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Bush vs. Kerry: Upcoming Election Offers Real Debate on Health Care

MANAGED CARE May 2004. © MediMedia USA
Legislation & Regulation

Bush vs. Kerry: Upcoming Election Offers Real Debate on Health Care

Despite the focus on the international situation, Americans are still keenly interested in just how they'll get the medical care they need.
John Carroll
MANAGED CARE May 2004. ©MediMedia USA

Despite the focus on the international situation, Americans are still keenly interested in just how they'll get the medical care they need.

John Carroll

It's another election year, and health care is once again a big card to play in the high-stakes world of presidential politics, where each chip in the policy game represents billions of dollars in potential gains and losses for some of the country's biggest health care players.

Just for starters, there's billions in newly approved subsidies for managed care companies on the table, fodder for the political debate over how the federal government should spend Medicare money. And that's just one of many budget items that has created a political chasm that separates the two main parties on health care policy.

Private enterprise

On one side of the policy gorge there's a bottom-line Republican belief that private enterprise — competing for government health care dollars — offers the best solution; the health system only needs some additional federal tax adjustments for insurance costs to fall within the reach of millions of uninsured Americans. And on the opposing cliff are the Democrats, waging popular political warfare with a promise that federal mandates and new rules — along with expanded Medicare and Medicaid programs — will force private enterprise to provide drugs and care at a more reasonable cost while bringing the great majority of Americans under the protective blanket of insurance coverage.

The candidates "are as different as they can be" on health care, says Kenneth Thorpe, the former deputy assistant secretary for health policy in the Department of Health and Human Services who's currently teaching at Emory University's Rollins School of Public Health — when he's not championing the Democratic Party's plan for near-universal coverage. The Bush administration, says Thorpe, doesn't have the money to put together a big enough plan for what ails America.But the biggest difference of all, the GOP contends, is that John Kerry is making health care promises the country can't afford to keep.

Claiming to offer an antidote to health-care fear is likely to be an ongoing obsession for the strategists that are setting the pace in the run-up to the November election. And no one is waiting for the starting gun of a national convention. Both sides have offered up compellingly detailed outlines of just what they would do given four years at the helm. Here's just a taste of what is likely to be a main course in a moveable feast of debates, speeches, and blog reports.

President Bush is running on both his record — there's a new drug subsidy for the elderly to champion and tax-sheltered health savings accounts — and on new reform initiatives, laying out a smorgasbord of cherished Republican proposals that center on using tax policy to bring coverage within reach of the uninsured and more affordable to just about everyone else. Included in a long list of proposals is the long-promised expansion of association health plans, $89 billion for health credits to make insurance more affordable, a tax deduction for long-term care insurance, and tax exemption for family members devoted to caring for ailing relatives.

Kerry counters with a sharp stick in the eye of many of the health care industry's most sensitive heavyweights.

Kerry's stance

For starters, he's endorsed the politically potent issue of re-importation, poison for a drug industry that breathed a sigh of relief when Bush's Medicare "reform" bill included a provision that keeps that issue squarely in the court of the Food and Drug Administration, which has made no secret of its intense dislike — and frequently stated concern about safety — for any pharmaceuticals that seep into the U.S. market without undergoing its rigid scrutiny.

Bargaining rights

Kerry also wants to kill a new provision that strips bargaining rights for drug costs from the Medicare agency, a provision the Bush bill leaves to private health plans offering Medicare Advantage options. And in a move not likely to find many friends among Medicare Advantage insurers, he cuts the increased Medicare rates provided to private plans by the Bush plan — money the administration deemed essential to reawakening their competitive interest in the elderly.

Kerry requires private health plans in federal programs, Medicare, and Medicaid to adopt chronic disease management programs as well as electronic information technology systems to force greater efficiencies. There's a call to open the Federal Employees Health Benefits Program — which covers all federal employees around the country through contracts struck with MCOs — to small businesses, people 55 to 64, and those between jobs.

Employers would pay 50 percent of the premium in exchange for a 25 percent tax credit. Workers between jobs would get a 75 percent subsidy to cover expenses and those 55 to 64 would get a 25 percent tax credit while paying rates capped at 6 percent to 12 percent of family income. There's also a mandate for federally subsidized Medicaid coverage for kids in families with incomes of up to 300 percent of the poverty level and adults with family incomes of up to 200 percent of poverty.

States that moved the fastest would be rewarded with $15 billion in extra bonuses over the next three years. Furthermore, to make insurance affordable, the government would make the commitment to cover catastrophic coverage costs above $50,000 for those companies that covered all their workers and introduced disease management programs to keep their employees as healthy as possible.

It's that last bit that has fueled some hefty estimates of the Kerry health plan.

Devon Herrick, PhD, a senior fellow at the conservative National Center for Policy Analysis, put the tab at $895 billion in a review he made of the competing proposals in March. Add it all up, he says, and you'll see Kerry substituting tax dollars for the private funds being used to buy insurance today.

"Like Kerry's plan for employer-provided insurance, his expansion of Medicaid and SCHIP is also very expensive, relative to what it achieves," writes Herrick. "The reason is that people tend to drop their private coverage to enroll in taxpayer funded insurance. In fact, studies estimate that 50 cents to 75 cents of each additional dollar spent under Medicaid simply replaces private insurance coverage."

Not surprisingly, the Kerry camp says that the Republicans are just counting the costs of the plan with none of the savings. And, they add, the country can pay for it all just by repealing the tax cut Bush has provided the top 2 percent of taxpayers.

Thorpe estimated the savings brought about by better IT, DM programs, and other items at about $298 billion in 10 years. Subtract that from $951.8 billion in added costs and you have a net expense of about $653 billion.

The plan, says Thorpe, is funded by rolling back the tax cuts for the most affluent taxpayers. In return, you gain coverage for 95 percent of the population.

"The issue with the Bush plan is simply that, in terms of the president's budget, he has spent the bulk of his money on tax cuts," says Thorpe. "The dilemma he faces is that there is no way to pay for a big health care proposal."

Just how much further anyone can go, though, with a federal deficit in record territory and an Iraqi occupation eating more than $4 billion a month, is likely to attract plenty of attention. And even more political debate.

John Carroll is a freelance writer living near Austin, Texas. He's been a contributing editor to Managed Care for three years.

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