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Presidential election focuses attention on American medicine

From the March ACP Observer, copyright 2004 by the American College of Physicians.

By Gina Rollins

With health care inflation approaching double digits and a growing population of people without health care insurance, the candidates in the race for president are turning a sharp eye on problems in American medicine.

While polls indicate that voters worry more about the economy and the war in Iraq, health care is clearly on their minds. As a result, presidential candidates on both sides of the aisle have proposed significant changes to the U.S. health care system.

The last time that health care problems loomed this large was in 1992. Today's candidates clearly remember the fiasco that ensued when the Clinton administration tried to overhaul U.S. health care, and they are determined not to repeat those mistakes.

As a result, the candidates are not calling for radical change to the U.S. health care system. In fact, they have been careful to state that they don't want to try to "fix" parts of the system that aren't broken. To avoid losing the votes of Americans who already have employer-based insurance, the candidates instead talk about taking incremental steps to add uninsured Americans to the health care rolls.

The good news is that the Democratic candidates and President Bush have adopted health care reform principles that ACP has long advocated for, from tax credits to expanding safety net institutions like Medicaid.

In politics, however, the devil is always in the details. Here's a look at the health care platforms of the Democratic candidates (at press time) and the president, how they stack up to ACP's recommendations and how analysts predict they'll fly with voters.

The public's view

In a Gallup poll released in January, Americans ranked health care as the fifth most important issue facing the country behind the economy in general, the war in Iraq, unemployment and terrorism.

Voters seem very concerned about health care largely because of continued unemployment combined with rising health care costs and a higher number of uninsured. More than 2 million Americans lost jobs since January 2001, and the number of uninsured rose to nearly 44 million in 2002, an increase of 4 million since 2000. In addition, health spending rose 9.3% in 2002, the largest increase in 11 years.

This convergence of factors has voters worried, and recent polls have consistently shown public displeasure with the current system. A Washington Post-ABC News survey conducted last October reported that 78% of respondents were dissatisfied with the total cost of health care. More than half said they worried about losing health coverage or not being able to afford it in the future.

"You've got a critical mass of the electorate saying the system is dysfunctional and needs major change," said Robert B. Doherty, ACP's Senior Vice President for Governmental Affairs and Public Policy.

An eye on history

While the presidential candidates are sensitive to those concerns, analysts say that today's politicians are also wary of repeating the high-profile failure of the Clinton administration's health reform plan in 1993.

"The candidates have learned from 10 years ago not to raise the anxiety of people with insurance," said health economist Kenneth E. Thorpe, PhD, professor of health policy at Emory University in Atlanta and a health advisor to the Clinton administration. "At that time, people with insurance were anxious they would pay more and get less. Now, the candidates are telling the insured they'll keep their insurance, and that they will find ways to make it affordable for others."

The leading Democratic presidential candidates have called for a series of incremental strategies to cover the uninsured. Most call for using tax credits to expand existing safety net programs like Medicaid and the State Children's Health Insurance Program (SCHIP). The goal is to make health premiums more affordable.

Those proposals mirror some of the provisions in ACP's seven-year plan, which calls on legislators to adopt a comprehensive framework to eventually cover everyone, beginning with lower-income Americans, by 2010. (See "ACP's positions on expanding access to care.")

"That's important because the issue has been debated for decades," explained Mr. Doherty. "While incremental changes have been implemented, there's never been a commitment to an end point."

The Democratic candidates

At press time, the leading Democratic candidates—Sens. John Edwards and John Kerry—were proposing variations on the same broad theme. Differences emerge in eligibility standards, how many people will be covered and how much the proposals will cost.

Sen. Edwards' plan is less ambitious. According to an analysis by The Commonwealth Fund, Sen. Edwards' plan would cover 22 million uninsured for about $590 billion over 10 years.

In contrast, Sen. Kerry has proposed a plan that would cover 27 million uninsured for about $895 million over 10 years.

  • Safety net expansion. The Democratic candidates support the idea of expanding programs like Medicaid and SCHIP with federal dollars. (These programs are currently administered at the state level.) "They recognize that states are in no position to expand coverage," Dr. Thorpe explained.

    Unique among the candidates, Sen. Edwards has proposed allowing all adults between ages 55 and 64 to purchase health care coverage through Medicare.

    ACP has called for changes to open up health care safety net programs to the public. In its seven-year plan, for example, the College urged legislators to give individuals who earn up to 100% of the poverty level a chance to enroll in the Medicaid program.

    The ACP plan also calls on the federal government to pick up any increased costs. ACP supports uniform national standards to determine which Americans can enter the program and to eliminate state-by-state differences.

    The College also advocates for tax credit-premium subsidies for Americans earning 100% to 200% of the federal poverty level. These subsidies could be used to purchase coverage from individual, small group or employer-based plans, or from a purchasing arrangement modeled after the Federal Employees Health Benefits Program (FEHBP).

  • Group insurance. The Democratic candidates have similarly called for the creation of a new group insurance option to make coverage more affordable for individuals and small businesses.

    Like ACP's proposal, the Democrats' plans are based on the FEHBP, with insurance plans participating in FEHBP offering a separate product for individuals and/or small businesses. The federal government would, through various funding mechanisms, underwrite the costs of any adverse selection associated with the program.

    ACP has similarly called on legislators to create purchasing groups that would make it easier to buy health insurance, and it has suggested that any such program be modeled after the FEHBP. The College went one step farther, however, and asked Congress to later extend subsidies to Americans with incomes above 200% of the federal poverty level to help pay for that coverage.

    Sen. Kerry's plan puts an interesting twist on the idea of government subsidies. It calls for the federal government to reimburse employers who meet certain conditions 75% of catastrophic costs incurred above $50,000. According to Kerry campaign documents, these catastrophic claims accounted for less than 1% of claims but nearly 20% of medical expenses for private insurers in 2001.

    Analysts say that a federally funded re-insurance program would help stabilize premiums, but they worry that it might produce other unintended consequences. "To have the government involved means it must be a prudent payer, which means audits and other big hassles for employers," said Joseph Antos, PhD, a health care and retirement policy scholar at the American Enterprise Institute in Washington.

    The proposals from the Democratic candidates rely on voluntary or automatic enrollment to cover the uninsured. However, Sen. Edwards would require parents to provide coverage for children under age 21.

    The proposal raises questions about how the government would mandate health care coverage. In its seven-year plan, ACP called for the government to create mechanisms that would discourage Americans from opting out of health care coverage. The College proposed automatically enrolling Americans without coverage in Medicaid, SCHIP or Medicare and imposing a tax surcharge to cover at least a portion of those costs.

  • Tax credits. One common feature of the Democrats' plans is a tax credit to subsidize the cost of insurance premiums. The candidates propose different income and employment thresholds to make tax credits available for individuals. Sen. Kerry has also proposed extending credits to businesses with less than 50 employees.

  • Single-payer. Only one Democratic candidate has resurrected the idea of a single payer system. Rep. Dennis Kucinich has called for expanding Medicare to cover all Americans, giving the federal government a much larger stake in health care coverage. Rep. Kucinich's plan would cover all the uninsured at a cost of about $6 trillion over 10 years. Although it is considered implausible politically, the proposal has simplicity in its favor.

    "Some would make the argument that it's divorced from current reality, but considering that 50% of health care spending is done by the government, we're already half way to the goal," said Robert E. Moffit, PhD, director of the Center for Health Policy Studies at the Heritage Foundation, a conservative think tank in Washington.

The president's plan

Compared to the proposals of his Democratic rivals, President Bush's health care proposals are more limited and would cover fewer of the uninsured.

  • Tax credits. In his State of the Union Address, the president called for tax credits for low-income individuals to purchase private insurance. According to The Commonwealth Fund, that proposal would help an estimated 4 million of the uninsured buy coverage, at a cost of about $89 billion over 10 years.

    Critics charge that those tax credits are not large enough to help the working poor. "The size of the tax credits only covers [up] to 25% of the cost of buying a health insurance package," Dr. Thorpe contended.

    Dr. Moffit from the Heritage Foundation agreed that Mr. Bush's tax credits would need to be larger to significantly boost coverage. "Our position is that we should have universal coverage based on a national tax credit," he said. "We would argue that if you wanted a serious reduction in the uninsured, you'd need a more robust tax credit."

    Dr. Moffit added, however, that he believes the president's tax credit would make a dent in health coverage for low-income individuals. "You can't talk about average premiums nationwide," he explained. "The cost of insurance in Utah, Indiana and New Mexico is radically different than in New York, New Jersey or Maryland."

    While ACP supports tax credits as one way to give more Americans access to health care, it has consistently said that credits need to be generous enough to be effective.

    ACP has also said that credits need to be given to Americans in advance, when they need money to purchase health care, and not at the end of the year. College officials have also called for giving credits to individuals earning up to 200% of the federal poverty level.

  • Association health plans. In his State of the Union Address, the president also called on Congress to create "association health plans." This program would allow small businesses to band together and negotiate lower rates outside of state insurance regulations.

    He also proposed that individuals who buy catastrophic health coverage as part of the health savings accounts created in last fall's Medicare reform bill be allowed to deduct 100% of the premiums from their taxes.

    ACP has no position on association health plans, but it has called on the government to give small employers new options to obtain coverage, including access to the types of health plans offered to federal employees.

  • The Medicare drug benefit. President Bush will also likely tout the Medicare prescription drug benefit program as an example of his ability to reform the health care system. Many observers believe the law will benefit the president and Republican congressional candidates at the polls.

    But the recent White House disclosure that the program will cost one-third more than originally expected—about $534 billion over 10 years—raises questions about whether the legislation will be viewed as a feather in the president's cap or a liability. Some analysts predict the Democratic presidential candidates may gain political traction this year as various aspects of the law are implemented.

Paying for the plans

The Democratic candidates propose paying for their plans by reversing at least some of the temporary tax cuts passed in 2001 that apply to wealthy Americans.

That concept probably has at least some traction with the electorate, according to Robert J. Blendon, ScD, professor of health policy and management at the Harvard School of Public Health.

"People have more sympathy for not giving upper-income people the full tax cut," he explained. "They have less sympathy for recapturing every tax cut."

In his State of the Union Address, President Bush urged Congress to make the tax cuts permanent, but the political landscape may be shifting. Earlier this year, the Congressional Budget Office indicated that the government is on track to rack up $2.4 trillion in debt by 2013, a deficit that could double if the tax cuts are made permanent.

The Democratic candidates say they would cut costs through administrative efficiencies like electronic health and prescription records, and by limiting direct-to-consumer advertising. President Bush has not proposed specific revenue sources to pay for Medicare reform and offset the cost of the tax credits.

Instead, he has proposed a budget that assumes continued high budget deficits, due in part to the costs associated with implementation of the Medicare law. He hopes to lower the deficit by half within five years by tightening spending on most domestic programs not related to national security or homeland defense.

President Bush has also said he supports stemming the rise in medical liability premiums by limiting noneconomic damages in malpractice awards to $250,000, a position the Democratic candidates do not hold.

How these issues will resonate with voters—and which party has more to gain in the health care debate—is unclear. A Washington Post-ABC News Poll conducted in January found that by a 52% to 33% majority, respondents trust Democrats in Congress over the president in handling the cost, availability and coverage of health insurance.

However, "the public is not ideological on health care," the Heritage Foundation's Dr. Moffit said. "It's very pragmatic. It just wants the problem fixed. So the issue is, who can convince the public what they do will solve the problem and not disrupt the health care system?"

Gina Rollins is a freelance writer in Silver Spring, Md.

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