Universal Prepaid Managed Care
The adjacent graph
represents the per capita deficits one might expect from Universal prepaid
managed care coverage with a 75% employer mandate. This is basically
the plan proposed by Clinton, otherwise know as ClintonCare. It is
not necessary for government to operate the managed care programs. It
is merely necessary for government to mandate that PREPAID managed care is
the universal system of coverage to have the effects shown in the graph.
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On the plus side, if one were able to keep the number of people subsidized
and the benefits (premiums) at a minimal level, the system could operate
without any deficit. Such a projection was undoubtably the initial
hope for this approach to Universal Coverage. One additional benefit
of this approach to health care coverage is that all coverage is basically
reinsured in a common pool.
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On the negative side, if one projects into the future, political pressure
will be brought to increase both the benefits and number of people subsidized.
This form of universal prepaid health care coverage quickly starts
to run a significant per capita deficit for everyone in society.
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The downhill slope (see arrow) is so steep that it is very difficult to remain
at any one spot, much less reverse the trend towards larger and larger deficits
by cutting benefits or subsidies. All that can be hoped for is a political
balance to develop between deficits and benefits. Single payer coverage
has an even steeper negative slope.
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The computer model shows the projected deficits if one assumes no rationing
of care were to take place. It is possible to adjust the negative budgets
of prepaid Managed Care (or Single Payer Care)
by cutting payments to providers and/or rationing care. Depending upon
the severity of such cuts in care or provider compensation, the deficits
can be moderated. However the ultimate result is a lower quality of
health care which can still be roughly represented by the same model with
the Deficit axis being replaced by an axis labeled Deficits plus Quality
of Care.
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A similar graph of average wages would show the same negative trend in wages.
As benefits and subsidies increase, wages go down sharply. This would
be both due to increased deficits/taxation and the negative effects on employers
for their extra 'tax burden' of paying for most of the employer mandated
HC coverage.
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Many current employer based HC plans have premiums and benefits above
$140/person. It is not reasonable to expect these people would be satisfied
with a cut in benefits.
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A similar model with a cigarette tax would show very little if any change
in deficits. Cigarette taxes do not raise sufficent revenue to make
a dent in the magnitude of cost of Universal Health Care coverage of any
form.