December 14, 2006

Senator Ron Wyden's Universal Health Coverage Plan

Carroll Andrew Morse

Senator Ron Wyden of Oregon has announced a universal health coverage plan that he intends to introduce in Congress next year. Here’s how the Los Angeles Times describes it…

Wyden's plan would require employers to continue contributing toward the cost of health coverage, but it would get them out the business of directly providing insurance and limit their exposure to double-digit annual inflation in healthcare costs.

In the first two years of the plan, employers who now provide coverage would be required to directly pay workers what they were spending on insurance.

It sounds like free marketers and libertarians might actually be able to rally around the Wyden plan in years one and two. However, for some reason, after year two, Senator Wyden wants to stick employers back in between individuals and their health insurance…
Thereafter, most companies would pay the government a healthcare contribution that resembles a payroll tax.
If you can successfully decouple insurance from the workplace for two years, then why does it need to be recoupled at a later date? The payroll-tax provision sounds more like something intended to make the government’s tax collection job easier, or to increase government influence over the healthcare choices that individuals make or, if you really want to be cynical, to make people believe that government is giving them something for free, when they are really buying it with their own hard-earned money, more than it does something intended to improve the delivery of healthcare.

Regardless of that concern, the idea of giving people the resources they need to choose their own health insurance, rather than having employers choose their insurance for them, is a solid starting point. Here's the rest of the outline of Senator Wyden's plan, according to the Times

Using the money from their employers, individuals would be required to purchase private insurance policies through state purchasing pools. Benefits would be keyed to the Blue Cross Blue Shield Standard Plan available to federal workers. Workers would not have to pay higher income taxes because of the employer contribution.

The uninsured would also have to buy coverage, but premiums for the poor would be fully subsidized by the government, and middle-class families with incomes up to $80,000 for a family of four would be eligible for help on a sliding scale.

Premiums from individuals and contributions from employers would be collected by the government through the tax system and distributed to insurers. Once enrolled, individuals would be covered until retirement. Seniors in the Medicare program would not have to make any changes.

A fuller description of the plan is available from Senator Wyden’s official website.

In short, the concept of the Wyden plan is really quite simple (as are most health insurance plans, contrary to what you may have been told. As Ronald Reagan once said, "There are no easy answers, but there are simple answers.")…

  1. Change the insurance system so that people within a state are pooled together and can buy health insurance, regardless of who their employer is,
  2. Require individuals to purchase a mandatory minimum level of health insurance, while allowing insurance companies to sell more coverage to people who are willing to spend more, and
  3. Create a new healthcare entitlement for people below a certain income level.
The messy part of analyzing a bill like this one will be untangling the mess of regulations and tax arcana whose effects need to be considered, as well as sorting through (and trying to remove) provisions intended to regulate individual behavior and directly control prices not relevant to facilitating an effective market for health insurance.

Oh, and where is the money for that new entitlement going to come from?

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I actually am in favor of some kind of national health coverage. I just want beings from another planet to legislate and administer it, seeing how badly Congress messes most things up.

" ... where is the money for that new entitlement going to come from?"

I refer you to johnb: the Deficit Fairy will take care of it.

Posted by: SusanD at December 14, 2006 10:16 PM

Oh, and where is the money for that new entitlement going to come from?

Hey Carroll, I'd suggest coming over to the netroots organizing site Stand Tall for America (which I manage for the Senator) and digging into the details.

In particular, read the Lewin Group report (pdf). They're a nonpartisan, independent bunch of fiscal analysts. According to their report,

National health spending, projected to be $2.3 trillion in 2007, would actually decline by $4.5 billion despite the expansion in private coverage, due to savings in administration ($29.8) and increased price competition for insurance ($54.9); The annual rate of growth in national health spending would be reduced by about 0.86 percent. Savings over the 2007-2016 period would be $1.48 trillion, which is 4.5 percent of spending over this ten-year period.

Anyway, here's the question for you: How many Americans will it take to make universal, portable, affordable, private health care a reality?

C'mon down to Stand Tall for America and let's find out!

Posted by: Kari Chisholm at December 15, 2006 5:07 AM

If StandTallForAmerica had a comments section, in addition to my question about unnecessarily including employers in the mix, these are the questions I would have posted...

1. How much of the supposed cost savings comes from price controls enforced by "keying" rates to Blue Cross? Price controls tend to have adverse consequences. Is this covered in the Lewin report somewhere?

2. Is a modification of the community rating system, where people who take advantage of preventative care and routine check-ups get lower rates (if there is really merit to these programs, individuals utilizing these programs should incur lower cost in the future, right?) something that should be added to the existing plan?

3. Isn't it just a tad dishonest to describe letting people spend their own money on their own healtcare as "a generous benefit" that the government is giving them?

Posted by: Andrew at December 15, 2006 11:09 AM

It is important to understand that it is STATE regulations and legislation NOT federal that have the most to do with access to and cost of health insurance in Rhode Island and states in general.

In Rhode Island our state legislators and regulators for too many years have only made things worse for health insurers even though Senator Marc Cote from Woonsocket has put together a package of proven reforms that would have guaranteed the return of at least two national health insurers to our state two years ago and more would have likely followed. This would have doubled the number of health insurers in our state and restored our individual health insurance market which is completely non-existant today!

The way you can tell if a state has a healthy individual insurance market is by calling any independent health insurance agent and asking them to help you get a QUALITY individual/family plan (not a limited benefit plan through Mega-Life and Health, Mid-west Life of Tennessee, or some discount program - These are NOT REAL comprehensive plans. They are not even good catastrophic plans).If you can't find an agent to help you(like you can't in RI, MA, VT, ME, NY or NJ) it is because the state's health insurance regulations have destroyed the individual market -- which is different vastly from the small group market.

Another way you can tell is by going to a national quoting site such as and type in your zip code. No renewable health insurance plans will come up in the states where legislators and regulators have messed up their state's individual health insurance market.

I could go into details about what it is that mucks up a states health insurance market in both the individual and small group market but I won't bore you with the technical details. In Rhode Island in a nutshell what needs to be changed are the managed care rules; the guaranteed issue mechanism in the individual market and the filing regulations. We also need to clean up damage that has been created in recent years like requiring individual carriers to hold consumer hearings when rates are increased beyond the consumer price index. These are poorly attended if they are attended at all and only end up costing consumers more money as the cost carriers money, (especially out of state based carriers), to hold - and NO OTHER STATE HAS THEM. There are other things pertaining to the small group market that could be improved as well.

To read with your very own eyes, testimony to the Senate Health and Human Services Committee from Assurant formerly Fortis and parent company of John Alden Life Insurance Company and Time insurance, that both John Alden and Time would return to Rhode Island if Senator Cote's very reasonable reforms used widely in most states in the rest of the country were passed, go to or to read up on our Rhode Island Crisis go to

Unfortunately rather than wanting these reforms passed and having carriers return where our legislators would finally be doing something to HELP their constituents by bringing affordable health insurance back to Rhode Island like they have in Connecticut, our Attorney General made such a fuss that essentially put the brakes on the whole hearing of the bills and Senator Cote withdrew them with an opportunity to resubmit them with changes - but Attorney General Lynch wouldn't even talk to him that year. Last year he was promised Governor Carcieri would get the regulators to support these reforms whether they agreed with them or not but that never happened. The first year, Attorney General Lynch was quoted in the Providence Business News as saying that one of the reforms would be like handing the keys to the state to the insurance industry and he was going to do everything he could to kill the bill.

He was wrong of course. If he'd checked with the Atorney General of PA he'd have found they have these same reforms and amazingly enough, they work beautifully. Both individuals AND small groups have a plethora of companies and plans to choose from at very affordable rates in Pennsylvania, one of the 40 or so states that opt to use PROVEN health insurance legislation and regulations that help both the industry and consumers!

It is sad that all our Rhode Island legislators and regulators seem to be able to do is look at other states like Massachusetts or New York or NJ or other bad states with terrible state regulations to get their ideas for reform from. It is like the blind leading the blind.

Yet when they have an opportunity to end our crisis and bring carriers back, they look a gift horse in the mouth. It is no wonder Rhode Island is thought to be one of the least friendly states in the country to do business in by the health insurance industry!

Until Rhode Island officials begin using successful states as models for health care reform and admit that they have a MISERABLE record when it comes to health insurance market reform and ACCEPT the help from national PROVEN experts, Rhode Island will continue to have one of the worst health insurance markets in the country.

Sorry to be so negative but it is just the way it is. I must say I think it would help if the PEOPLE of Rhode Island recognized this and DEMANDED of their state elected officials that these reforms be passed and that legislators do EVERYTHING they can to bring carriers back INCLUDING undoing or modifying poor pieces of legislation that have made things worse.

Emily Harding

Posted by: Emily Harding at December 18, 2006 12:53 PM