie is a loser because of government policy, not because of the health insurance company. The issue of what kind of rules we ought to have for health insurance, that is a key point. I think Linda is absolutely right. There should not be a discrimination of people simply on a basis of their health, and there should be a spreading of risk.
I was involved in efforts with Governor Romney to create a new type of insurance market where we would spread risk more equitably in Massachusetts, and the result of that has been that people have a greater access to health insurance. But it's not just - it's not the health insurance executives; it's the environment in which they work. And the environment in which they work has been created directly by Congress, which has an unfair and inequitable tax treatment of health insurance and state legislators whom in many cases enact laws and rules and regulations which have unintended consequences that drive health-care costs up and make it less affordable for millions of Americans.
COX: So, Linda, Robert says it is not of the fault of the private insurance carriers, it is the fault of the government. What do you say?
Dr. BLUMBERG: In general, I agree with that statement, but I would put a different spin on it because, yes, when you put regulations in place or rules in place for insurers to follow, they are businesses and they will maximize profit within the constraints of the rules that have been set out. And it is our responsibility to be thinking about those rules. And part of what makes this situation very difficult and makes the insurers, I think, look like the villains in this is that we have a system that is a voluntary system. And so individuals can move in and out at will, and the insurers are protecting themselves against worrying that people are going to come in only when they need to use a lot of medical services by price discriminating against those who are sick.
And so, with this system, we have - we actually have a very unregulated non-group health insurance market in most the states in the country. And so what we see is - especially for those who are outside the employer context - we've got a situation where the rules have been set up to really harm those who are those most in need and most vulnerable. And so on top of that, we don't have a system that is going to make coverage affordable for those are the lowest income in the country.
So, we've got to change the rules so that we can make sure that everybody is in the market, we don't have this ever selection issue of people moving in and out, that we - that can then do proper broad risk spreading that we both agree ought to take place.
COX: Here's the final question that I have, and it's going to have to be a yes or no answer from the both of you. Millions of people are facing unemployment. If they can pay for COBRA to extend their health benefits - usually very expensive, as we know, but as part of the stimulus package that was just signed, the government is now going to subsidize payments by 65 percent. The question, yes or no, should the government be using taxpayer funds in this way. Robert?
Dr. MOFFITT: No.
Dr. BLUMBERG: I don't have a problem with what they're doing. I know, you want just a yes or no. I'll say, yes, it's fine, but it doesn't go far enough because a lot are left out...
COX: All right, our time is out. Thank you very much.
Dr. MOFFITT: That's my view.
COX: Robert Moffitt, director of the Center for Health Policy Studies. Linda Blumberg, senior fellow at the Urban Institute's Health Policy Center. Thank you again.
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