More Americans Fear Losing Their Health Insurance Than Being in a Terrorist Attack

By Ezra Klein, The American Prospect. Posted May 21, 2008.

If health insurance were cheap, we could all buy it. If universal health care could get 60 votes in the Senate, we'd all have it. But these two imperatives -- the need to control costs and the need to attract the 60 Senate votes required to overcome a filibuster -- point in opposite directions. This is the central paradox of health reform.

The most intractable policy problem is not, fundamentally, the 47 million uninsured or the fact that insurers have a business model right out of Dickens. It's cost. In 2006, the average family policy cost $13,600. This is why one out of six Americans are uninsured; they can't afford the premiums. An October 2007 Kaiser Family Foundation poll found that more Americans were "very worried" about being priced out of their health insurance than feared losing their job, their house, or being in a terrorist attack. And with good reason: Premiums have gone up 98 percent since 2000. Wages have not.

Corporate America's outlook is similarly grim. Better Health Care Together, a health-reform coalition that includes Intel, Wal-Mart, and General Mills, recently issued a report, Health-Cost Crossroad: Why American Businesses Urgently Need Health Care Reform. The paper warns that "health care cost growth threatens businesses, workers, and the overall health of the American economy," and frets that "if trends continue, health benefit costs will exceed profits in Fortune 500 companies in 2008."

Likewise government. Absent reform, government health spending would be 37 percent of gross domestic product by 2050. (The entire federal government now consumes about 20 percent of GDP.) David Walker, the U.S comptroller general, warns that "we have been diagnosed with fiscal cancer, and we need to start treating it." At the Congressional Budget Office, the normally staid Peter Orszag gives an Al Gore-esque slideshow on the looming threat of health costs that risk bankrupting government finances.

The question, then, is how to limit heath-care costs while still surviving the legislative process. A single-payer system would increase efficiencies, but critics fear that it would control costs excessively, limiting care. Politically, single-payer would mean restructuring about 17 percent of our economy and eliminating multibillion-dollar industries that provide tens of thousands of jobs. It would have to be legislated over the fierce objections of the Republican Party and all conservative Democrats. Conversely, many Republicans, John McCain included, advocate a radical shift of costs onto individuals, controlling spending by pricing care out of reach for tens of millions. Few Democrats or moderate Republicans -- or voters -- favor this course.

Kids First?

Looking at this blockage, many observers instinctively grope toward a political stopgap -- starting with kids, a very attractive and cheap-to-insure part of the population. Coverage for all kids, they theorize, could make it through the Senate. Once accomplished, the rest of the country would view that success and green-light full reform of the health-care system. The logic of this strategy fails on two counts. First, as George W. Bush's obstinance on the State Children's Health Insurance Program (S-CHIP) has shown, many Republicans view health-care expansions the way the National Rifle Association looks at gun control -- there's no such thing as a little bit. Second, both the Republicans and the Democrats who see S-CHIP as the road to socialism are wrong. Medicare, despite its popularity, hasn't advanced the single-payer movement. It just took seniors out of the constituency for reform. And S-CHIP hasn't even led to its own successful expansion, much less that of the whole health system.

Moreover, covering kids is just covering kids; it does nothing to reform the system. Universal coverage of children, grafted onto the existing system, could actually exacerbate problems of inefficiency and cost. Worse, politicians could posture as if they had made major progress on the health-care crisis, while in fact they would be letting it deteriorate.

Single-Payer by Stealth

Another strategy would incrementally move toward single-payer, alert to the electorate's fear of change. That's one lesson many reformers learned from 1994 -- know your audience. Among those reformers was Yale political scientist Jacob Hacker, whose book on the failure of the Clinton proposal, The Road to Nowhere, concludes that President Clinton had built a plan for wonks, not voters. Cost containment was front-loaded (global budgets, managed care) and required total restructuring of the system. Clinton's plan scared people, introducing unfamiliar and untested concepts like "managed competition" and changing current health arrangements. "They couldn't defend it in simple terms," Hacker says, "because it actually meant a complex set of changes for most Americans."

Following his book, Hacker devised a plan to avoid these pitfalls. His final proposal was embraced last year by the Economic Policy Institute and the Campaign for America's Future, the latter of which worked hard to push it to the candidates. The final plans from Clinton, Obama, and Edwards all looked a lot like the Hacker plan, with some crucial and perhaps fatal political compromises thrown in. More on that in a moment.

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Ezra Klein is a Prospect staff writer.

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