Healthcare Reform, Then And Now

Jason Schafrin, a young economist trained at UCSD, breaks down RN’s 1974 message to Congress and proposal for a comprehensive health insurance plan, and compares it to President Obama’s current plan:

  • Today the need [for reform] is even more pressing because of the higher costs of medical care.”  Obama echoes this sentiment.
  • …the 25 million Americans who remain uninsured.”  Nixon hoped to expand coverage for the 25 million Americans who, in 1974 who did not have health insurance.  He planned to do this using with the creation of “Assisted Health Insurance, covering low-income persons.”  In 2009, there are 46 million uninsured Americans.  Obama also proposes using tax credits to help poor and middle class individuals afford private insurance.  Obama also proposes a public option.
  • Americans who do carry health insurance often lack coverage which is balanced, comprehensive and fully protective.”  Health insurance was originally created as protection against serious illnesses and hospital stays.  Routine physician visits were not covered.  This often meant that check-up and preventive care was not covered and Nixon wanted to expand the scope of insurance coverage.  In the present day, most individuals who have insurance have relatively comprehensive health insurance.  In fact, as a reaction to the expanding scope of present day health insurance, Republicans support HSAs which use high deductibles to transfer more of the cost of care towards the individual patient.
  • Comprehensive Health Insurance Plan (CHIP).  This was Nixon’s solution to the problem that many individuals who had insurance had only partial insurance.  It basically expands the scope of insurance coverage. In the present day, most individuals who do have insurance have relatively comprehensive coverage.
  • Third, it builds on the strength and diversity of our existing public and private systems of health financing and harmonizes them into an overall system.”  Nixon’s CHIP plan aims to provide subsidies for health insurance and aims to reform health care, but will not overhaul the system (à la a single payer system or the elimination of Medicare in exchange for all private insurance).  Obama’s currently proposes reforms to the current system that also builds on the existing healthcare infrastructure.
  • Fourth, it uses public funds only where needed and requires no new Federal taxes.”  Nixon claims that his plan will not use any new taxes.  Obama did not claim he would not raise taxes, but did assert that “I will not sign a plan that adds one dime to our deficits.”  However, the government’s spending on health care as a share of GDP has accelerated over time.  This was true in Nixon’s time, is true now, and most expert believe it will continue into the future.
  • Sixth, it encourages more effective use of our health care resources.”  Obama wants to “eliminate is the hundreds of billions of dollars in waste and fraud” as well as “create an independent commission of doctors and medical experts charged with identifying more waste in the years ahead.”  More effective use of health care resources was, is and will continue to be a laudable goal; actually realizing these efficiency gains in practice, however, is more difficult.
  • No family would ever have annual out-of-pocket expenses for covered health services in excess of $1,500, and low-income families would face substantially smaller expenses.”  Nixon planned a cap on patient annual out-of-pocket costs.  Currently, Nixon’s proposal has become commonplace.  Most group health insurance plans offer an out-of-pocket cap as does Medicare and Medicaid.  However, for non-group health insurance, these caps are often not available.  Obama proposed that health insurance companies “…will no longer be able to place some arbitrary cap on the amount of coverage you can receive in a given year or a lifetime.”
  • Medicare, however, does not cover outpatient drugs, nor does it limit total out-of-pocket costs.”  Nixon believed that Medicare should cover drug costs and limit out-of-pocket costs.  Medicare does limit out-of-pocket costs and, with the creation of Medicare Part D, most prescription drug costs are covered for seniors.
  • COST: “the total new costs…would be about $6.9 billion.” Obama’s plan would cost “$900 billion over ten years.”
  • Nixon wanted to “increase the supply of physicians.” Nixon believed that increasing the supply of physicians will drive down costs as competition increases.  With patient paying less and less money out of pocket, this may no longer hold.  If supplier-induced demand exists, an increase in the supply of physicians will increase demand and costs and not necessarily decrease prices.  Obama did not discuss physician shortages in his speech.
  • On December 29, 1973, I signed into law legislation designed to stimulate, through Federal aid, the establishment of prepaid comprehensive care organizations.”  HMOs now control a significant portion of the health insurance market.
  • I also contemplate in my proposal a provision that would place health services provided under CHIP under the review of Professional Standards Review Organizations. These PSRO’s would be charged with maintaining high standards of care and reducing needless hospitalization.“ This is similar to Obama’s “independent commission of doctors and medical experts charged with identifying more waste in the years ahead.”

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