The AP is reporting that the universal health care plan put forward by Senators Ron Wyden (D-OR) and Robert Bennett (R-UT) could be operational by 2012 and be budget-neutral by 2014. A budget-neutral item brings in as much revenue as it costs. The kicker to this plan and one of the reasons it has a host of Republicans as co-sponsors is this:
Sen. Ron Wyden, D-Ore., one of the plan's co-sponsors, said the report showed it is possible to provide health care coverage for all Americans — including the estimated 47 million people who are uninsured — without a large tax increase. "We can get everyone in America health care coverage without breaking the bank," he said.
Universal Health Care without tax increases? How is it possible and where is the catch?
The plan is not Medicare for All, it uses the private health insurance companies, but it lays a thick layer of good regulations over them. It's a philosophical cross between Teddy and Franklin Roosevelt. Here are a few key points about the plan, from around the blogosphere.
- The government would subsidize health caree for people up to 400 percent of the poverty level.
- The system would replace employer-based health insurance systems.
- The coverage would be guaranteed to be as good as that which federal employees (Senators) receive.
- The plan is paid for by a new tax on employers from between 3 to 26 percent, based on the size of the companies and this spending would replace the money employers now spend to provide private heath insurance to workers.
- The legislation now has 12 senators onboard—six of them Democrats, six of them Republicans (Grassley, Judd, Gregg, Alexander, Coleman, Crapo).
- No insurance provider may discriminate based on pre-existing conditions, occupation, genetic information, gender or age. Nor could they deny insurance to those who ask for it.
- The Lewin Group estimates that the plan would save $1.5 trillion over 10 years
- "The grounds left for competition are price, benefits, and quality. The hope is that if insurers can no longer eke out advantages by denying or reducing health coverage, they will be forced into competing to offer the most comprehensive services at the lowest cost."
This isn't health care for all, this isn't Medicare for all. But, this is a good health care plan, at first blush. Over at PNHP they have some reservations about what this will do to wages down the line.
The theory is that in competitive labor markets, total compensation is determined by the market, but the distribution between payroll and other benefits such as health plans and pensions does not influence the total compensation. Thus termination of a health benefit program results in an increase in wages that has the same monetary value.
In Sen. Wyden’s proposal, not only does it assume this theory to be true, it also provides back-up enforcement by requiring that employers increase wages by the same amount of the health benefit that will be terminated under this Act, but only for the first two years. After that, the competition of labor markets resumes, but without the complication of a health benefit program. Employees are on their own for accessing and funding their health plans.
...Have wages kept up with the costs of basic needs? There certainly has been a redistribution from wage earners to the wealthy. The minimum wage has not been increased for many years. Consumer debt continues to expand. Personal savings are now a negative. Personal insolvency continues to grow. Yet employers are not providing wage increases that are indexed to food, nor to housing, nor to transportation. Now that they are no longer in charge of health coverage, they will feel no obligation to index wages to health costs either.
This is a very good point. When health care is no longer tied to employment, it will not be indexed into raises. If you want proof, look at the skyrocketing increases in gas/heat/food in the last year. Did you get a raise based on the price increases? No, of course not. And, health care has grown at at least twice the inflation rate.
In many ways, this plan will contain the beast that is private health care insurance. But, in other ways, it will provide employers with the opportunity to screw their employees by lowering wages relative to health care inflation in the long-run. The same way that we hear arguments against raising the minimum wage, we will hear arguments over the tax rates on employers for insurance. "We can't raise the tax rates or else businesses will go broke. So, we need to cut services and/or allow insurance companies to increase what they charge."
If this plan relies on the good nature of the free market system to give pay raises that keep up with inflation....