Health care, a prime issue in this year's presidential election
05 09 08 - 11:46
Insurance accessibility could see big changes under the next president
by Gary Gosselin | Michigan Business Review
Spiraling costs and the parallel rise in the numbers of the uninsured make health care a prime issue in this year's presidential election.
Sens. Barack Obama and John McCain promise to close or reduce the insurance gap for some 47 million uninsured Americans and to curb the rising cost of care.
"You have very different approaches that are kind of consistent with the ideological split that has existed on health care in this country," said Alwyn Cassil of the Center for Health System Change in Washington, D.C. "You have in Obama's proposal a stated goal of significantly increasing coverage and universal coverage with expansion of public programs and private coverage."
The McCain proposal is more radical than it seems, she said, changing the tax structure on employer contributions and potentially shifting much more of the cost to the employee.
For those without employer-based coverage who earn too much to qualify for Medicaid and children's program SCHIP, Obama proposes a comprehensive benefits package modeled after the one that covers federal employees and lawmakers.
The package, delivered by private plans, would cover "all essential medical services." Obama also makes subsidies available to help low-income individuals and families buy into his program.
Individual insurance plays a large part in each candidate's plan, said Thomas Buchmueller, the Waldo O. Hildebrand professor of Risk Management and Insurance at the Ross School of Business at the University of Michigan.
Obama says he would allow group purchase of individual policies through a "National Health Insurance Exchange," giving individuals and small businesses the group buying power of large organizations.
That's combined with mandates to cover children and require businesses to insure employees or pay into a public system. For those without insurance who make too much for government programs, Obama would institute a health plan modeled after the federal plan.
Sen. John McCain's plan is a reflection of policies put forth by George H.W. Bush in 1992, Buchmueller said.
McCain has suggested eliminating the tax exemption for employer-provided health benefits and giving a tax credit of up to $2,500 for individuals and $5,000 for families to buy individual policies.
Those who buy insurance for less than the tax credit could put the difference into expanded Health Savings Accounts.
McCain would promote insurance competition with national rather than regional health plans and contain costs through payment changes to providers, tort reform and emphasizing prevention, early intervention, new public health infrastructure and the use of information technology.
McCain said he would also work with states to help them establish or shore up high-risk insurance pools in which those with high risk or preexisting conditions would likely get discounted coverage.
"We have to get a gauge on how people will deal with the individual market, and how they will navigate that market," said Amy Chambers, a vice president Grand Rapids-based Priority Health. "There's going to be a push on access and affordable coverage, but the question is whether (individual buyers) will have guaranteed access. Do we do away with preexisting conditions, will (government) subsidize certain conditions - those are yet to be seen."
In Michigan, which has a fairly high rate of employer-sponsored coverage, a lot of companies would take the chance on letting employees get individual coverage, Buchmueller said.
"McCain would like to see national rather than local or regional insurance (markets), but the real risk is that the most aggressive could cherry pick - companies like Blue Cross could get all high risk - and there may be some unraveling of consumer protections."
Roughly 17 million non-elderly Americans buy health coverage on their own, according to America's Health Insurance Plans, an industry group. More than 159 million are covered through employer-sponsored health plans.
Michigan has 5.9 million residents, or 59 percent of the total, covered by employer insurance, according to the latest census. That compares to the national average of 54 percent.
If individual coverage were to be instituted on a large scale, there would be winners and losers across the country.
And since Michigan has a higher than average amount of employer coverage, migration to individual coverage may be more widespread, Buchmueller said.
"The real winners are the healthy younger people; people with the hardest time are older and with preexisting conditions," Buchmueller said. "Increasingly in that market, previous conditions are not just things like cancer, but even women who delivered by cesarean section, they might not be covered because they are considered high risk. (McCain's plan) could put a lot of people in a market where there are not a lot of protections, particularly for high risk."
Obama's plan would likely be a boon to Michigan, especially if the state's high unemployment continues, more residents become uninsured and the automakers and suppliers continue to shift costs to employees, said Cassil.
"A big difference between the two is that Obama's goal is getting close to universal coverage, so the winners would be those who lost jobs or insurance or have low wage jobs," Cassil said. "Auto related companies that have a big cost of retirees would benefit from expanded coverage. People would be more subsidized and Michigan would likely be one of the winners."
Obama has promised to lower the price of pharmaceuticals by allowing Americans to buy them from other developed countries and repealing the ban that prevents the government from negotiating with drug companies. He estimates cost savings of $30 billion.
McCain calls for safe re-importation of drugs from other countries and faster introduction of generic drugs. He has not released any cost savings numbers for that initiative.
"We believe health care reform by either candidate will be positive for Michigan and both candidates support reform, Priority Health's Amy Chambers said. "But, I think it's too early to tell. We've got to figure out what's best for people and employers in Michigan ... we just need to know more from the candidates."
That clarity likely won't come until after the election though, and only after much discussion between the White House and Congress, she said.
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