Bush, Kerry clash over help for uninsured

THE BALTIMORE SUN

WASHINGTON - In a presidential contest featuring two candidates who disagree about almost everything, the challenge of dealing with soaring health care costs stands out as one of the largest points of conflict between President Bush and Sen. John Kerry.

"If you want to define a single issue that crystallizes the essential differences between the two candidates on domestic policy, health care would be it," said Henry J. Aaron, an economist at the Brookings Institution.

Whatever their political stripes, voters across the nation are deeply concerned about health care, and looking to the next president to lower their costs and make it easier for them to get and keep insurance coverage. National polls show that health care ranks near the top of voters' concerns, just behind the economy and national security.

Bush's and Kerry's campaigns view health care as a key issue, and the candidates have been sparring on the issue in campaign events and television ads in battleground states such as Florida.

That's because virtually everybody is facing health care worries. Americans who have health coverage have watched in recent years as costs have skyrocketed. And the ranks of the uninsured have swollen to 44 million, with many more at risk of losing coverage as costs rise.

If there is wide consensus that something must be done to address those problems, there also is vehement disagreement between Bush and Kerry about the answers.

Republican Bush favors a private-sector program that uses tax breaks to steer people into individual health insurance plans.

Kerry also backs tax credits, but his plan is far more ambitious - and expensive, relying on the government to solve people's health care problems.

The Massachusetts Democrat would greatly expand federal insurance programs to cover more people, and try to lower costs for those who already have insurance by creating a government safety net to help employers pay for the highest-cost cases.

To finance his plan, Kerry wants to roll back Bush's tax cuts for those earning more than $200,000 a year.

"I think they're about as far apart as I've ever seen," said Joseph A. Antos, a health care expert at the conservative American Enterprise Institute (AEI).

The blueprints offered by Bush and Kerry - with starkly different priorities and paths for the future - could weigh heavily in voters' decisions about who is the right person to lead the country for the next four years.

Most experts agree that Kerry would provide health insurance to about 25 million people who lack it. His plan also aims to bring down costs for people with insurance by 10 percent. Kerry's campaign tallies the cost of his plan at $653 billion over 10 years, but some experts say it could be from $800 billion to well over $1 trillion.

Bush's plan is far smaller. His campaign says it would cover 11.2 million people without insurance but some experts disagree, estimating as few as 1 million will get help. The bulk of its roughly $145 billion cost is spent on a tax credit to help low-income people buy individual health insurance.

But many agree with Bush that bigger is not necessarily better when it comes to easing the nation's health care woes.

Bush calls for a radical shift in the way people get their health insurance, beginning to move people away from getting employer-provided insurance and toward buying it themselves.

"Ours is common-sense plan," Bush told a campaign crowd last week in Bangor, Maine. "Ours is . ... a plan that doesn't let the federal government decide everything for you."

The centerpiece of his plan is a new tax credit for low-income people - $1,000 for individuals and $3,000 for families - that they could use to buy health insurance. They also could use the credit to fund their Health Savings Accounts (HSAs), which allow people who buy high-deductible insurance plans to save tax-free to pay out-of-pocket health care costs.

Promoting HSAs

Bush wants to promote HSAs, first enacted as part of the 2003 Medicare overhaul, by making the premiums tax-deductible. He also would give small businesses a tax credit of $200 for individuals and $500 for families for contributing to an HSA.

Small businesses would be allowed under Bush's plan to band together to form so-called Association Health Plans - exempt from many insurance regulations - that could pool risk to get better health care rates.

To control health care costs, Bush advocates reforming medical liability laws, including capping damages in malpractice lawsuits, to hold down doctors' insurance premiums. Kerry advocates similar reforms, but opposes capping damages.

Many Democrats and liberal health care economists view Bush's proposals with dread, saying they could give employers incentive to drop workers from insurance and leave poorer, sicker people without affordable health care options.

Employers are "scared out of their wits" that they will be slapped with large, unexpected health care expenses, said Brookings' Aaron. If the government created a tax credit for the uninsured, employers might opt to drop insurance.

"There is a serious risk that we will begin the process of unwinding the system of employment-based coverage," he said.

Critics of Bush's plans also argue that the tax credits, which would go to people making $30,000 or less per year, won't provide enough help to allow them to afford health insurance, which can cost a family up to $10,000 a year.

"That's not going to be enough to affect their decision," said Jonathan Gruber, an economist at the Massachusetts Institute of Technology. Gruber estimated that Bush's plan would only insure a net 1.3 million people, because the number of people who gained insurance would be offset by the number dropped from employer plans.

Proponents of Bush's plan say it would cover some of the neediest people and begin to revolutionize health by putting individuals, rather than the government or big companies, in charge of their medical costs.

Bush is "more focused on consumer-driven health care and on actually ... addressing the root-causes of rising health care costs," said Megan Hauck, a Bush campaign health policy adviser. "The Kerry proposal is really more of a shift to the federal government of the costs, without doing anything to lower them."

While Bush seeks to improve the system by turning it on its head, Kerry's plan seeks instead to bolster the existing structure.

Kerry's is "essentially a work- within-the-current-system proposal," said Jeff LeMieux, the executive director of Centrists.org, a centrist think tank.

Kerry proposes expanding Medicaid and the State Children's Heath Insurance Program (SCHIP) to cover virtually all children, poor and near-poor families and more childless adults - a proposal covering 18 million uninsured people.

Bush argues that this is a costly, government "one-size-fits-all" approach, but Kenneth E. Thorpe, a public health professor at Emory University who supports the plan, said it takes that kind of "substantial federal support" to insure the bulk of those who lack coverage. "Otherwise," Thorpe said, "it's never going to happen."

To bring down health care costs for those who have insurance, Kerry would have the government provide employers with a rebate of 75 percent of what they pay for the costliest patients (those whose medical expenses exceed $30,000 a year).

Critics see the measure as a government giveaway to businesses that helps people who have insurance.

"Now you have the federal government starting to make decisions for people and driving care, and that's an inappropriate role for the government to have," Hauck said. Instead of controlling costs, Kerry is "having the federal government pick up more of a percentage for it."

But Kerry says the plan will lower costs by shielding companies from spikes in expenses.

To help companies

The plan helps companies that provide health insurance but "are having a great deal of difficulty in this market," said Sarah Bianchi, the Kerry campaign's national policy director. Relieving businesses' health care costs "is a lot better economic approach in terms of keeping businesses more competitive than giving the top 2 percent huge tax breaks."

Kerry also would allow anyone to join the Federal Employee Health Benefits Program, a generous plan that covers lawmakers and government workers, giving small businesses and individuals tax credits to help them afford the premiums.

Antos said Kerry's proposals amount to "pouring money into the bucket with a hole in it." They would maintain a system of government-sponsored and employer-based health insurance that has helped create the problems that now exist in the health care market, he said.

But the Kerry camp says the system is worth preserving, and that his plan is workable if some of Bush's tax cuts are sacrificed to pay the cost. "This is about choices," Bianchi said. "You have to have a commitment to allocating resources and rolling back the tax cuts."

GENERAL APPROACH:

GEORGE BUSH: Would provide tax incentives to help people buy health insurance or to set up self-funded, tax-free savings accounts they could use to pay for their own medical care, with coverage only for catastrophic costs. Would drive down costs by putting consumers in charge of their own care and allowing small businesses to band together to get better insurance rates. Aims to cover 11.2 million of the nationM-Fs uninsured at a cost of $145 billion over 10 years.

Criticism: Relies on individuals fending for themselves in a complicated health care market, encouraging employers to drop coverage as people join individual plans and leaving the poorest and sickest patients facing exorbitant premiums. Likely to cover far fewer people, as few as 1 million, and might cause others to lose coverage.

JOHN KERRY: Tax incentives to encourage small businesses to provide health insurance paired with a broad expansion of existing government health programs to cover virtually all children and poor and near-poor adults. Aims to keep premiums low by giving employers large government subsidies to pay for high-cost cases. Aims to cover 27 million uninsured at a cost of $653 billion over 10 years.

Criticism: Shifts more of spiraling health costs onto the federal government, spends billions to help some who have coverage and offers lavish subsidies to companies with no guarantee they will help control the growth of insurance costs. Will cost far more, as much as $1.25 trillion over 10 years.

EXPANDING ACCESS TO INSURANCE:

GEORGE BUSH: Launch a M-tCover the KidsM-v outreach campaign to enroll more children who are eligible for government health care coverage.

Criticism: Fails to broaden access to the federal and employer health plans that constitute the backbone of the health care system.

JOHN KERRY: Expand Medicaid and the State ChildrenM-Fs Health Insurance Program to cover more low- and middleincome children as well as low-income adults. Allow everybody to buy into the Federal Employee Health Benefits Program, the plan that covers members of Congress, with subsidies to help pay for the coverage.

Criticism: Increases the federal governmentM-Fs role in the health care system while failing to address the causes of rising costs and blowing a hole in the federal budget that would likely have to be filled with tax increases that would negate the benefits of the plan.

CUTTING DRUG COSTS:

GEORGE BUSH: Signed legislation that offers limited Medicare prescription drug benefits with the most substantial subsidies going to lower-income seniors and those with the highest drug bills. All seniors are eligible for a prescription drug discount card until the full plan begins in 2006.

Criticism: Offers a stingy benefit with a coverage gap that could leave seniors facing prohibitively high drug costs.

JOHN KERRY: Allow the government to negotiate lower drug prices and bring generic drugs to market more quickly. Allow the reimportation of cheaper U.S.-made Food and Drug Administration-approved prescription drugs from abroad where they are far cheaper.

Criticism: Drug reimportation could allow unsafe, counterfeit drugs into the U.S. pharmaceutical supply.

CUTTING INDIVIDUAL COSTS:

GEORGE BUSH: Give low- and middleincome people with no coverage tax credits to help them buy health insurance or to purchase a high-deductible, low-premium plan and a Health Savings Account (HSA), which would allow individuals to save tax-free to pay for their health care costs. Offer a tax credit of $1,000 for individuals and $3,000 for families. Allow people to deduct the premiums they pay for the high-deductible, low-premium plans. Allow individuals to shop across state lines to find the best available rates for health coverage.

Criticism: HSAs will only work for relatively young, healthy people who have low health care costs, leaving older, sicker people with more expensive medical needs in traditional insurance plans, which will in turn raise premiums for those more vulnerable people.

JOHN KERRY: Provide tax credits to help people afford health insurance coverage. Small businesses would be eligible for tax credits for up to 50 percent of the cost. Individuals would get assistance for costs above 6 percent of their incomes. Laid-off workers could get a 75 percent tax subsidy to help them pay their premiums while between jobs. Retirees and individuals ages 55 to 64 would get tax credits to help them afford coverage. Stabilize insurance rates by creating a M-tpremium rebateM-v program in which the government reimburses employers for 75 percent of medical costs for catastrophically ill people (those whose costs exceed about $30,000 a year).

Criticism: Premium rebate program would do little to reduce health insurance rates, but instead would be a windfall for big companies that offer generous health benefits and would discourage employers and individuals from controlling their health care costs.

CUTTING SMALL BUSINESS COSTS

GEORGE BUSH: Give small businesses and their employees who set up HSAs tax rebates for contributions to the accounts of up to $500 per worker for families and $200 per worker for individuals. Allow small business to form Association Health Plans (AHPs), in which they band together and use group purchasing power to negotiate better health care rates.

Criticism: AHPs could push up premiums for small businesses that opt to keep traditional insurance. Little evidence that AHPs would reduce small firmsM-F costs, because of administrative burdens inherent in running the plans.

JOHN KERRY: Give small businesses tax credits to cover up to 50 percent of premiums for low- to moderate-income workers.

Criticism: Uses a government solution rather than empowering small firms to find lower rates in the marketplace and deliver them to their employees.

OTHER COST-CUTTING MEASURES

GEORGE BUSH: Make electronic health records universally available within a decade. Cap punitive damages in malpractice suits and reform liability laws to stem premium increases that are discouraging doctors from providing services. Cut wasteful Medicaid and Medicare spending. Provide preventive care through Medicare.

Criticism: Capping punitive damages deprives victims of just compensation and would not help lower premiums. Cost savings from electronic records and preventive care are questionable.

JOHN KERRY: Make electronic health records available by 2008. Reform liability laws to cut down on meritless claims and defenses, streamline the claims process and award punitive damages only in cases of proven intentional misconduct, gross negligence or reckless indifference to life. Give financial incentives for providers to improve the quality of care and invest in information technology. Promote preventive care.

Criticism: Malpractice changes would not bring down premiums. Cost savings from electronic health records and preventive care are questionable.

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