Cost of Clinton Health Care Plan Unfair to StudentsGuest column by Lars Bader
The Clinton plan for national health care has been the subject of seemingly endless analysis by journalists. Where will the revenue to pay for it come from? Will its employer's mandate stifle creation of new jobs? To what extent will it finance abortion? And is it realistic to expect it to cut costs, when national health care schemes in other countries have accelerated growth in medical expenditures? Surprisingly, however, some basic issues of equity have gone unquestioned. One of these is whether the plan would unfairly disadvantage students and young, single people.
Under the Clinton health plan, all adults in a given region would pay similar health care rates, without regard to their likely use of medical services. The preliminary figure is $1800 per year. While actuarially unsound, this provision does seem to have compensating benefits in fairness. It means, for example, that a person suffering from a rare genetic disease would not have to suffer additionally from higher medical bills. The costs of such an unfortunate condition would be distributed over society as a whole, as perhaps they should be.
But at the same time, young adults would subsidize their elders, and the single would subsidize families. Under the Clinton plan, children would be covered along with their parents. A married, middle-aged, two-earner couple with several children would pay little, if anything, more than the total paid by two single, college students. This is true even though the family's income and usage of medical services would both normally be many times greater than that of the two students combined. Two-earner families typically have more disposable income than young adults with entry-level jobs, and a great deal more, of course, than college students, who must devote what little income they have to paying tuition and interest on loans. College students use medical services rarely. Families, on the other hand, go to the doctor often, because children frequently injure themselves, experience minor illnesses, and require check-ups and orthodontic care. After the children in the family grow up, their parents' subsidy will continue: the parents will now be at an age where they require more medical services. They will also be in their peak earning years, able to pay these expenses more easily than the rest of society. Yet they will still pay the same rates as people in their twenties.
As people age and gain work experience, they typically earn more money. At the same time, their medical costs will also typically rise, though not as quickly as their increase in income. Thus, older workers are better able to carry the weight of their higher premiums than are the young. Cost-shifting from the old to the young is neither fair nor desirable. It's worth noting that cost-shifting from the old to young adults has already been tried. It's called social security. Those who have retired today are receiving many times what they put in. The average college student today will pay twice as much as he will ever get back, starting with a stiff social security tax of over 15 percent on every dollar he earns. As the population ages, and medical costs rise, we can expect that medical coverage will be narrowed, so that people our age will never experience the same full coverage they will soon be subsidizing for others. Just living a long life won't get you back the increased premiums.
While young adults will soon subsidize their elders in medical insurance, no effort will be made to equalize youthful automobile insurance rates with the lower rates paid by older people. A young man under 30, or a young woman under 25 (yes, there is discrimination between the sexes, too), can expect to pay double the automobile insurance rates of a middle-aged person in most states, as a result of the greater likelihood of an accident by an inexperienced driver. Thus, young adults will soon be paying the highest aggregate insurance premiums of any age group.
Can college students afford this higher insurance burden? The President and other southern Democrats would like to cut federally-funded student loans and shift the funds to the new national servitude, oops, service program. The national service program recently established would compensate those who participate in its make-work, menial jobs by giving them about $5000 per year of service toward college. At MIT tuition levels, it would take about 15 years of service to afford college. Even assuming a student only has to pay the self-help level, it would take five years of indentured servitude to pay for college. But with an additional $1800 per year expenditure while attending college, either the Institute would have to go further into the red, or the student would have to put up some extra money. At present, the MIT health plan costs $600 per year. The new Clinton plan costs $1800, $1200 more. If the student has to produce the money, she would have to work an additional year of servitude to make up the difference. At that rate, she would graduate from MIT at the youthful age of 27.
Even those who can borrow and work their way through can expect to see a bill for about $1000 more per year, both during college and during the years after graduation when they are busy paying down the debts they incurred. And if the final version of the Clinton plan sets lower rates for students or allows them to be insured through their families, the rates on recent graduates will have to go higher in compensation. There is no such thing as a free lunch. Whenever you see someone celebrating the new health plan, remember that they're celebrating a subsidy which you'll be paying for in the near future.