Candidates diverge on health care plans
26 03 08 - 12:12
By Julie Appleby, USA TODAY
Republican presidential candidate John McCain says the United States is approaching a "perfect storm" of problems that "will cause our health care system to implode" if the next president doesn't act.
Democratic rivals Barack Obama and Hillary Rodham Clinton would agree. But that's about where agreement over health care ends.
While McCain sees soaring medical costs as the initial problem to address, Obama and Clinton have competing plans that focus first on expanding coverage. They say too many Americans don't have adequate health insurance, and 47 million aren't covered at all.
These sharply different philosophies are at the core of the three candidates' potential solutions for how Americans should get and pay for their health care in the coming decade.
Each is reacting to a host of problems that are driving up costs for businesses and consumers: a 78% jump in insurance premiums since 2002, as tracked by the Kaiser Family Foundation; a Medicare system heading for red ink as baby boomers age; and a shrinking percentage of employers offering coverage.
Those factors, combined with the growing number of uninsured, have created the broadest public appetite for change since Clinton led a failed effort to overhaul health care during her husband's presidency. Health care ranks near the top of Americans' worries in a USA TODAY/Gallup Poll last month.
Concerns about health costs and the uninsured will help make this "the first presidential election that will have a good share of the campaign fought around health care," says Tommy Thompson, former secretary of Health and Human Services under President Bush.
It's unclear how that political fight will take shape - and whether any plan from the next president will survive through Congress. Health policy analysts say the battle lines already in place over the future of the health care system will offer Americans a stark choice in the November election.
Health care consultant Robert Laszewski and Drew Altman, president of the non-partisan Kaiser foundation, and others describe three major areas in which the candidates and their two parties split:
. The Democratic candidates want to cover all or nearly all people, often by expanding government programs. McCain says worry about costs first and expand coverage later.
. McCain and many congressional Republicans would not require anyone to buy insurance or make insurers sell to those with existing medical problems. Democrats would require most, if not all, people to have insurance and insist that insurers sell to everyone who applies.
. Republicans would lean more on tax incentives to get people to buy their own insurance and less on coverage through their jobs. Democrats would bolster the current system of employer coverage.
These alternatives have both potential as well as pitfalls, Altman and Laszewski say.
McCain's ideas could continue to leave millions of people without insurance, they say, and could increase the number of employers dropping or limiting health plans. Covering more people, as Clinton's and Obama's plans attempt, could cost more than expected, they say.
Meanwhile, a bold initiative in Massachusetts aims to cover most of the uninsured by requiring everyone to have coverage and subsidizing care for lower-income residents. The plans offered by Clinton and Obama have similar elements.
The year-old Massachusetts effort helped increase enrollment in health insurance by more than 300,000. That success also means more people qualify for subsidies to help buy coverage, so the program may cost about $150 million more than expected this year.
The Massachusetts plan and other state efforts to cover the uninsured have helped make health care a campaign issue. A bigger reason for the current interest is a public perception that Washington has failed to act, says Robert Blendon, a health policy professor at Harvard.
"The sense is that very little has happened about the uninsured or making insurance more affordable for people," he says.
The different proposals among the candidates - and in Washington - boil down to three issues: Who gets health insurance, how should they get it and who pays.
Cover everyone?
Clinton's and Obama's plans are similar in many ways, but they disagree on at least one key point: Clinton would require all people to have insurance. Obama would only require parents to have coverage for their children.
McCain would emphasize tax credits to help purchase health coverage and not require anyone to have insurance.
Blendon says that to cover a large share of the uninsured, the Democrats are "willing to consider laws that require most businesses to offer insurance to employees and at least require all parents to have insurance coverage for their kids."
The Republicans, he says, "are more focused on getting people who have insurance lower-cost options … including helping people who buy their own insurance to have more choices."
Laszewski, president of Health Policy and Strategy Associates, a Washington, D.C.-based consulting firm that works with insurers, hospitals and drug companies, says, "Either one could work," but both options face hurdles.
For example, Massachusetts - where some people still can't afford coverage - shows that "you can get a lot (of people) covered, but you can't get everyone covered," he says. Laszewski also sees flaws in McCain's push for tax credits to help buy coverage. "How will they make health insurance affordable for the oldest and sickest with one standard tax credit?" he asks. A tax credit could help younger, healthier people buy coverage, but it might not be enough for older people or those with health problems.
Force insurers to sell?
Clinton and Obama want insurers to sell coverage to all who apply. That would change many state laws, which allow insurers who sell policies to individuals to reject those with medical conditions ranging from hay fever to cancer.
More than 18 million people buy their own insurance because they are self-employed or their jobs don't offer it, according to America's Health Insurance Plans, the industry's lobbying group.
Len Nichols, an economist at the New America Foundation, a centrist think tank in Washington, says without a mandate for everyone to get insurance, some people would wait until they are sick to buy coverage. That would deprive insurance companies of premiums paid by healthy clients that offset costs of treating the sick.
McCain says too many rules already govern insurance and are driving up costs. To reduce insurance regulations, McCain's proposal would allow consumers to shop for lower-cost insurance in any state, not just where they live - a change from most state laws.
Job coverage or tax credits?
Offering tax credits to buy health insurance, as McCain supports, would change how most Americans pay for coverage.
Currently, workers in the 60% of companies that offer health insurance get those benefits tax-free. Many Republicans, including McCain, say tax-free benefits are unfair to those who don't get coverage through their jobs and can't deduct insurance costs unless they are self-employed.
Under McCain's plan, job-based insurance would be taxable income. For a worker whose employer-offered family plan now costs an average $12,000 a year, that would mean a tax increase of $3,360, if in the 28% bracket.
McCain wants all individuals to get a tax credit - $2,500 or $5,000 for families - to either buy their own health policies or offset the taxes on coverage through their jobs.
Laszewski warns that for older or sicker workers, especially those buying coverage on their own, a policy could cost far more than the tax credit.
Len Burman, director of the centrist Urban-Brookings Tax Policy Center, says McCain's plan would improve the current system because it offers low-income residents a refundable tax credit to buy insurance. He also says that tax credits could likely lead some employers to drop health coverage.
Clinton and Obama want most Americans to keep getting coverage through their jobs. Large employers that don't offer health plans would have to contribute to the cost of covering their employees under Clinton's plan. Obama wants big companies to pay into a public fund for health care.
Both Democrats also want to open new ways to buy coverage, possibly through a system similar to one that covers federal workers and includes a variety of benefits.
What are the chances?
Numerous efforts to revamp health care have failed since Democrat Harry Truman's administration in the 1940s. The last major push was during President Bill Clinton's first term in 1993-94. Hillary Clinton led a task force that called for universal health coverage to overhaul the nation's health care system, but the complexity of the plan and industry opposition doomed it in Congress.
"Two huge things are different now," New America's Nichols says. First, premiums have shot up, he says. Second, U.S. companies are increasingly competing with firms in other countries where health insurance is rarely offered, such as China or India, he says. That means U.S. employers pay for benefits, while their competitors don't.
Controlling rising costs could prove to be the hardest, although all three presidential hopefuls say their plans would do that.
Thompson, the former health secretary, says both parties agree on two ways to hold down costs. One is to promote technology, such as electronic medical records, to increase efficiency. The other is to streamline care for millions of Americans who have chronic illnesses, such as diabetes and asthma. Early care for those patients could reduce expensive hospital stays or other avoidable complications.
Many economists, including Paul Ginsburg of the Center for Studying Health System Change, say tougher measures may be needed to put a dent in health care spending, which topped $2.1 trillion in 2006 - 16% of the economy.
Harder-hitting measures, such as limits on new medical treatments until proved effective, wouldn't be well received.
"No one has a frontal assault on health care costs because that is somewhere between politically unpopular and political suicide," says Altman of the Kaiser foundation, which studies health policy.
Will any changes succeed?
None of the candidates is proposing a government-run health system like in Canada or Great Britain. "A one-size-fits-all, big government takeover" isn't the answer, McCain says.
Clinton says her proposal is "not a government takeover of health care." She would, as one option, allow people to enroll in a plan similar to Medicare.
Obama says the government should control "skyrocketing profits of the drug and insurance industries," but should not change coverage for millions of Americans who get insurance through work.
Analysts disagree on whether any changes will succeed. Thompson says that "2009 will be the biggest successful year in the transformation of health care that we have seen since the passage of Medicare and Medicaid in the 1960s." Harvard's Blendon, however, foresees "a huge stalemate" except around the issue of covering more children, unless there is a sweep of Congress by one party.
Blendon says the two parties are so far apart on solutions - and have become so polarized - there is little common ground.
"There used to be a sense of a moderate middle that shared some of the values and concerns of each party," he says. "Now there are not a lot of people in the middle."