McAuliffe’s Health Plan: More Subsidies, More Regs

Terry McAuliffe at the YMCA Early Learning Center in Charlottesville

by James A. Bacon

Once and potentially future Governor Terry McAuliffe stopped in Charlottesville yesterday to describe his plan for health care in Virginia if he is reelected governor this fall.

“COVID has decimated us, and this COVID will be with us for years to come,” he said, as reported by The Daily Progress. “We cannot tinker around the edges in Virginia. We’ve got to go big.”

And how does McAuliffe propose to “go big”? In a nutshell: more subsidies and more regulation.

Yup, that’s what ails Virginia’s healthcare system, all right. Already the most heavily regulated and subsidized sector of the economy, healthcare needs more regulations and more subsidies!

Here’s what McAuliffe has in mind, according to the Daily Progress:

McAuliffe said he wants to implement a state reinsurance program; see “massive new investment,” both federal and state, into a state exchange; and have a “new watchdog” on health care and prescription drug prices.

“We need to seek the [Section] 1332 waiver for our reinsurance program that we need here in Virginia — go to the federal government, go to Joe Biden and say we need to do this,” he said. “Fourteen states have done it. It will bring the cost down by 30% of the premiums. Virginia needs to get in the game.”

McAuliffe’s plans also broadly include making health care more accessible and affordable; enhancing and strengthening Virginia Medicaid; promoting health equity and eliminating racial health inequities; and modernizing Virginia’s public health system.

More money — for Democrats that is always the answer. (Republicans, suffering from a failure of imagination, don’t have many ideas for doing anything at all. But the nostrum “do no harm” is good advice not just for the practice of medicine but the delivery of healthcare, so at least Republicans are not making the problem worse.)

The healthcare system is so immensely complicated, with so many moving parts, so many feedback loops, and so many hairy ethical questions of life, death, and well being, that it is exceedingly difficult for politicians or the public to understand. So we get governance by sound bite instead.

Here’s the problem with subsidies: They’re never enough. Never ever. The political class always wants more. There’s always someone who falls between the cracks. There’s always some unmet need. There’s always a new, higher standard of care to be insisted upon. Unlike taxpayer’s pocketbooks, the demands are endless.

Here’s the problem with regulations: They have created a Byzantine system of rules that established players manipulate to their benefit. Politicians pass a law, pat themselves on the back, and move on to the next cause. When the bureaucrats have to write the regulations, who shows up at hearings and submits letters to provide feedback? Who hires the lawyers to shape the language? Whose lobbyists comes back the following year to tweak the original legislation?

Not the consumers! Not even the politicians. Incumbent insurers and health providers whose day-to-day livelihoods are impacted by laws, subsidies and regulations are the ones who pay attention and expend the resources. As the regulatory thicket has expanded, the health care industry has consolidated. Healthcare in Virginia today is dominated by integrated, monopolistic healthcare systems. Competition and innovation are stifled. Costs rise without let-up. Access and affordability to healthcare diminishes faster than the politicians can apply new Band-Aids.

Just once — just friggin’ once — I’d like to hear from a politician who has a comprehensive plan for promoting price transparency, competition, and innovation with the goal of enhancing productivity and improving outcomes. But that’s probably too much to ask. This is Virginia — a state where the collective failure of imagination is complete, where citizens clamor for instant fixes, where the media has totally failed in its job as a watchdog, and where the political class sees every social and economic woe as an excuse to expand government power.

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7 responses to “McAuliffe’s Health Plan: More Subsidies, More Regs”

  1. WayneS Avatar

    ““COVID has decimated us…”

    No it has not. It has not even come close to decimating us.

  2. LarrytheG Avatar

    ” In a nutshell, the idea is that the reinsurance program lowers the cost of health insurance, which means that premium subsidies don’t have to be as large in order to keep coverage affordable, and that saves the federal government money (since premium subsidies are funded by the federal government).”,funded%20by%20the%20federal%20government).

    But the basic issue with employer-provided health insurance is that Government rules requires that if the employer offers it it cannot use medical underwriting to set rates.

    What that basically means is that the insurer cannot establish premiums on a per person basis where the insurance company takes into account the persons age and current health status to set the premium.

    So for most employers, the “price” of the insurance is the same for each class – like single or family no matter the persons age or health status.

    The young and healthy essentially subsidize the older and sicker because they pay the same premium as older and less healthy do.

    So what politician would advocate the Government do away with this rule and let insurers charge each person according to their own age and health status?

    Would most Conservatives who want more “transparency” and less regulations support this approach where essentially age and pre-existing health conditions are used to figure what the premium should be?

    This part is not that complicated but it does involve making a choice as to whether the government should deny insurance companies the ability to use medical underwriting on a per person basis.

    If we did that, the employers would then give each employee the same amount of money towards their health care and the insurance company would decide the cost per person based on their age and health status.

  3. Nancy Naive Avatar
    Nancy Naive

    So, no regulation and no subsidies. In short, the non-plan that got us into the healthcare crisis in the first place. Absence of a plan is not a plan.

    Some Vikings need to get off the veranda.

  4. LarrytheG Avatar

    “The average subsidy amount in 2020 is $492/month, which covers the large majority of the average $576/month premium (note that both of these amounts are lower than they were in 2019).”,than%20they%20were%20in%202019).

    The reinsurance, protects the insurance companies if they have larger payouts than estimated and in doing so, allows them to lower premiums.

    Ironically, unlike employer-provided insurance, Obamacare DOES adjust the cost of the premium according to your age and whether you smoke or not AND they have to pay their share of the premium with money already taxed.

    Employer-provided pay for their insurance with pre-tax money and do not pay premiums based on age or health – but instead on a “pool” basis with everyone in the pool paying the same premium for Single or Family (or similar scheme). The average “subsidy” for employer-provided is more than the average subsidy for Obamacare.

  5. Nancy Naive Avatar
    Nancy Naive

    Just issue 1000 diver’s licenses in the same name and SSN. Worked for Monsanto in the 90s.

    Then just get 1 insurance policy.

  6. Nancy Naive Avatar
    Nancy Naive

    So, no regulation and no subsidies. In short, the non-plan that got us into the healthcare crisis in the first place. Absence of a plan is not a plan.

    Some Vikings need to get off the veranda.

  7. Eric the half a troll Avatar
    Eric the half a troll

    “But the nostrum “do no harm” is good advice not just for the practice of medicine but the delivery of healthcare, so at least Republicans are not making the problem worse.)”

    Do no harm does not mean sit back and do nothing while the patient suffers.

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