achieving universal coverage. Coverage andcosts are, of course, inextricably linked. Butmost Democrats, including Obama’s primary opponents,werefocusedalmostexclusivelyonthe question of how to provide health insur-ance to those without it. That was the battlecry of Sen. Hillary Clinton, who promised toprovide “health insurance for every single American.”
12
In contrast, Obama, while continuing tocall his proposal a “universal health careplan,”hasfocusedmoreonacombinationof regulations, cost cutting, and subsidies toreducebothoverallhealthcarespendingandthe price of insurance. He even appears will-ing to concede that universal coverage is notimmediately achievable, and his own plandoes not aim for 100 percent coverage.Evenso,Obamaclearlyseeksgreatergovern-ment control over the U.S. health care system.Inhisbook,the
AudacityofHope
,hearguesthat“themarketalonecannotsolveourhealthcarewoes—in part because the market has provenincapable of creating large enough insurancepoolstokeepcoststoindividualsaffordable,inpart because health care is not like other prod-ucts or services (when your child gets sick, youdon’tgoshoppingforthebestbargain).”
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As a result, he has been actively hostile tomarket-basedreformssuchasHealthSavings Accounts, which he dismisses as being basedon the idea that people have “an irrationaldesire to purchase more than they need.”
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“The “freedom to choose,” he argues, “mag-nifiestheunevenrisksandrewardsoftoday’swinner-take-all economy.”
15
Not Quite Universal Coverage
ThroughouttheDemocraticprimaries,oneofthekeypointsofcontentionbetweenBarakObama and Hillary Clinton was the questionofanindividualmandate.
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Clintonsupporteda requirement that every American buy healthinsurance, whereas Obama eschewed a man-dateforadults.Hewould,though,requirethatparentspurchase insuranceto covertheirchil-dren(generouslydefinedasuptoage25).
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Obama argues that a mandate is unneces-sary since Americans would buy health insur-ance on their own if it were affordable. “My beliefis thereasonthat peopledon’t have it isnot because they don’t want it, but becausetheycan’taffordit,”hesays.
18
Mostofhispro-posals are focused on making health insur-ance more affordable, either by reducing thecost of the insurance itself or subsidizing itspurchase.Hewouldrequireallemployerstoprovidetheir workers with insurance through a “play-or-pay” mandate. Employers who donot provide “meaningful coverage” for theirworkers would be required to pay a penalty equaltosomepercentageoftheirpayrollintoanationalfundthatwouldprovideinsuranceto those uncovered workers.
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Obama’s cam-paign materials do not specify how muchthatpenalty(whichiseffectivelyatax)wouldbe. However, similar proposals have rangedfrom 4 to 7 percent of payroll.
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Obama also leaves undefined the term“meaningfulcoverage,”althoughelsewherehesuggests that all insurance plans should offerbenefitsatleastasgenerousasthoseprovidedthrough the Federal Employees Health Bene-fitProgram.Finally, Obama does not appear to makeclear distinctions based on the size of theemployer, although in one speech he did say that his mandate would apply to “all but thesmallest businesses.”
21
Elsewhere he suggeststhat“verysmallbusinessesandstartups”wouldbeexempt.
22
Campaignofficialshavesaidunof-ficially that the exemption would apply to“some number less than 15” employees.
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Itseems likely, therefore, that many of whatwouldnormallybeconsideredsmallbusinesseswould fall under the mandate. This is signifi-cant because small businesses are far less likely toofferinsurancetoday.Roughly45percentof uninsuredworkersareemployedbycompanieswith25orfewerworkers.
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Thereareseveralproblemswithanemploy-er mandate. First, while it might be politically appealing to claim that business will bear thenew tax burden, nearly all economists wouldsee it quite differently. The amount of com-pensation that a worker receives is a functionofhisorherproductivity.Theemployerisgen-
3
Obama appearsto breaksomewhat withrecentDemocraticorthodoxy by making thereduction of health care costsat least as centralto his proposalsas achievinguniversalcoverage.
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