October 3, 2004
Kerry vs. Bush on Health Care
he faults in the American health care system become more glaring with each passing year. Large numbers of Americans have no health insurance at all, and those who do have insurance are faced with soaring premiums that threaten to make coverage unaffordable for individuals, families and employers. The two presidential candidates have responded to these problems with health plans that differ markedly in scope and philosophy. Both tinker at the edges of the current system rather than seeking a broad, nation-shaking change. Sadly, the fervor for sweeping reform died a decade ago with the disastrous demise of the Clinton health plan.
President Bush would also continue to rely on - and even expand - employer-based coverage. But he would supplement this approach with tax credits to help individuals and families buy their own policies or invest in so-called health savings accounts backed by high-deductible coverage. This is the health care version of the president's "ownership society.'' If adopted widely, such individual coverage would represent a radical alternative to employment-based policies, but for now the Bush plan takes only small steps in that direction.
Over all, Mr. Kerry's approach would do more and cost more than Mr. Bush's. One independent analysis pegs the cost to taxpayers of the Kerry plan at $650 billion over a decade. Mr. Kerry says he would cover the cost by canceling the administration's tax cuts for the wealthiest Americans, those earning more than $200,000 a year. However, the price tag could be higher - one conservative research group calculates the cost at $1.5 trillion, a level that would certainly force Mr. Kerry to scale back his plans. Independent estimates put the cost of the Bush plan at $90 billion to $130 billion over a decade.
On the vexing issue of how to provide coverage for the 45 million Americans who currently lack health insurance, Senator Kerry would do a far better job. His plan would extend coverage to some 27 million of the uninsured, mostly by expanding Medicaid and the Children's Health Insurance Program to include children and adults whose income is twice to three times the poverty level. Mr. Kerry would also provide subsidies to encourage more employers to offer coverage. In a bow to a favorite nostrum of conservative health analysts, he would set up a new health plan modeled on that serving federal employees. It would be open to individuals and businesses and subsidized with tax credits.
President Bush would rely primarily on a tax credit of up to $3,000 to help lower-income families buy health insurance and on a tax deduction to encourage people to buy high-deductible policies. But the credit will not go far toward paying for policies that can cost $9,000 to $10,000 a year. Independent estimates suggest that the Bush plan would cover at most seven million of the uninsured.
For the vast majority of Americans and most businesses as well, the chief worry is soaring premiums. Here Mr. Kerry has proposed an innovative solution. He would have a federally funded "reinsurance" program reimburse employers for 75 percent of all medical bills exceeding some catastrophic limit - say, for example, $30,000 a year. That would mean companies and group health plans would no longer have to shoulder the most costly cases that account for a huge chunk of all health expenditures. In return, the companies would have to pass the savings on in reduced premiums, cover all workers and set up disease management programs. The Kerry camp estimates this might reduce premiums by 10 percent, mostly by shifting the cost to the taxpayers.
President Bush would try to make insurance more affordable partly through his tax credits and partly by enabling small businesses to band together in "association health plans" that would give them greater purchasing power to bargain for low insurance rates. He would also encourage an expansion of tax-free health savings accounts, coupled with insurance to cover catastrophic illnesses. The notion is that catastrophic coverage is relatively cheap and that the savings accounts would be used to pay routine medical bills, making the individual more prudent in spending for health care services. Such accounts are an unjustified tax break for those who least need it. They would primarily benefit those in high tax brackets and would most likely attract only the healthiest people with few medical needs, leaving traditional health plans to deal with the sickest and costliest patients, inevitably forcing an increase in their premiums.
Neither plan looks like it would make a major dent in the ever-escalating cost of medical care. Both candidates would promote electronic record keeping in a laudable effort to drag the paper-driven medical system into the modern age of computers. Analysts of all political persuasions agree that widespread use of the newest information technologies could save money through reduced paperwork, greater productivity and a probable reduction in costly medical errors, but how much and how soon are uncertain. Both candidates also favor better disease management, especially of such costly chronic ailments as diabetes and cardiovascular disease. This is a reform espoused by many health analysts and would surely help control costs in the long run. In a remedy that seems more ideological than practical, Mr. Bush also stresses the need for a cap on medical liability damages, whereas Mr. Kerry rejects caps and proposes other ways to rein in malpractice litigation costs. Liability litigation is a small element in the overall cost picture, and neither approach would produce much savings.
New Drug Benefit
President Bush had expected to get campaign mileage from the Medicare prescription drug benefit enacted last year - indeed, that was the main reason the Republicans forced it through Congress - but the Democrats have focused so much attention on its shortcomings that it may have become a political liability. Voters can be sure the two candidates would approach the issue of drug prices differently. President Bush has opposed the importation of cheaper drugs from abroad and supports the Medicare drug law that prohibits the federal government from negotiating drug prices with the manufacturers. Mr. Kerry supports drug importation and believes the federal government should use its purchasing power to negotiate lower drug prices. This page has endorsed both importation and federal negotiation as sensible ways to restrain drug prices, the fastest-growing segment of medical costs. However, if the Republicans retain control of Congress, a President Kerry might be powerless to crack down on the drug companies.