Let’s give some molecules of credit to John Edwards regarding his health care plan. He’s honest enough to admit his plan will require raising taxes; he claims it will only hit those making more than $200,000. (Of course, experience suggests that the definition of “the rich” will get a lot broader if this plan moves from the campaign trail to elected office.)

Secondly, Edwards lays out who he wants to cover the health insurance premiums for, at a Nevada forum on health care this weekend sponsored by the Center for American Progress Action Fund. (I would link to the transcript, but the CAP site is down at the moment.)

We subsidize health insurance premiums for low income and middle income families. That caps out at about $80,000 of income a year.”

Now, I want to help poor people. None of us want to see somebody not get the health care they need. But if you’re making $79,000 a year, I’m not sure that you’re entitled to ask the government to bail you out on this expense.

A little later, I like what he’s saying about having various health care plans competing, but I think his assessment of how low the administrative costs could be are optimistic:

So what we do is we set up these health care markets is we create the same market power for you that exists for the biggest corporations in America.These markets will require competitive bidding to get into the markets, and also these private insurers are going to have to compete with the government plan with extraordinary low administrative costs, two, three percent in all likelihood. So that competition will bring down costs.

So what are the administrative costs, and how low could they get? The Council for Affordable Health Insurance did a study last year on Medicare’s administrative costs and found:

We are looking only at hard, or actual, administrative costs, and do not include the problems and potential costs incurred by Medicare’s unfunded liability. Mark Litow, still with Milliman, has provided CAHI with a technical paper that identifies both Medicare’s and the private sector’s administrative costs; the technical paper is available on the CAHI website. This report explains in layman’s terms what the technical paper found. Litow finds that Medicare’s actual administrative costs, at 5.2 percent, are significantly higher than the oft-cited 2 percent. However, those costs are still lower than the private sector’s administrative costs. There are several reasons for that, which will be discussed in more detail later in this paper. In addition, the technical paper shows that average private sector administrative costs, about 8.9 percent, are significantly lower than the numbers frequently cited in the health policy community, although still higher than Medicare’s. Large companies’ administrative costs, which like Medicare achieve economies of scale, are even closer to those of Medicare.

If their research is accurate, the difference between the private insurers and the government plan may be less than Edwards projects. Next up was Bill Richardson, who had a bit of a slip of the tongue in his opening statement:

We should find ways to invest in the diseases in this country.

I mention this just to point out that if President Bush had said that, it would be a classic “Bushism.” Because Richardson said it, this is the only place you’ll ever hear it.

Anyway, one of the things that stood out to me about Richardson was that he believes that some credit card interest rates are “excessive”, and that as President, he would stop that.

Number two, I would clamp down on credit card companies that are covering excessive interest rate costs. I have a health secretary who her brother is paying 18 percent. A lot of Americans pay their health care through credit cards. 18 percent interest rate. I would put a cap on those costs.

And then you read sections like this, and you begin to wonder if Richardson is as smart as his reputation suggests:

I would also make sure that we have a strategy to deal with a 31 percent of excessive health care costs and bureaucracy by electronic records. I would also find ways to ensure that we have an answer, how do we pay for this? This is how I would pay for this health care plan. Number one, we reorder priorities in this country. We get out of Iraq and put the $400 billion that we have in Iraq and shift it to human needs. Number two, we spend 2 trillion on health care. We shift and reorder priorities in terms of reducing inefficiencies in our system.

“I will make sure we have a strategy,” is not the same as having a strategy. “I will find ways to ensure we have an answer” is not the same as an answer. It’s one thing to say, “we’ll reduce inefficiencies”; it’s another to inspire confidence by actually bothering to identify those inefficiences, besides the ubiquitous “electronic record-keeping” and “preventative care,” which every politician has promised since 1994.

As for that $400 billion that’s going to come out of Iraq – is that going to come out of soldiers’ salaries, benefits, spare parts, equipment? What do we not replace because you’re transferring these funds to health care expenditures?

Don’t give me the “we don’t have time to get into details.” You’re at a health-care forum. You have twenty minutes. Get into it, man.

And then, on page 49, the transcript goes blank. Way to go, Center for American Progress.

UPDATE: Hillary Spot reader Ian notes, “The idea that you can get administrative expenses to 2-3% is complete wishful thinking. Assuming that health insurance continues to be regulated by states, insurers have to pay an average 2% state premium tax. Other states – New York, for example – have state specific charges that add to the required cost to be in the market. So there goes their administrative margin.”