What are the prospects for national health insurance or universal coverage

National health insurance (universal coverage) is unlikely to be enacted in the foreseeable future. Although the public, the media, and legislators decry the number of uninsured (and underinsured), given the size of the federal deficit and the additional burden on federal tax revenues of the Medicare prescription drug benefit, additional federal funds will not be available to fund expensive new programs for the uninsured. Further, the middle class is unwilling to tax themselves to provide the necessary funds to either expand coverage to the uninsured or to enhance Medicaid.

Congress and health reform

The pressures forcing Congress to consider health reform are middleclass concerns, and that is the group that provides the political support for such visible redistributive legislation. For this reason health insurance reform (HIPAA) was enacted. These reforms were not enacted to provide health insurance for those unable to afford such health insurance, but instead to relieve middle-class anxieties about being denied coverage or losing their coverage if they changed jobs. Similarly, minimum length of hospital stays for maternity patients was a response to anecdotes regarding early hospital discharge after a normal delivery, although there were no definitive studies indicating that early hospital discharge had an adverse effect on quality. Proposals to enact patient rights legislation and to remove restrictions imposed by managed health care companies that limit the patient's choice of provider are additional attempts by legislators to curry favor amongst the voting public.

Congress provides these regulatory benefits to the public without imposing any visible cost. Health insurance companies and HMOs are simply required to provide them. The public is pleased by seemingly receiving something for nothing. Although the costs of these regulations are apparently borne by the insurers and HMOs, in reality those (diffuse) costs are shifted toward purchasers in the form of higher health insurance premiums.

Limiting rising health care costs is likely to be the major redistributive issue in coming years. The increasing burden on federal revenues caused by the new Medicare prescription drug benefit will pressure the administration to hold down prescription drug costs. Concern over the insolvency of the Medicare Trust Fund and rising Part B expenditures will place the administration in conflict with hospital and physician associations. As health insurance premiums increase, the number of uninsured will increase, placing greater pressure on state Medicaid budgets. Large employers and their unions, facing large unfunded retiree health obligations and lower takehome pay, will press for regulatory action to reduce rising medical costs. And market pressures are forcing the middle class to make the trade-offs that politicians are reluctant to propose for Medicare.

To reduce their insurance premiums, the middle class is accepting higher deductibles and copayments. Some of the more popular health insurance products on the market are high-deductible insurance plans, such as HSAs. As an alternative to these "consumer-directed" insurance products for lowering insurance premiums, managed health care products relying on limited provider networks are returning.

New health insurance products

The growth in these new health insurance products reflects the public's willingness to choose lower premiums in return for larger out-of-pocket payments and restrictions on their choice of provider. Market competition has previously lowered the rate of increase in medical expenditures and is being relied on to do it again. As in other markets, the competitive health care market offers different tiers of medical care for those who are willing to pay different amounts.

Sharp ideological differences between the political parties have made it difficult to provide these different choices to Medicare beneficiaries. In Medicare, fewer restrictions on choice of provider mean higher Medicare expenditures. Many politicians, however, have been reluctant to publicly promote multiple tiers of medical care within Medicare, such as proposed by advocates of "Medicare reform," even though they exist within the private sector.

The United States has the national health insurance it is willing to fund.

Federal and state governments spend more than $560 billion a year on medical services, but coverage is not universal. Medicaid serves only a portion of the poor at an estimated $300 billion per year (in 2004 the federal share was $176 billion and the states spent $121 billion). Medicare is national health insurance for the aged at $265 billion per year, and employerpaid health insurance is national health insurance for middle- and highincome groups at more than $188 billion a year in lost federal, state, and Social Security taxes.

The major redistributive policies in coming years will be those that attempt to lower the rate of increase in government health expenditures and rising health insurance premiums for the middle class. To achieve these twin objectives, there will be an ideological debate between those who favor relying on market competition in the private and Medicare markets (with continued consumer dissatisfaction over higher out-of-pocket payments and restricted provider access) and those who favor greater government regulation (limits on expenditure and/or premium increases), with its eventual (thus diffuse) decreased patient access to health care and to innovative medical technology.

To understand the debate underlying health care reform, it is necessary to appreciate the difference between its real versus its stated objectives. The public interest theory is less able to explain and predict the outcome of health care reform than is a theory based on how those who are politically powerful attempt to shift their costs onto those who are less politically powerful. The outcome will have little to do with improved equity or efficiency, as those were never the real objectives underlying national health insurance.

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3. Financing Social Security and Medicare
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8. Indemnity payments and marginal costs for Medicare patients
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9. Medicare provides same benefits to all Social Security contributors
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