"A Rube Goldberg machine"--that's how one disgusted lobbyist described the so-called Mainstream Coalition proposal for health-care reform that surfaced last week. He probably meant the proposal is an outlandish contraption that is likely to break down on the road. But it's worse than that; it's not even headed in the right direction. And that may be true of any other health-care proposal coming from this Congress.
At the beginning of the current healthcare debate, we heard that healthcare costs were going through the ceiling, and if we didn't stop them, the U.S. would be crippled, economically and socially. Cost containment, we understood, was one of the big reasons for supporting a revolution in the healthcare system. That was true then and it still is.
Healthcare consumes about 14 percent of our Gross Domestic Product, and the cost is rising much faster than inflation. By the year 2000, the figure will be 20 percent. Companies that buy health insurance for their employees spend, on average, more than 13 cents of every dollar they make to pay for this coverage. This is 35 to 40 percent more than other industrialized countries, which already puts us at a competitive disadvantage. The burden is no lighter when employees buy their own health insurance, and it will become far worse if the current rate of increase continues--as there is every reason to think will happen. Yet the "Mainstream" proposal does nothing serious to deal with this problem.
What do we need to do? Cost containment and universal coverage go hand in hand. Universal coverage is what sold Americans on health-care reform in the first place--the security of "healthcare that can never be taken away." And universal coverage is also economically sound. If healthcare coverage is optional, people won't buy it until they need it. And when some people are covered and others are not, the expense of caring for the uninsured is passed on to the insured, which drives up costs.
Healthcare also tends to be more expensive for people who are not covered because they are likely to delay getting care until the last minute. Then, instead of preventive care, which is relatively efficient and cost-effective, they have to go to an emergency room where the treatment is more expensive and less likely to be successful. We have lots of evidence about how non-universal coverage leads to soaring healthcare costs. The "Mainstream" proposal, which will cover 92 to 93 percent of people at most, ignores it all.
It also rejects the most credible way of financing a universal healthcare system, the employer mandate, which would build on what we already have instead of creating a new system. The employer mandate works like Social Security: Employers pay a specified percentage of the costs for health coverage and employees pay the rest. Since most workers are already insured at their place of business and since at least one member of most U.S. families works, the employer mandate would be an efficient way of providing nearly universal coverage--without creating a new bureaucracy.
But instead of building on what we have and know works, the "Mainstream" system would tend to dismantle it. Under this proposal, employers offering more than a basic benefit package would lose part of their tax deduction, and employees would have to pay income tax on many additions to the basic package. This would encourage employers to provide much less than many now do. In fact, it would be an incentive for employers to stop offering healthcare coverage and simply give their employees a sum of money to buy their own. If this happens, many healthy people will wait to buy insurance until they are in trouble, and that will continue to drive up the cost of insurance. And since there are no real cost-containment mechanisms in this proposal, large numbers of workers who now have health insurance through their employers will find themselves hard pressed to afford coverage.
The "Mainstream" proposal is likely to mean less, not more, health security: Fewer working people will be covered than are now, with poorer benefits. And individuals will be left to fend for themselves in the insurance market rather than having the clout afforded by a group plan, like those now offered at work.
Some people will support the "Mainstream" proposal or other proposals touted as "incremental" because they are the only healthcare legislation we can get this year. Is that a good enough reason? President Clinton has moved us further toward universal health care than any previous president, but if the best that a gridlocked Congress can do is offer healthcare legislation that is neither universal nor fiscally responsible, he may have no choice but to say no.