The American people are facing a transformational election this November 4th. Many important issues including the focus of our Foreign Policy, the balance of the Supreme Court, and the future direction of our economy are at stake. Healthcare, comprising 15% of our national economy and affecting every American life is perhaps the most significant domestic issue and the most contentious policy debate in the election. While two decades of sophisticated polling targeting people with healthcare insurance has consistently reported overall satisfaction rates hovering around 80% , we now are faced with the twin crises of 47 Million uninsured people and an equal if not greater number of under-insured people. Those Americans who have health care insurance, their employers who are sharing in the cost of that insurance and the healthcare providers who are reimbursed by the insurance companies feel that they are all getting less benefit from each health care dollar. This intolerable and shameful situation is unique amongst the so-called developed countries.
The 2008 Presidential Campaigns of both Senators Barack Obama (D-IL) & John McCain (R-AZ) offer contrasting remedies in their healthcare plans. They differ not only in their philosophical underpinnings, but in the details and methods of implementation. I will first review and compare their basic tenets and then discuss the wonkish technical details of their proposed policies.
Senator Obama advocates that the Government, as the largest single provider of healthcare, should take the lead and reform the system by both offering universal accessibility and improving the overall quality of care. Obama believes that the Government can and should create several new agencies with mandate powers to underwrite new forms of affordable healthcare insurance, ranging from the most basic to extremely comprehensive, for every American citizen.
Senator McCain, on the other hand, is a firm believer in “Market Forces” and feels that the individual consumer should be given a tax credit that would be used solely to purchase healthcare insurance. The increased number of available healthcare insurance dollars would then, according to this notion, entice the private sector to offer more varied and competitive insurance products that would lead to expanded access as well. More importantly, McCain feels that the private sector can administer the new enterprise more efficiently and effectively than a new Governmental agency and hence affect both greater consumer satisfaction and overall cost savings.
Let us now review both Healthcare Plans in greater detail.
The essence of the Obama plan is both simple and daring: all employers (with the notable exception of very small businesses) will be required to either offer all employees healthcare insurance or pay an additional Federal tax that will finance the purchase of Government-sponsored insurance. This is the so-called “Play or Pay” option. In addition, the Government would create two new federal agencies, the “National Health Insurance Exchange” and the “National Health Plan” modeled on the Federal Employees Health Benefit Program (FEHBP) and Medicare respectively. The former is a small but effective government agency that purchases health insurance policies on the open market from private underwriters for large groups of federal employees ranging from Congressmen to postal workers. These two new Federal agencies would offer a variety of affordable plans for those either unhappy with their present insurance as well as for the uninsured and under-insured. Low-income families would be offered additional financial subsidies as an inducement to purchase coverage. Other important aspects of the Obama plan include establishing universal coverage for all children up, mandating universal insurance portability and banning the practice of factoring in prior health conditions for underwriting purposes.
How does Obama propose to pay for this? The plan calls for rescinding the Bush tax cut of 2001 as well as increasing the payroll tax (FICA) cap for all workers. Additional savings will accrue from a variety of other factors including the expected decreased costs of business for both insurance carriers (including the Government) as well as for physicians due to increased computerization and universal adoption of Electronic Medical Records (EMRs). Ancillary cost control measures include: emphasis on public health and disease-preventive measures (e.g., pre-school vaccinations), paying providers solely on the basis of both performances and outcome and affording Medicare the option to negotiate prices with drug companies (Medicare D presently pays the manufacturers’ suggested retail price (MSRP) for every medication as mandated by Congress in 2006!)
Can Obama’s plan work? There are big risks both in the concept as well as in implementation. A significant concern is the expected resistance by many workers to the increased FICA cap. Will Americans go along with new Government-run entities and insurance mandates? This is perhaps the most important gamble; however polls have shown that over 50% of Americans realize that something “bold” must be done to correct this inequitable and broken system. Will the new plan truly come in on budget? The estimates so far from a variety of reputable healthcare economists suggest that the new plan will cost U.S. taxpayers between $80-120 Billion annually. These are lofty challenges indeed. But ones that the American public may be ready for.
The McCain plan, grounded in the firmly held belief that private enterprise influenced by “Market Forces” is the only potential means of altering the present situation, encourages individuals to purchase private healthcare insurance directly. McCain would finance his plan entirely by eliminating the present system where employees pay no tax on work-based healthcare premiums. The savings effected, about $3.6 Trillion over the next 10 years, would be “spent” as refundable tax credits for the purchase of private insurance. Furthermore, the credit is refundable and even those who do not pay taxes will be able to take advantage of the plan. The present system favors higher-income Americans whereas the McCain plan would even the playing field by allowing the under-insured and uninsured to purchase previously unaffordable plans.
Cost control is also an important element of the McCain plan and is based in great part on deregulating the insurance market and hence fostering competition, transforming Medicare from fee-for-service to outcome-based remuneration, promoting the use of generic drugs, encouraging the wider use of both medical billing technology and EMRs and… mandating medical malpractice reform. The major stumbling block is the plan’s inability to guarantee universal access.
Can McCain’s plan work? The McCain plan is easier to implement as most of the presumptive building blocks are either already in place or are at least theoretically palatable for the voter. But, there is no guarantee that this plan will either effectively control spiraling costs or expand the healthcare base. Will the McCain plan come in on budget? There is no way of predicting but the risk here is that many people may find the proposed tax credits of $2500/individual and $5000/family inadequate and not enough to cover the cost of private health insurance,. The dangerous result is that they would then defer or even forgo purchasing insurance, particularly if it is not offered as part of an employment benefits package.
The Obama and McCain Healthcare plans are presently simple sketches in an ever-evolving and complex political process. Many crucial details remain unexplained or deliberately obscured by both candidates. Perception is paramount. Whoever wins on November 4th will have to run the gauntlet of a skeptical and divided Congress that will be ginned up by a multiplicity of hostile, ruthlessly effective and determined special interests groups. Whatever portion of either plan survives and surfaces after the grueling legislative process will in all likelihood bear little resemblance to the original template. Success will ultimately depend on the fortitude and political skills of the 44th President of these United States and the determination of the American public to continue to demand healthcare reform.