Ezra Klein and David Sirota have had a rather nasty little infight over universal health care: Ezra claimed that it can only really work as a D.C. initiative, and David Sirota got ticked at a D.C. insider (?) claiming that only D.C. could do something like this. He linked in turn to Nathan Newman, who responded to Ezra's points.
(Before I say anything, though, the fact that these comments were all made on sites that, as far as I know, don't allow pseudonymously-penned pieces looms a little large in my mind. I like the Washington Monthly, the Huffington Post, and TPM Cafe, but since this is Ezra I'm talking about, it came to mind. Anyway, digression.)
Ezra's complaint is by and large financial: that states really can't afford to provide universal health care (well, universal insurance). Sure, they can afford it to a certain extent when times are good, but during economic downturns, things can go south quickly if the Republicans take over the state house and start cutting like mad. Now, considering this is a constant danger in Canada, a sovereign state with a long, long history of socialized health care, it's pretty understandable that this would be an issue in individual states.
Nathan responds by pointing out that other states have been more successful, like New York, in providing insurance for the underprivileged. He also points out initiatives like Healthy Wisconsin, which would provide both freedom of choice in doctors and universal coverage. Healthy Wisconsin is being blocked by State Republicans, but it's likely to be a big election issue next year, and I have my doubt that the Republican party will enjoy monster success next year in, er, Wisconsin.
But, here's the problem that I think Nathan and David are overlooking. A direct quote from Ezra:
Hawaii, in contrast, went for the classic liberal approach: a giant government program. The state had already forced all employers to cover their workers in 1974. In 1994, hoping to cover all those without employer-provided insurance, Hawaii created the QUEST program, into which it merged Medicaid and a similar state program. Early reviews were good. At the outset, QUEST appeared so successful that Hillary Clinton used it as supporting evidence for the Clinton Health Security Act, proclaiming that Hawaii “has achieved nearly universal coverage and has less of a cost.”In order to advocate universal health care, you need to understand what its strengths and weaknesses are.
What happened next wasn’t pretty. First, Hawaii suffered from the problem known as the “woodwork effect,” where a new government program entices people out of the woodwork, leading to more applicants and higher costs than anticipated. An economic downturn proved even more damaging. It’s a cruel economic irony—but an inescapable policy reality—that recessions rob government of the revenue it needs to cover the uninsured at precisely the moment that the most people need subsidies to get them through the lean times. And states are incapable of responding, since they, unlike the federal government, are constitutionally barred from running deficits.
So Hawaii responded in the only way it could: by cutting back the program. Instead of offering benefits for those whose income was up to three times the federal poverty line, it restricted eligibility to people whose income was twice the poverty line, and introduced an assets test. The dreams of universality evaporated. According to the Kaiser Family Foundation, 9 percent of Hawaii’s population is uninsured, compared to 15 percent nationwide, and it spends 12 percent of its gross state product on health care—exactly the same proportion as the rest of the country.
The strengths are obvious: it's cheaper, because it's a monopsony (single buyer situation) so you don't have buyers competing to pay more for services, so prices for the same level of service tend to go down. It covers everybody, so there isn't the sort of cherrypicking of the most desireable insurees that you see with private insurers. It covers preventative procedures, so you don't end up with expensive ER visits and hospital stays by people who should have had a little cheap preventative work done.
(This is one of the reasons I think Canada has dropped the ball on one thing, for example: dental isn't covered, and dental work is about the most blatant example of that sort of ramping-up of costs in all of medicine.)
The weaknesses are often overlooked, however: doctors probably aren't going to make as much as they would otherwise, and big pharma certainly isn't. It is also more expensive for the government itself than letting the private sector handle it would be; it is far cheaper for everybody, but that isn't necessarily going to matter when you're looking at the government's books. Canadian conservatives rail about how much is spent on health care all the time, and advocate privatization, because although that would mean more is spent overall, they would pay less taxes. Also, in order to work, it has to be universal; if the wealthy can pay to "jump the queue" for too many procedures, you end up pretty much back where you used to be.
So, why does this matter? Freedom of movement. Let's say that two states, right beside each other, pursue different paths. One goes universal. The other goes private (status quo). There is no real barriers to movement between states, so what happens? Everybody who needs the health care is going to go to the state with universal care, so their costs go up. Everybody who doesn't want to wait in line (that's overstated, but that'll be the perception) will move to the other state. Many of these will be un- or underemployed people who don't have corporate health care. The universal state has a larger base of people who need procedures, whereas the other state will end up with a lot of new, relatively affluent taxpayers.
Yes, a lot of corporations like universal health care. Corporations who don't want to pay for health care will like the idea of the government footing the bill. A lot of income taxes are going to be leaving the state and somebody has to foot the bill, though, so they're going to soak a bigger hit than they would in the other state. They'll have to, because they're covering both the people who would have been covered by their own plans, and those who wouldn't. Those corporations that would have benefited would stay (car manufacturers, for example), but those that employ a relatively number of expensive professionals would almost certainly be better off leaving. Considering the dwindling number of firms that provide anything like comprehensive health care, the latter probably outweigh the former.
A lot of doctors would have left, as well, chasing the bigger dollars the private insurers would be offering.
So, the universal health care state ends up in a tough bind. It has a larger number of people who want coverage, but the tax base has bailed because of the enormous freedom of movement. They can probably handle it if they're relatively prosperous, this wouldn't be apocalyptic, but what happens during a downturn?
That's when having it be state-led runs into gigantic problems. Yes, States can run a deficit, but not indefinitely; and they lack the sort of tools that the federal government enjoys to manipulate the economy in times of downturn. If things get too bad, too fast, for too long, they must cut something, and health care is a huge target. If they don't, sooner or later another party will come into power, and they will.
If you federalize the program, you're in much, much better shape. Moving from the U.S. to another country is much more difficult than switching states; the cost and hassle of doing so will almost certainly prevent people and firms from trying to leave the United States to chase a lower tax bill (or higher medical paycheque) at the expense of universal care. No emigration is likely, or at least it'll be low enough that you won't need to worry about it. In a downturn, the federal government doesn't necessarily need to hack up its budget; it can ride things out, and employ fiscal and monetary tools to ensure that, yes, eventually things will improve. Plus, if it's universal, it's far less likely that elected officials will be pressured into weakening the system, because nobody can hold the threat of emigration over their heads.
Honestly, it's a better choice.
Nathan does point out the chief political obstacle; getting together 40 Senators to filibuster a serious health care proposal is relatively easy for Big Pharma to do. That's why a part of this MUST be other corporations leaning on said Senators to relent; Big Pharma is only one industry, and fixing things has less to do with removing their influence than swamping them with other lobbyists from other industries that really want the government to take this burden off their hands, along with a public outcry that ensures that not only will votes ride on this, but those nifty little $20-$40 donations that the Dems are growing increasingly reliant on.
(The biggest problem is not getting Republicans on board, but ensuring that Dems are reliable. The Republicans aren't exactly in great shape for 2008 in the first place, and a few Republicans aren't going to be hard to sway. It's the Dems that are the issue here.)
I'm not saying that state initiatives are impossible. Nor am I necessarily saying they're doomed, like Ezra seems to. I think he does overstate things slightly. I know, though, that Nathan and David need to realize that if it can be federal, it should be federal. "Universal" needs to be exactly that, if it's going to be effective.
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