Debunking the Myths about John Edwards’ Universal Health Care Plan Espoused by its Critics

With John Edwards in third place among Democratic candidates in the national polls (but on the rise, and doing better than anyone in head to head competition against Republicans) and our corporate news media showing great hostility towards his candidacy, it is important that false understandings about his positions be dispelled. I recently posted on DU a discussion of his health care plan, along with praise of that plan by one of our country’s most brilliant economists, Paul Krugman. Although many DUers agreed with Krugman’s assessment, my post also received several comments that were aggressively critical and indicated serious misunderstandings of Edwards’ plan.

The main purpose of this post is to try to dispel the misunderstandings about Edwards’ health care plan. I will begin with a discussion of Paul Krugman’s credentials and a brief summary of his assessment of the health care plans of the three leading Democratic candidates, and then I will proceed with attempts to dispel the myths about the Edwards health care plan.

SOME WORDS ABOUT PAUL KRUGMAN

Krugman’s credentials and political views

Paul Krugman is a professor of economics and international affairs at Princeton University and has written op-ed columns for the New York Times for many years. He has been named Columnist of the Year by Editor and Publisher Magazine and is a winner of the John Bates Clark Medal, the most prized award given to American economists.

Krugman espouses the liberal/progressive values that most DUers do. In “The Great Unraveling”, copyrighted in 2003, which is mostly a reprint of Krugman’s editorials, Krugman tears apart Bush economic policies (and Alan Greenspan too, for refusing to speak up about the Bush tax cuts) long before Bush or his policies became unpopular. In his recent book, “The Conscience of a Liberal”, this is what Krugman had to say about our current political situation:

Perhaps Krugman’s most fervent political desire at this time is that our nation enact a universal national health care plan that ensures that all Americans receive quality health when they need it. This is what he had to say about the subject in his book:

A brief summary of Krugman’s assessment of the health care plans of the three leading Democratic candidates

When Edwards came out with his plan in February of 2007, Krugman reviewed the plan and then concluded in an op-ed titled “Edwards Get it Right”:

Three months later, when Obama came out with his plan, Krugman had a lot of good things to say about it, though he explained why its lack of a mandatory provision made his plan inferior to Edwards’ plan. When Clinton came out with her plan in September, Krugman explained that it was almost identical to the Edwards plan. However, he expressed concern about the lateness of her commitment to universal health care, saying “The long delay before Senator Clinton announced her health care plan made supporters of universal care, myself included, so nervous… What remains is the question of whether… she will have the determination to turn that plan into reality.”

Krugman became especially concerned when Obama began attacking the health care plans of his two main rivals using Republican talking points that were inaccurate. In particular Obama appeared not to understand why health care coverage needs to be mandatory in order to ensure the economic viability of a universal health care plan. Krugman had this to say about that:

MYTHS ABOUT EDWARDS’ UNIVERSAL HEALTH CARE PLAN

Before I get into the myths, I need to give a brief summary of Edwards’ plan (see above link):

The most important part of the plan is that it will make health care available to all Americans. It will do that by providing tax credits on a sliding scale, so that those who are otherwise unable to afford health care will then be able to receive it. The opening quote on the subject in Edwards’ website is

His plan would offer a choice between government insurance similar to our Medicare system (before Bush got hold of it) and private insurance. The purchase of one or the other would be mandatory, in order to prevent people from gaming the system (see explanation for that below). No insurance company would be allowed to deny the issuance of insurance or charge more for their insurance based on pre-existing conditions or any health risk.

With that brief summary, let’s get to the myths that I’ve seen expressed based on my single post from two days ago:

Edwards’ plan will ensure the dominance of private insurance companies and indicates his unwillingness to stand up to them

Oh, give me a break. That’s almost like saying that FDR was unwilling to stand up to big economic interests. No other candidate in the 2008 field has been more critical of insurance companies.

Where did this idea ever come from? Perhaps it came about because Edwards’ plan offers a choice between private insurance and Medicare-like government health care. Specifically, Edwards says “Health Care Markets will offer a choice between private insurers and a public insurance plan modeled after Medicare…”

For some people, even offering a choice of private health care insurance is just too much. But will that allow private health insurance to continue their dominance in the health care field that they enjoy today? Why should it? Under Edwards’ plan, anyone who chooses can have a public not-for-profit insurance plan similar to Medicare, which totally bypasses private insurance. This is what Krugman has to say about allowing a choice between private and public insurance:

Unfortunately, under Edwards’ plan, those Americans who chose, through ignorance or ideology, to purchase private insurance rather than public insurance, would probably suffer for that choice, as so many Americans suffer today when insurance companies deny legitimate claims. But even the ideologues would probably learn after a while and would start opting for public rather than private insurance.

Only single-payer plans will effectively eliminate Americans losing out to insurance companies that deny legitimate claims

This objection is very similar to the one noted above. It is true that Edwards’ plan, which is not a single-payer plan (at least, not initially), allows some role for private insurance companies, at least initially. In that sense, it doesn’t completely eliminate private insurance immediately. But make no mistake about it, the insurance companies will be aggressively opposed to Edwards’ plan, for the reasons described above. Krugman has this to say about them:

The only reason to favor the Edwards plan over a single-payer plan is “political”

Well, that’s true, but so what? Krugman himself says that on purely economic grounds a single-payer plan is superior to Edwards’ plan, primarily because with the Edwards plan at least some people will initially choose private insurance, and many of those people will suffer for that choice.

But as someone who believes that it is essential that universal health care be passed, Krugman is worried that a single-payer plan may not be politically viable enough to pass.

Edwards’ plan has two political advantages over a single-payer plan. First, it would be less expensive in the sense that it would require less taxes to pay for it. (Economically, that advantage would be only apparent rather than real. What we would save in taxes would be more than cancelled out by out-of-pocket expenses for those who purchased private rather than government insurance.) Krugman believes that it would be more politically palatable because it would be less expensive up front, and many voters would not recognize the cost savings of a single-payer plan, given the propaganda that would be sure to come from political opponents.

The other political advantage of giving people the choice of government vs. private insurance would be that such a plan would be less susceptible to accusations that people wouldn’t be able to exercise their choice of doctor. Again, we are talking about a perceived rather than a real problem. Single-payer plans are perfectly capable of allowing people to choose their own doctor. They require that everyone obtain their insurance through government, but can still allow complete freedom of choice of doctors. Nevertheless, Krugman feels that a single-payer plan is likely to be a political liability, given the distortions that are certain to be introduced by political opponents.

I don’t know how valid Krugman’s fears are about the political liabilities of a single-payer health plan. He’s an economist, not a political scientist. But for the little that we gain with a single-payer plan compared to Edwards’ plan, do we really want to take that chance? Since a national health care plan was defeated in 1993 we’ve gone nearly 15 years without another try at it. Do we really want to take that chance if we can get a very good plan that insures everyone with less political risk?

Making insurance mandatory will increase its cost

That would be true if Edwards’ plan mandated that people purchase private insurance. But quite the contrary, Edwards’ plan will give tens of millions of Americans who now have private insurance the opportunity to purchase government insurance at a lower cost. The result will be much less business for private insurers, possibly being reduced to near zero before long, unless they lower their prices and improve the quality of their product. They will in fact be forced to reduce their costs in order to compete with government insurance.

Furthermore, no universal health care plan can be economically viable unless it is mandatory. If it isn’t, some will opt out of the system until they become sick. That will increase the costs for everyone else while allowing those who originally opt out (thus gaming the system) to either purchase insurance when they become ill or receive care through tax-supported emergency rooms.

Edwards’ plan will cause a two-tiered system – a private tier for the wealthy and a government tier for the poor

That would be likely only if a health care system subsidized private insurance companies. Quite the contrary, Edwards’ plan does not subsidize private insurance companies, but rather creates competition for them where no competition currently exists (except through Medicare and Medicaid).

People should not confuse this with school vouchers, where people receive vouchers to attend private school only if they opt out of public school to attend private school. That is not what Edwards’ plan does. Those who opt for private rather than public health insurance receive nothing for doing so – except the risk of getting screwed.

The wealthy can choose private rather than public insurance and thereby avoid contributing to the support of national health care

Not true. Taxes will pay for the plan, and in fact Edwards says that his plan will be paid for through reversals of the Bush tax cuts for the wealthy. The wealthy can choose private over government insurance if they want to, just like everyone else. But they receive no advantages for doing so, and they have to pay the same taxes regardless of whether they purchase government or private insurance. Anyhow, I don’t see our Congresspersons, who all receive health care through the government, opting out of that for private insurance.

It is a crime to force people to purchase insurance – that is what we fought our Revolution against

Actually, taxes were a good part of the reason that we fought our Revolution, not the requirement to purchase insurance. But it wasn’t just taxes, it was taxes without representation. In Edwards’ plan not only will those who pay into the plan be represented, they will receive health insurance.

POLLS SHOW GREAT MOMENTUM FOR EDWARDS

This is slightly off subject, but I’ll include it here because I’m excited about the momentum indicated by recent polls for the Edwards campaign. I haven’t seen national numbers like these for Edwards since his campaign began.

I watch the Rasmussen polls closely because they’re the only polls that track candidates on an almost daily basis, as far as I can tell. Edwards’ rise in the polls in recent weeks has been substantial, especially since Saturday’s debate, which could be the critical moment for the Edwards campaign. Here are the 3-day national Rasmussen poll averages for Edwards over the past month, that is, since December 9th:

December 9-11 – 11%
December 12-14 – 13%
December 15-17 – 14%
December 18-20 – 15%
December 21-28* – 15%
December 29 – January 3** – 16%
January 4-6 – 20% (with a record 23% on January 6)

* — No polling done during Christmas break, so this is only 3 days of polling
** — No polling done during New Year break, so this is only 3 days of polling

It looks like our corporate news media will quickly have to find some more haircut type “scandals”. Hopefully the American public will soon grow weary of that kind of thing.