Unbiased Analysis of Today's Healthcare Issues

Guide to the Democratic Candidates

Written By: Jason Shafrin - Jan• 08•08

So you’re a Democrat and you don’t know who to vote for. Which of the Democratic candidates has the best plan for health care reform? This is what I will discuss today.

If you are a Republican, please read my “Guide to the Republican Candidates” tomorrow.


All of the Democratic candidates support the following actions:

  • Expanding SCHIP/Medicaid to cover more of America’s uninsured.
  • Providing more subsidies for households who can not afford health care.
  • Providing a minimum standardized insurance benefit package. For instance, both the Clinton and Obama websites claim that insurance benefit packages will be similar to those offered through the Federal Employees Health Benefits Program (FEHBP). This is the plan members of Congress have.
  • None of the candidates has proposed to end the tax deductible status of employer-provided health insurance.
  • All support guaranteed issue (i.e.: The right to purchase insurance without physical examination; the present and past physical condition of the applicant are not considered.).
  • Although none of the candidates’ websites explicitly state this, all must raise taxes to finance these expanding benefits.
  • All three will offer employers the choice of providing health insurance for employees or contributing a percentage of their payroll towards the costs of the national plan.


A chart may be helpful here:

Obama Edwards Clinton
Insurance mandate? N Y Y
Expand SCHIP? Y Y Y
Guaranteed issue? Y Y Y
Community Rating? ? Y ?
Insurance subsidies? Y Y Y
End tax deductibility of employer-provided ins? N N Y
Begin tax deductibility of individual ins? N N N
Regional Purchasing N Y N
Allow drug imports? Y ? ?
Expand HSA? N N N
  • Clinton and Edwards both support insurance mandates. Obama is trying to expand coverage to more and more people but is not mandating coverage.
  • Edwards proposes the creation of a regional purchasing system which he names “Health Care Markets.” This system will be available for all individuals who do not have employer provided insurance. According to the Edwards website “non-profit purchasing pools that offer a choice of competing insurance plans. At least one plan would be a public program based upon Medicare.” The Obama and Clinton plans aim for more government regulation as well as the offering of public health insurance to individuals, but do not involve regional purchasing.
  • Obama states that he would allow the importation of pharmaceuticals from developed nations. I have not seen where the other two candidates stand on this issue.

Healthcare Economist’s Take

Electing a Democratic president will likely move us closer towards a universal health system. Subsidizing health care will help poor individuals afford the care they need. I like the egalitarian approach of Democrats but this type of system will be expensive.

Many of the candidates propose that the federal government will reimburse employer health plans for a portion of the catastrophic costs they incur above a threshold. This may decrease insurance companies incentive to provide inexpensive preventive care. For instance, insurance companies have a large incentive to provide beta blockers to reduce heart attacks, but if the federal government will pay for most hospitalizations, than the incentive to provide this care diminishes.

While there is no one optimal standard for insurance benefits, standardizing insurance benefits can help eliminate some of the patient-third payer confusion of what will actually be reimbursed. It will also help stop the insurance company practice of denying claims to increase profits.

The one drawback to this system is that it is expensive. Taxes will have to be raised. Although the candidates talk generally about preventive care and EMR, without having individuals bear a significant share of the marginal costs of medical care, medical spending will like increase significantly.

The Healthcare Economist Democratic Pick: OBAMA

If you are a Democrat and are voting solely based on a health care reform agenda, I endorse Obama. Obama does not mandate insurance coverage. Instead, he is trying to make care more affordable without telling individuals how to spend their money. Further, I whole-heartedly agree that patients should be able to buy prescription drugs from developed countries. Obama’s goal is to expand coverage which still allowing significant choice. The Edwards plan is one step away from nationalized health care.

Obama also has an explicit proposal to create and fund an “independent institute to guide re¬≠views and research on comparative effectiveness.” Although the government may not be the best mechanism for this, disseminating medical ‘best practice’ methods is vital to improving medical quality.

The Obama plan will be expensive and either taxes will have to be increased, or spending must be cut elsewhere. Still, Obama is the best Democratic option.

Candidates’ Statement on the Health Care Issue

Tomorrow: Guide to the Republican Candidates

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  1. Elliot Wicks says:

    You have an error in your analysis. You say that none of the Democrats propose to end the tax exclusion for employer-paid premiums. But as your table correctly notes, Clinton does propose that change.

    As a fellow health economist, I disagree with you and Obama on the issue of an individual mandate. The private health insurance market, in particular the individual market, can’t work well without a mandate. If there is guaranteed issue–as there must be–and no mandate, relatively low-risk people will wait to buy coverage until they expect to need expensive medical care, since there is essentially no penalty for waiting. They will not be paying their fair share, and their absence from the insurance pool will cause premiums to be much higher. Someone has to pay that higher price: either the higher-risk people who remain in the pool, which will make coverage unaffordable for many, or government through subsidies to make coverage affordable for higher-risk people. Neither of those is fair. Everybody has to be in the pool to make the system workable and fair.

  2. […] would surely lead to a tax increase agree most economists. Read a comparison of Democratic plans here. [?] Share This  Share Popularity: 82% [?] SHARETHIS.addEntry( { title: “Making Sense […]

  3. Nola Figen says:

    I agree with Mr Wicks. The people who choose NOT to buy healthcare will be the young and healthy. this is part of the reason premiums TODAY are so high. In order for any insurance plan to work, everyone must be included to balance the risk.

    Cost: Yes of course any of these plans will cost money. But what everyone seems to ignore is the fact that we are ALREADY paying for “universal” healthcare! We are paying for emergency help for those who have no insurance, we are paying for illness in those who are not covered, and most of all, we are paying for profit for the insurance companies! As everyone knows, we pay more for healthcare thanany other developed country. I personally would rather pay more taxes for a sure thing, than pay in many hidden ways for this patchwork system we have now that is not working.

  4. Jon says:

    I don’t really understand this argument for a mandate. Specifically, I don’t understand how paying for health care by taxing healthy people with a mandate is “fair” while paying for it by taxing everybody is “unfair”. Why does it matter where the tax comes from? Also, shouldn’t people who need health insurance pay more into the system than those who don’t, so long as everybody can afford it if they need? That seems more “fair” to me…