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A healthcare idea's second life


SOONER OR LATER, the political argument about expanding access to healthcare always returns to the same intractable question: Who pays the bill?

The healthcare proposal that Democratic presidential hopeful Barack Obama released Tuesday, though vague on many details, will sharpen that debate in illuminating ways.

Obama's plan is important first for what it is not. Like the other top Democratic presidential contenders, he rejects the left's growing support for a government-run, single-payer healthcare system. Instead, he proposes to reinforce the existing system, under which the vast majority of Americans receive coverage either through their employers or through government programs such as Medicare and Medicaid.

To cover most (but not all) of the roughly 45 million Americans without health insurance, Obama advances ideas that split the bill between individuals, government and business. His first step would be to require parents to insure their children. Then he proposes to expand eligibility for government programs for the poor and to offer subsidies to help other uninsured individuals buy coverage through a new, nationwide purchasing pool modeled on the insurance available to federal employees. Finally, Obama would require all but the smallest employers to provide insurance for workers or else pay about 6% of their payroll to help government fund the cost of covering those employees.

That last proposal marks a crucial turn in the healthcare debate. Bill Clinton included a mandate for employers to insure their workers in the 1993 universal coverage proposal designed largely by his wife, Hillary Clinton. But, since small business groups led by the National Federation of Independent Business helped sink the Clintons' plan, Democrats have shied away from such a mandate. President Clinton never again proposed one; nor did Al Gore in his 2000 presidential campaign, nor any of the top 2004 Democratic presidential contenders.

This year, though, John Edwards, another 2008 Democratic hopeful, has already proposed a mandated employer contribution as part of his universal coverage plan. Democratic Gov. Ed Rendell in Pennsylvania and Republican Gov. Arnold Schwarzenegger in California have incorporated the idea into state-level universal coverage initiatives. The universal healthcare plan Massachusetts adopted last year also included a mandatory, though token, employer payment. Obama, who has stressed national reconciliation, underscored the idea's resurgent mainstream appeal by joining that list.

Small-business owners have ferociously fought these state mandates and would undoubtedly resist any national proposal, as would most Republicans. The political question for mandate supporters is whether they can split big employers (98% of whom provide insurance) away from the small firms (only 60% of which cover their workers) and the GOP.

COMPANIES THAT already offer insurance would unquestionably benefit from a mandate on employers that don't. A mandate would eliminate a cost advantage for the employers that don't cover their workers. It would also reduce the uncompensated care that hospitals and doctors must provide to the uninsured -- which inflates premiums for those providing insurance.

But ideological resistance to government mandates have outweighed those considerations for big employers. Few endorsed the Clinton plan in 1993 or the most ambitious proposals to expand coverage since. Kenneth E. Thorpe, an Emory University health economist, says big employers might now accept a universal coverage plan with an employer mandate because they have learned that they cannot control their costs without systemwide reform. And, in fact, business coalitions promoting universal coverage have sprouted in California and nationally.

Still, none of these groups has embraced an employer mandate, and some business leaders appear ready to jettison the employer-based system altogether. "There is a sense [big companies] are more serious about reform now," says Drew Altman, president of the non-partisan Kaiser Family Foundation, "but the track record is not great."

Democrats are trying to attract business to comprehensive reform by emphasizing ideas that would cut their costs. Hillary Clinton last week proposed that health insurance companies, as a condition of participating in federal programs, be required to cover both preventive and disease-management services that could help reduce premiums. Obama echoed her Tuesday. Obama also revived the best policy idea of Sen. John F. Kerry's 2004 campaign: a proposal for Washington to fund most of the bill for high-cost patients once their annual healthcare bills exceed a fixed level. Shifting those catastrophic expenses to government would lower employer premiums. So might Obama's surprisingly sharp-edged proposals to limit insurance company profits.

The best chance for reaching (or even nearing) universal healthcare coverage is a system of shared responsibility that requires government, individuals and business to all contribute. The ideas percolating in the states, and among the leading Democratic presidential contenders, move in that direction. But unless big employers also finally act on their stake in reform, healthcare for all is likely to remain out of reach -- at great cost not only to the national interest but to corporate America's own bottom line.


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