Ultimately, full implementation of the Kerry plan will lead to massive changes in our health care system. At the end of the process we will find a four-tiered health care system.

Tier one will be the Medicaid/SCHIP tier. Families will have limited choice of doctors, lengthy waits and rationing of care, much as we see in Medicaid today. Over time, as health costs rise and budget pressures mount, they will see more rationing of care. Today’s enrollees are all poor; millions of middle-class families will be added.

Tier two will look increasingly like the German system, which has had mandated employer coverage for about 90 percent of the population for many years and has recently introduced American-style managed competition. Pressures to hold down costs will lead to increased waiting times and less access to expensive medical technology — but not as bad as for Medicaid patients. The government may engage in nationwide negotiations with providers and impose limits on high tech equipment, as is done in Germany. 69 The pressures of managed competition will induce health plans to overprovide to the healthy and underprovide to the sick, which happens in Britain and Canada.

Tier three will consist of a small percent of the population (in Germany it’s about 10 percent) who can afford to opt out of the more general system of managed competition. They will pay more for their health insurance and they will pay higher doctors’ fees. They will experience less rationing by waiting and easier access to expensive technology, and they will probably receive better health care.

Tier four will consist of seniors who will remain in Medicare. The Bush presidency promised to give seniors access to the same full-service health plans as the rest of America. Under a Kerry presidency that hope would almost certainly evaporate. Cost pressures would induce the government to squeeze providers (as happens under the current system), leading to longer waits and more rationing - but not as bad as for Medicaid patients because seniors will continue to have more political power.

Overview. In the past, providers were able to shift some costs - from those who underpaid to those who overpaid. For example, inadequate payments from Medicaid and Medicare were made up by overcharging employers and private insurers. Regardless of who becomes the next president, competitive pressures in the provider community will intensify. Cost-shifting will become increasingly rare.

Under a Kerry presidency people will ultimately get the kind of care they and their insurers pay for. No more; no less.

NOTE: Nothing written here should be construed as necessarily reflecting the views of the National Center for Policy Analysis or as an attempt to aid or hinder the passage of any bill before Congress.