Analysis of the Candidates’ healthcare Proposals

               

by Stephen E. Beller, PhD [email  /  bio]

Contributors:
Barry Carol
Sabatini Monatesti

Latest Update on 1/25/08: View updates here.
(Check back for future updates)

Introduction

This site systematically analyzes the presidential candidates’ healthcare proposals and matches them to the wants and needs to 18 groups of voters. Several resources were used to compile this information, with the bulk coming from documents available on the Kaiser Family Foundation's Health08.org website at http://www.health08.org/sidebyside.cfm and on the Huffington Post website at http://www.huffingtonpost.com/susan-blumenthal/us-presidential-candida_b_79371.html.

In order to assure accuracy, please contact Dr. Beller to report any errors or omissions.

Table of Contents

 

Proposal Selection Chart

After analyzing the details of each Presidential candidate’s healthcare proposal, the best proposal appears to depend on one’s current health insurance plan, level of wealth, and priority for assuring good healthcare for all. This is reflected in the Proposal Selection Chart.

dESCRibing the Proposal Selection Chart

The Proposal Selection Chart provides a logical way to choose a candidate’s proposal based on three factors:

The forth column—Proposal Most Likely to be Chosen—identifies the type of healthcare proposal a person is likely to chose based on the factors in the other three columns. There are 18 voter groups.

In addition, the End Notes section includes other charts identifying how the candidates strategies for dealing with (or not dealing with) healthcare quality and cost control issues, as well as identifying important strategies that no candidate proposes.

Return to Table of Contents

Identifying the beSt Candidates

Each candidate’s proposal was analyzed based on the needs and desires of the 18 voter groups. This analysis considered whether the candidate proposes a universal healthcare system (UHS). It also took into account the number of strategies proposed to improve healthcare quality and control costs. While not all the strategies are equally important, the total number of strategies proposed gives some indication of how much attention a candidate is paying to these issues. Based on this analysis, the following identifies the best candidates:

Note, however, that there are significant gaps in every candidate’s proposal. It would be useful to know how what it would require to (a) evaluate all the quality improvement and cost control strategies described in this document and to (b) implement the effective ones efficiently.

Return to Table of Contents

 

tHE Proposal Selection Chart: The 18 Options

Note that end notes contain important supplemental information and can be access by clicking the end note links, which are indicated by a number in brackets: [#].

Assumptions: (a) anyone with existing health problems or risks factors has greater urgency for insurance coverage and (b) anyone with knowledge about the quality problems in our current healthcare system (see this link and this link) would want to implement strategies for improving care quality [1].

Current Health Plan

Wealth Level

UHC
Priority

Proposal Most Likely to be Chosen

Ÿ Good insurance coverage

Ÿ Low out-of-pocket cost

Ÿ Low risk of ever losing the coveragei

High

High priority

(1) FEHBP-UHSii + Private Insurance

Low priority

(2) Keep own insurance;  Reject tax increase and approve tax breaks (tax credits, deductions) for self;  Controlling care cost is unimportant

Middle

High priority

(3) FEHBP-UHSii + Private Insurance

Low priority

(4) Keep own insurance;  Reject tax increase and approve tax breaks (tax credits, deductions) for self;  Controlling care cost is not very important

Low

High priority

(5) FEHBP-UHSii + Private Insurance

Low priority

(6) Keep own insurance;  Tax issue less important;  Control care costs [2]

Ÿ Good insurance coverage

Ÿ High out-of-pocket cost

Ÿ Low risk of ever losing the coveragei

High

High priority

(7) FEHBP-UHSii + Private Insurance or SP-UHSiii [3]

Low priority

(8) Keep own insurance;  Reject tax increase and approve tax breaks (tax credits, deductions) for self;  Control care costs [2]

Middle

High priority

(9) FEHBP-UHSii+ Private Insurance or SP-UHSiii [3]

Low priority

(10) Keep own insurance;  Reject tax increase and approve tax breaks (tax credits, deductions) for self;  Control care costs [2]

Low

High priority

(11) FEHBP-UHSii + Private Insurance or SP-UHSiii [3]

Low priority

(12) Keep own insurance;  Tax issue less important;  Control care costs [2]

Ÿ No insurance
OR
Ÿ Poor or Inadequate insurance coverage

OR
Ÿ High Risk of losing the coverage

High

High priority

(13) FEHBP-UHSii + Private Insurance or SP-UHSiii [3]

Low priority

(14) Keep own insurance: If lost or inadequate, purchase new private insurance or pay out-of-pocket for needed care;  Reject tax increase and approve tax breaks (tax credits, deductions) for self;  Control care costs [2]

Middle

High priority

(15) FEHBP-UHSii + Private Insurance or SP-UHSiii [3]   

Low priority

(16) (a) If no insurance or it’s inadequate, then FEHBP-UHSii + Private Insurance or SP-UHSiii [3] or (b) If current insurance is adequate, then Universal Public Program in case current insurance is lost or inadequate;  Don’t reject tax increase if necessary to fund the FEHBP-UHSii or
SP-UHSiii
[4];  Control care costs [2]

Low

High priority

(17) FEHBP-UHSii + Private Insurance or SP-UHSiii [3]

Low priority

(18) (a) If no insurance or it’s inadequate, FEHBP-UHSii + Private Insurance or SP-UHSiii [3] or (b) If current insurance is adequate, support FEHBP-UHS in case current insurance is lost or inadequate;  Don’t reject tax increase if necessary to fund the FEHBP-UHSii or SP-UHSiii [4];  Control care costs [2]

i Among those who are without health insurance, at least 80% had it but lost it, so the risk may be greater than most people realize (see this link). Primary causes include job loss or change, employers dropping coverage for their employees/retirees, and serious illness. Even the long-term fiscal viability of Medicare is questionable (see this link and this link).

ii FEHBP-UHS=Federal Employees Health Benefits Program Universal Healthcare System
iii SP-UHS=Single-Payer System Universal Healthcare System

Return to Table of Contents

 

Identifying the Candidates’ pROPOSALS Best Suited for Each of the 18 Options

Determination of the best proposals for the 18 options was done by:

  1. Matching the 9 High Priority Universal Healthcare options with candidates whose proposals support a FEHBP-UHS or SP-UHS.
  2. Since Quality Improvement is relevant to all 18 options, selecting the candidates who have a strong focus on improving quality by virtue of the number of strategies in their proposals that address quality improvement, as per the Quality Improvement and Cost Control Strategies Summary Chart below.
  3. Matching the 16 options in which Cost Control is important with the candidates who have a strong focus on controlling costs by virtue of the number of strategies in their proposals that address cost control, as per the Quality Improvement and Cost Control Strategies Summary Chart below.

Quality Improvement and Cost Control Strategies Summary Chart

This Quality Improvement and Cost Control Strategies Summary Chart is based on data from the Quality Improvement and Cost Control Strategy Grids at End Note 1 and End Note 2, respectively. An analysis of these data indicate that the candidates most serious about improving quality and controlling costs are Clinton, Obama, Richardson and McCain; with Clinton and Kucinich scoring highest.

Note, however, that there are significant gaps in all candidates’ proposals.

 

Total number of strategies in candidates’ proposals
are in last two rows

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QUALITY IMPROVEMENT Strategies

16

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COST CONTROL Strategies

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i Kucinich given 1 Quality Improvement Strategy point for not needing private insurance incentives and disincentives.

i i Kucinich given 3 Cost Control Strategy point for not needing private insurance incentives.

Matching The Best Candidates to each of the 18 Options

Following are candidate’s proposals that are best suited to each of the 18 voter groups (best candidates in bold):

Return to Table of Contents 

 

THE Candidate Comparison Grid: cOMPARING THE cANDIDATES’ pROPOSALS

The grid below shows details of each candidate’s proposal.

 

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Universal Healthcare System (UHS)

· Government-Run Single-Payer System (SPS)

 

 

 

u

 

 

 

 

 

 

 

 

· Government-Run Federal Employees Health Benefits Program (FEHBP)

u

 

 

 

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u

 

 

 

 

 

 

· Health Markets

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· Vouchers

 

 

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Allow Private Insurers

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u

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Mandates (individual and/or employer requirements)

 

 

 

 

 

 

 

 

 

 

 

 

· Requirement for Individuals to receive coverage
(Osama – Only children required)

u

u

u

u

u

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· Requirement for (large) Employers to provide coverage or help their employees purchase it

u

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u

Creation or Expansion of Public Programs

 

 

 

 

 

 

 

 

 

 

 

 

· Support the creation of new public programs

 

u

 

u

u

 

 

 

 

 

 

 

· Expand existing public programs

u

u

 

 

u

u

 

 

 

 

 

 

· Replace Medicare and Medicaid with new public programs

 

 

u

u

 

 

 

 

 

 

 

 

Insurance Pooling (Community Ratings)

u

u

u

u

u

u

 

 

 

u

 

 

Tax Credits/Subsidies/Deductions for Individuals/Families

 

 

 

 

 

 

 

 

 

 

 

 

đTax Credits/Incentives

 

 

 

 

 

 

 

 

 

 

 

 

· Tax credits

u

u

 

 

 

u

 

u

 

u

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· Tax incentives

 

 

 

 

 

 

 

 

 

 

 

 

u

đ Subsidies: Premium Payments Based on Income

 

 

 

 

 

 

 

 

 

 

 

 

· Sliding scale/subsidized premiums

 

 

 

u

u

 

 

 

 

 

 

 

đ Tax Deductions

 

 

 

 

 

 

 

 

 

 

 

 

· For individuals without employer-based coverage

 

 

 

 

 

 

u

 

 

 

 

 

đ Tax Code Changes

 

 

 

 

 

 

 

 

 

 

 

 

· Eliminate bias toward employer-sponsored health insurance

 

 

 

 

 

 

 

 

 

u

 

 

· Permit full deductibility of qualified medical expenses

 

 

 

 

 

 

 

 

 

 

 

u

· Eliminate federal tax incentives for “bare-bones, high-risk plans.”

 

 

 

 

 

u

 

 

 

 

 

 

Tax Credits/ Subsidies/Deductions
for Businesses

 

 

 

 

 

 

 

 

 

 

 

 

· Tax Credits

u

 

 

 

 

 

 

 

 

 

 

 

· Subsidies

 

 

 

 

 

u

 

 

 

 

 

 

· Sliding Scale Premiums

 

 

 

u

 

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Health Savings Accounts

 

 

 

 

 

 

 

 

 

 

 

 

· Have simpler regulations

 

 

 

 

 

 

u

 

 

 

 

 

· way to encourage people to limit the use of services

 

 

 

 

 

 

 

u

 

 

 

 

· Allow expansion

 

 

 

 

 

 

 

 

 

u

 

 

· Eliminate minimum HSA deductible requirements

 

 

 

 

 

 

 

 

 

 

 

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State Flexibility (i.e., states may offer their own plans)

 

 

 

 

 

 

 

 

 

 

 

 

· States may band together to offer same type of regional public plan

u

 

 

 

u

 

 

 

 

 

 

 

· Give states block grants

 

 

 

 

 

 

u

 

 

 

 

 

· Give states flexibility and encouragement to experiment

 

 

 

 

 

 

 

u

 

u

 

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Changes in Private Insurance

 

 

 

 

 

 

 

 

 

 

 

 

· No Discrimination for Pre-Existing Conditions

u

 

 

 

 

u

 

 

 

 

 

 

· No Discrimination for At-Risk Conditions

u

 

 

 

 

 

 

 

 

 

 

 

· Coverage is Guaranteed Issue and Guaranteed Renewable; Portability Across Jobs

u

u

 

 

u

 

 

u

 

 

 

 

· Insurers Must Meet Minimum Loss Ratio; Must Pay Reasonable Share of Premium on Care Benefits

u

u

 

 

u

 

 

 

 

 

 

 

· Use of Out-Of-Network Providers in Emergencies

 

u

 

 

 

 

 

 

 

 

 

 

· Older Children can Continue Family Coverage through Their Parents’ Plan

 

 

 

 

u

u

 

 

 

 

 

 

· Prevent Abuse of Monopoly Power through unjustified price increases

 

 

 

 

u

 

 

 

 

 

 

 

· Permit Individuals to Purchase Insurance Across State Lines

 

 

 

 

 

 

u

 

u

u

 

 

· Encourage Innovative Multi-Year Insurance Products

 

 

 

 

 

 

 

 

 

u

 

 

·   Provide Federal Incentives for States to Deregulate & Reform Health Insurance Markets

 

 

 

 

 

 

 

 

 

 

 

u

 

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Financing & Payments

đ Total Annual  Cost of Initiative (estimated)

· Equal to current spending less $387 billion/year savings

 

 

 

u

 

 

 

 

 

 

 

 

· $50-65 billion

 

 

 

 

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· $104-110 billion

 

 

 

 

 

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· $110 billion

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· $90-120 billion

 

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đ Finance with Revenue from Limits/Roll-Back of Tax Exclusions and Cuts

 

 

 

 

 

 

 

 

 

 

 

 

· $54 billion in revenue from limiting the tax exclusion for employer-paid health insurance and discontinuing tax cuts for those with incomes over $250,000

u

 

 

 

 

 

 

 

 

 

 

 

· additional revenue to come from discontinuing tax cuts for those with incomes over $250,000

 

 

 

 

u

 

 

 

 

 

 

 

· finance the plan by rolling back tax cuts for those earning more than $200,000 a year

 

u

 

 

 

 

 

 

 

 

 

 

· reduce corporate welfare and reverse 2001 and 2002 tax cuts for additional $351 billion revenue

 

 

 

u

 

 

 

 

 

 

 

 

đ Finance with Savings

· Anticipates that savings from the voucher program can finance universal coverage without additional costs

 

 

u

 

 

 

 

 

 

 

 

 

· Expects much of the financing to come from savings within the health care system

 

 

 

 

u

 

 

 

 

 

 

 

·   Estimates that savings to the government will result from streamlining administration, reinvesting money now spent on uncompensated care, and investing in prevention and chronic disease management should be sufficient to cover the required costs

 

 

 

 

 

u

 

 

 

 

 

 

đ Finance with Insurance Premiums

· With a combination of employer and individual/family premiums

 

 

 

 

 

 

 

 

 

 

 

 

đ Finance with New or Increased Taxes (Payroll, Income, Investment Taxes)

 

 

 

 

 

 

 

 

 

 

 

 

·  Increase personal income taxes on the top 5 percent income earners; Institute a excise tax on payroll and self-employment income; Institute a small tax on stock and bond transactions; Payroll Tax (3.3% additional on employer/employee) to generate $538 billion; Stock Transfer Tax (0.25% on seller & buyer) to generate $150 billion revenue; Tax Surcharge: 5% on richest 5% of taxpayers annual income between $184,000 and $279,999; 10% on richest 1% annual income of $280,000+ to generate $351 billion

 

 

 

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· Existing sources of federal revenue for health care would be transferred to the new public program; appropriations for existing programs for uninsured and indigent will be transferred and appropriated

 

 

 

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đ Finance with Other Revenue Streams

 

 

 

 

 

 

 

 

 

 

 

 

· Including those that result from ending the war in Iraq and by recapturing existing uncompensated care subsidies

 

 

 

 

 

 

 

 

 

 

 

 

đ Finance by Redirecting Existing Subsidies

 

 

 

 

 

 

 

 

 

 

 

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Improving the Quality of Care

· Transparency of Quality to support consumers’ decisions

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· Clinical Health Information Technology

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· Use Case Management

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· Coordinate/Integrate Care and Provider Communications

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· Promote Evidence-Based Care/Best Practices

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· Promote/Support/Fund Medical Research

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· Develop and Use Quality Metrics; Quality Control Oversight

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· Deploy Performance Incentives and Disincentives for Providers

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· Deploy Performance Incentives and Disincentives for Patients

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· Deploy Performance Incentives and Disincentives for Insurers

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· Increase Market Competition among Insurers

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· Reduce Errors and Increase Safety

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· Promote Consumer Literacy/Education

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· Support Medical Homes

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· Utilize Telemedicine

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· Reduce Healthcare Disparities

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· Free Choice of Provider

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· Mental Health Parity

u

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· Prepare for Public Health Threats

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· Streamline FDA Drug Approval Process

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· Improve/Increase Primary Care, Nursing and Public Health Workforce

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· Improve Care for Veterans

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· Fund more accurate data collection

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· Support Long-Term Care Insurance

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· Prepare for Public Health Threats

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Control Costs

· Provide Transparency of Cost for Consumers

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· Provide Preventive Care

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· Provide Chronic Disease Management

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· Establish Best Practices

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· Do Comparative Research

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· Use Health Information Technology: Uniform (Paperless) Billing System

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· Reduce Drug Prices

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· Change Medicare Advantage Plans  to be more level with traditional Medicare

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· Eliminate Insurance Discrimination to help reduce administration costs

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· Reform Malpractice Insurance/Medical Liability

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· Limit Insurer Profits

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· Promote Insurer Competition

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· Promote Provider Competition

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· Promote Personal Responsibility

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· Establish global budgets

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· Corruption protection against collusion, unfair business and consumer practices

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· Streamline regulations

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· Address illegal immigration [Tancredo only]

· Limit medical debt interest rates

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· Encourage private sector innovation as way to encourage people to stay healthy and limit the use of services and improve free market for health care

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Other

đSpecial Disease Initiatives

· Cancer

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· HIV/AIDS

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u

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· Autism

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· Global Health

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Return to Table of Contents  

End Notes

[End Note 1] Candidates’ QUALITY IMPROVEMENT strategies

 

Strategy

Included in these candidates’ proposals

Transparency of Quality to support consumers’ decisions

Clinton, Obama, McCain

Clinical Health Information Technology

Clinton,  Obama, Huckabee, McCain

Coordinate/Integrate Care and Provider Communications

Clinton,  McCain

Use Case Management

{Edwards only}

Promote Evidence-Based Care/Best Practices

Clinton

Promote Medical Research

Clinton,  Obama, Huckabee

Develop and Use Quality Metrics; Quality Control Oversight

Clinton, McCain

Deploy Performance Incentives & Disincentives: Providers

Clinton,  Obama, McCain

Deploy Performance Incentives & Disincentives: Patients

Giuliani , Huckabee

Deploy Performance Incentives & Disincentives: Insurers (not applicable to Single Payer Program)

{Edwards only}

Reduce Errors and Increase Safety

Clinton, Obama

Promote Consumer Literacy/Education

McCain

Support Medical Homes

Clinton

Utilize Telemedicine

McCain

Reduce Disparities (so no one is left out due to health status, age, gender, etc.)

{Edwards only}

Free Choice of Provider

{Romney only}

Mental Health Parity

Clinton, Obama

Prepare for Public Health Threats

Obama

Streamline FDA Drug Approval Process

{Giuliani only}

Improvements/Increases in Primary Care, Nursing and Public Health Practitioner Workforce

Clinton, Obama

Fund more accurate data collection

Clinton

Support Long-Term Care Insurance

Clinton

Prepare for Public Health Threats

Clinton, Obama

Missing from All Proposals:

Promote integrated care in which providers compete based on the value they deliver to patients [see this link]

Promote personalized care see [this link]

Promote research and delivery of cost-effective complementary and alternative care [see this link ]

Promote biopsychosocial healthcare that focuses on the mind-body interaction [see this link]

Prepare for public health threats incl. first responders:

·        Supporting first responders and linking them with trauma centers [see this link]

·        Protect populations with biosurveillance and post-market drug & device surveillance [see this link]

Return to Proposal Selection Chart

Return to Table of Contents

[End Note 2] Candidate’s COST CONTROL strategies

 Strategy

Included in these candidates’ proposals

Transparency of Cost to support consumers’ decisions

Obama , McCain

Preventive Care

Clinton,  Obama , Huckabee, McCain

Chronic disease management

Clinton,  Huckabee, McCain

Establish Best Practices

Clinton

Do Comparative Research

{Edwards only}

Use Health Information Technology: Uniform (Paperless) Billing System

Clinton, Obama , Huckabee

Reduce Drug Prices

Clinton, Obama, McCain

Change Medicare Advantage Plans  to be more level with traditional Medicare

Clinton, Obama

Eliminate Insurance Discrimination to help reduce admin costs

Clinton

Reform Malpractice Insurance/Medical Liability

Clinton, Obama , McCain

Limit Insurer Profits  (not relevant to Single Payer Program)

Obama

Promote Insurer Competition  (not relevant to Single Payer)

Obama, McCain

Promote Provider Competition

McCain

Promote Personal Responsibility

{Thompson only}

Establish global budgets

{Kucinich only}

Corruption protection against collusion & unfair business practices

McCain

Streamline regulations

{Thompson only}

Address illegal immigration

{Trancredo only}

Limit medical debt interest rates

{Richardson only}

Encourage private sector innovation as way to encourage people to stay healthy and improve free market for health care

Huckabee

Missing From All Candidates:

Containing costs via telemedicine and home care for chronic conditions [see this link]

Containing costs by establishing best practices procedures based on comparative value (cost-effectiveness) [see this link]

Containing costs by minimizing waste [see this link and this]

Containing costs through sensible rationing of end-of-life care [see this link]

Promote research and delivery of cost-effective complementary and alternative care [see this link ]

Return to Proposal Selection Chart

Return to Table of Contents


[End Note 3] Publically Funded Universal Healthcare Program + Private Insurance Versus a Single-Payer Program (No private insurance)

Single-Payer Government Run System (SP-UHS)

The primary arguments in favor of a Single-Payer System Universal Healthcare System (SP-UHS), rather than a Federal Employees Health Benefits Program Universal Healthcare System (FEHBP-UHS), center on cost control issues. Here are views about how it would reduce administrative costs. Consider the following:

The most obvious difference between [European] health care systems and ours — that their governments provide universal insurance — certainly plays a big role in the cost differences. Look behind the receptionist at your doctor’s office, and you will very likely see a staff of people filing claims to different insurance companies. The insurance companies, meanwhile, employ a small army charged with figuring out how to avoid covering the unhealthy. The administrative costs of our patchwork bureaucracy eat up about 25 percent of health spending… Even in Europe’s single-payer systems, administrative costs account for about 15 percent of health spending [italics added], once everything is included, according to the Lewin Group, a consulting firm…. Medicare, which has administrative costs roughly as low as those of other countries’ universal plans. Younger Americans, by contrast, have private insurance, with all its inefficiencies. Yet elderly Americans’ share of national health spending is similar to that of the elderly in other countries, as Arnold Kling, an economist, has noted [source].

Private insurers spend large sums fighting adverse selection, trying to identify and screen out high-cost customers. Systems such as Medicare, which covers every American sixty-five or older, or the Canadian single-payer system, which covers everyone, avoid these costs. In 2003 Medicare spent less than 2 percent of its resources on administration, while private insurance companies spent more than 13 percent … Although it's rarely described this way, Medicare is a single-payer system covering many of the health costs of older Americans. (Canada's universal single-payer system is, in fact, also called Medicare.) And it has some though not all the advantages of broader single-payer systems, notably low administrative costs. [source].

Here’s a discussion of how a single-payer system would control healthcare delivery costs:

…the evidence clearly shows that the key problem with the US health care system is its fragmentation. A history of failed attempts to introduce universal health insurance has left us with a system in which the government pays directly or indirectly for more than half of the nation's health care, but the actual delivery both of insurance and of care is undertaken by a crazy quilt of private insurers, for-profit hospitals, and other players who add cost without adding value. A Canadian-style single-payer system, in which the government directly provides insurance, would almost surely be both cheaper and more effective than what we now have. And we could do even better if we learned from "integrated" systems, like the Veterans Administration, that directly provide some health care as well as medical insurance. …

[Another] source of savings in a system of public health insurance is the ability to bargain with suppliers, especially drug companies, for lower prices. Residents of the United States notoriously pay much higher prices for prescription drugs than residents of other advanced countries, including Canada. What is less known is that both Medicaid and, to an even greater extent, the Veterans' Administration, get discounts similar to or greater than those received by the Canadian health system.

We're talking about large cost savings. Indeed, the available evidence suggests that if the United States were to replace its current complex mix of health insurance systems with standardized, universal coverage, the savings would be so large that we could cover all those currently uninsured, yet end up spending less overall. That's what happened in Taiwan, which adopted a single-payer system in 1995: the percentage of the population with health insurance soared from 57 percent to 97 percent, yet health care costs actually grew more slowly than one would have predicted from trends before the change in system [source].

And the following argues that a single-payer system is the only way sensible solution:

A mere shift of power from Republicans to Democrats would not, in itself, be enough to give us sensible health care reform. While Democrats would have written a less perverse drug bill, it's not clear that they are ready to embrace a single-payer system. Even liberal economists and scholars at progressive think tanks tend to shy away from proposing a straightforward system of national health insurance. Instead, they propose fairly complex compromise plans. Typically, such plans try to achieve universal coverage by requiring everyone to buy health insurance, the way everyone is forced to buy car insurance, and deal with those who can't afford to purchase insurance through a system of subsidies. Proponents of such plans make a few arguments for their superiority to a single-payer system, mainly the (dubious) claim that single-payer would reduce medical innovation. But the main reason for not proposing single-payer is political fear: reformers believe that private insurers are too powerful to cut out of the loop, and that a single-payer plan would be too easily demonized by business and political propagandists as "big government."

These are the same political calculations that led Bill Clinton to reject a single-payer system in 1993, even though his advisers believed that a single-payer system would be the least expensive way to provide universal coverage. Instead, he proposed a complex plan designed to preserve a role for private health insurers. But the plan backfired. The insurers opposed it anyway, most famously with their "Harry and Louise" ads. And the plan's complexity left the public baffled.

We believe that the compromise plans being proposed by the cautious reformers would run into the same political problems, and that it would be politically smarter as well as economically superior to go for broke: to propose a straightforward single-payer system, and try to sell voters on the huge advantages such a sys-tem would bring. But this would mean taking on the drug and insurance companies rather than trying to co-opt them, and even progressive policy wonks, let alone Democratic politicians, still seem too timid to do that [source].

Two important lessons can be learned [from the Massachusetts Health Reform Law]. First, we need to sever the connection between healthcare and employment. People need continuous, portable coverage that is affordable, comprehensive, and equitable. Second, we cannot depend on the private insurance industry to provide this for us.

Piece-meal reform such as the new law will not work. Both employers and the public support the concept of single-payer healthcare. Big business is starting to realize that a single payer system will be the only affordable way to cover everyone. When will our politicians understand that their political futures will depend on supporting this kind of comprehensive reform? [source]

The reason we spend more and get less than the rest of the world is because we have a patchwork system of for-profit payers. Private insurers necessarily waste health dollars on things that have nothing to do with care: overhead, underwriting, billing, sales and marketing departments as well as huge profits and exorbitant executive pay. Doctors and hospitals must maintain costly administrative staffs to deal with the bureaucracy. Combined, this needless administration consumes one-third (31 percent) of Americans’ health dollars.

Single-payer financing is the only way to recapture this wasted money. The potential savings on paperwork, more than $350 billion per year, are enough to provide comprehensive coverage to everyone without paying any more than we already do.

Under a single-payer system, all Americans would be covered for all medically necessary services, including: doctor, hospital, long-term care, mental health, dental, vision, prescription drug and medical supply costs. Patients would regain free choice of doctor and hospital, and doctors would regain autonomy over patient care.

Physicians would be paid fee-for-service according to a negotiated formulary or receive salary from a hospital or nonprofit HMO; group practice. Hospitals would receive a global budget for operating expenses. Health facilities and expensive equipment purchases would be managed by regional health planning boards.

A single-payer system would be financed by eliminating private insurers and recapturing their administrative waste. Modest new taxes would replace premiums and out-of-pocket payments currently paid by individuals and business. Costs would be controlled through negotiated fees, global budgeting and bulk purchasing [source].

Single payer, universal health care administered by a state public health system would be much more democratic and much less intrusive than our current system. Consumers and providers would have a voice in determining benefits, rates and taxes. Problems with free choice, confidentiality and medical decision making would be resolved [source].

The primary arguments against a single-payer system center on concerns about:

·    Loss of options or increased expense to those who currently have employer-paid plans

·    Rationing of care

·     Stifling of innovation

·    Long wait for care. 

Concerns about Loss of options or increased expense to those who currently have employer-paid plans and rationing of care

Regarding the first two bullets, consider the following:

Most lucky Americans with good insurance are doubly isolated from financial reality. They don't pay for their health care and they don't even pay for most of their insurance—their employers or the government pays. …[With a single-payer system, the government would have to start] saving money by simply not providing effective treatments that cost too much. …Should people be allowed to opt out of [such] rationing if they can afford it? That is, if the system (private or single-payer) won't pay for the $100,000 pill, should you be able to pay for it yourself? …There are the makings of a deal here. Better-off or better-insured people could be told, individually or as a group: Give up your health-care subsidy [i.e., buy insurance or healthcare with your own money] and you may opt out of any rationing-type restrictions that the system imposes [source].

In a Single-Payer system, everyone has an EQUAL access to insurance coverage. But it doesn’t mean that everyone is able to access all the care that they want or even believe they need. …Since users of the system don’t pay for care directly, the only way to control costs is to limit utilization & access to medical technology. A single-payer system’s economic success is …to limit access to services, as well as access to the most sophisticated and expensive types of medical treatment and services. …Significant savings in single-payer systems come from limiting the supply of medical services to curb demand (rationing of treatment and technology)…

Residents in countries with single-payer systems pay significantly higher taxes…Canadians are currently paying 40 percent more taxes than Americans, and Europeans are paying 60 percent more than we are! [source]

A counter argument is that our system needs to increase value to the consumer, so that everyone gets the safest, most cost-effective care possible. That will only happen when (a) we know what care gets the best results for the least cost for each person (which is a problem in its own right) and (b) there are mandated rewards for delivering such high-value care and punishments for not. Single-payer system countries are working diligently to identify the most cost-effective tests, treatments and prevention methods, and to minimize over-testing, over-treating and use of expensive drugs and procedures when more cost-effective options exist. The U.S. healthcare system, on the other hand, does just the opposite: More profits go to providers, pharmaceutical companies and medical device manufacturers when patients get sick, receive more tests and treatments, especially when they’re expensive; this does not bring high value to the consumer [see this link]. This means that we’ve got to transition from “pay-for-volume” to “pay-for-value”—instead of arguing that waste is “a benefit” private insurance allows—and a single-payer system can help drive such value.

Nevertheless, what if certain consumers want to throw their money away for expensive care with little evidence of efficacy? Or what if they want to pay more than is necessary for care when there are less costly options that are just as good? If they are willing to pay for it out of their own pocket for it—through costly private insurance or cash—then shouldn’t they have that option? Should our government refuse them access to overly expensive or ineffective care? Well, this depends on whether allowing people to opt out of the single-payer system drains so much money from the system that it cannot survive. This issue relates to mandates.

The Thorny Issue of Mandates

In order to ensure universal coverage, all the Democrats propose mandates that ensure everyone has access to coverage through individual and/or employer based requirements. Note that while Obama requires coverage for children, he doesn’t for adults, which some have estimated to leave about 15 million Americans without coverage [reference]. The Republicans, on the other hand, have no such mandates.

Mandates in generals have become quite a controversial issue. Consider the following [original at this link]:

John Edwards' declaration that under his health reform proposal anyone who refuses to sign up for health insurance will be subject to having their wages garnished has led to a …storm of often confusing debates.  Under national health reform, should everyone be required to enroll? The Edwards and Clinton plans have mandates insisting that all Americans purchase insurance; the Obama plan has a mandate for children, but not for adults

New York Times columnist Paul Krugman stirred controversy Friday by defending Edwards, and criticizing Barack Obama: “Under Obama’s health care plan, healthy people could choose not to buy insurance—then sign up for it if they developed health problems later,” Krugman observed. “As a result, people who did the right thing and bought insurance when they were healthy would end up subsidizing those who didn’t sign up for insurance until or unless they needed medical care.”

…[This issue] addresses a serious defect in our health care system:  under existing rules, you don’t have to buy insurance, but you can be priced out of the insurance system if you are sick. [So, w]hy force people to buy insurance? Why not just tax everyone, put the money in a pool similar to the Medicare Trust Fund, and use it to buy universal insurance?

Begin with one of the most serious inequities in our current system. Today, laws in many states, including California, allow insurance companies to refuse to cover anyone applying for an individual policy who suffers from a “pre-existing condition”--including common conditions such as asthma or pregnancy. As a result, if a person loses her group coverage--either because she changes jobs or because her employer no longer offers health benefits--and then discovers that she’s pregnant, she may find that she is uninsurable.

Moreover, even if you manage to secure coverage, in many states the insurer can jack up your premiums if you become sick and actually begin using your policy. A small business also may find itself penalized if one or more of its employees become seriously ill; in some cases employers have had to cancel insurance for the entire group because they couldn’t afford spiraling premiums.

In addition, the Los Angeles Times reports (see a 1/08/07 story by Lisa Girion…) that in states like California private insurers can--and do--refuse to insure entire categories of workers who they deem “too risky” to cover, including roofers, pro athletes, dockworkers, migrant workers and firefighters , even if they are in good health and can afford coverage… [because] “actuarially speaking,” certain workers pose too big a risk.

A last resort for people turned away by the private market is a state's high-risk pool, in which the state assumes the financial risk while paying private insurers to administer coverage. But in California, enrollees must lay out as much as one-third of their income on monthly premiums that cost up to $796 (see 12/21/06 story by Lisa Girion, also in the L.A. Times). Meanwhile, annual benefits are capped at just $75,000. If your child is diagnosed with cancer, it’s likely that you’ll run through that $75,000 in less than six months.  Then what do you do?

In each case, insurers are penalizing people for being sick, or because it seems likely that they might be injured. Those who most need insurance are excluded.  It is one thing to raise car insurance premiums if a driver has a series of accidents (suggesting that he might well be a reckless driver). But most people become sick through no fault of their own, No matter how careful we are, unless we die in an accident, each of us is going to become seriously ill at some point in our lives. We just don’t know when. This is why we all need insurance.

To prevent insurers from shunning the sick, some states, including New York, have passed “community rating laws” which say that insurers must charge everyone in a given community the same price for the same policy, regardless of age or health status. Moreover, insurers are not allowed to hike rates because a business or an individual has made claims.

In states like New York, where community rating applies, no one is left out in the cold.  If an individual wants to apply for a new insurance policy, he does not have to report pre-existing conditions. But he does have to show that he was already insured with another carrier; you cannot just wait until you’re diagnosed and then decide you want coverage.

Insurance in New York is much more expensive than it is in California because the pool includes sick people who would have been excluded in California. (The percent of premiums that insurers pay out to provide care is roughly the same in both states. Insurers don’t make higher profits in New York. If anything, they prefer to operate in states like California where they can hope to avoid patients suffering from serious, debilitating diseases).

If you are young and healthy, you might prefer to live in a state like California, where insurance is cheaper—assuming you don’t mind living in a state where your mother can’t get insurance because she has had breast cancer and your best friend can’t afford insurance because she’s a diabetic.

…the three leading Democratic candidates, including Obama, are calling for community rating. Their proposals for reform offer citizens a choice between public sector insurance (that would be much like Medicare) and private sector insurance, and under their plans, both public and private insurers would abide by community rating, insuring everyone in the community, young or old, sick or healthy, at the same price.

And to make sure that everyone can afford the price, the government would offer subsidies, based on income. Thus, only upper-income twenty-somethings would wind up paying the full price. The subsidies are key. As The American Prospect’s Paul Starr points out:

“The secret power of the mandate is that it is as much a mandate on government as it is on individuals. It is a mandate on government to make coverage available and affordable. For it would be patently unacceptable to demand that people have coverage and then provide no practical way for many people to get it.” But the government (i.e. taxpayers) will be able to afford those subsidies only if the healthy and wealthy participate in the pool.

Why Insuring Everyone Means That Everyone Must Be Insured

If we want community rating and Clinton realize that we also must mandate that everyone sign up. Otherwise, no one would buy insurance until they were sick or elderly; then they would enroll, secure in the knowledge that insurers had to cover them, and couldn’t charge them more.  Meanwhile, the insurance pool would be comprised mainly of people who are expensive to insure, and premiums would skyrocket.

Put simply, mandates are the flip side of community rating. If you want to say insurance must cover everyone—even if they are suffering from a slow, progressive disease like Parkinson’s—then you have to insist that everyone gets into the pool. This is the only way we can afford universal coverage. If you think about it, this is precisely what Medicare does: no one over 65 is excluded, but everyone—even the young and healthy-- must pay the same percentage of their paycheck in Medicare taxes.

In the end, Harvard economist David Cutler, Obama’s health care adviser, agrees that for national health reform to work, we will need to bring everyone in under the tent. But he says that, rather than forcing people to buy insurance, Obama believes “a better approach is to do everything possible to make it affordable and available. When it is, almost everyone will have it.”

Will everyone sign up? Many young people look in the mirror and feel immortal. Meanwhile, young libertarians just don’t believe that they have a responsibility to help cover others. In Massachusetts, where there is no mandate, over 200,000 of the Commonwealth’s uninsured have refused to sign up. Roughly one-fifth of the refuseniks earn more than $50,000 a year; many are under 35, but choose not to buy coverage even although under the Massachusetts plan,  a 27-year-old can buy insurance for as little as $176 a month.

Cutler’s idealism is sincere. He, like Obama, would prefer to soft-sell reform. But it’s telling that, in the interview with Sentinel Effect last Friday. Cutler went on to acknowledge that: “If there are free riders [people who don’t sign up but expect to receive care if they’re in an accident], Obama is open to mandates.  . . . He hasn’t ruled anything out. It’s a matter of priorities. The fact is the policy differences on the mandate issue aren’t that large at all. Sen. Obama believes they’re an option down the road, if other approaches don’t work.”   In other words it seems that Obama, like Edwards and Clinton, realizes that in the end mandates may well be needed. But right now, Obama is targeting younger voters, and this isn’t what they want to hear.

Edwards, on the other hand, says he wants to be honest: “I’m going to tell people what I’m going to do and how I’m going to do it.” As a matter of political strategy, I would say that Edwards may be honest to a fault. It’s probably not necessary to talk about “enforcement” now.

But if Americans want universal, affordable insurance, they need to understand that, to achieve that goal, everyone must help. Insurance, when it works, is all about spreading risks.

Still, when Edwards talks about enforcing the rule that everyone purchase insurance, people like Reed Hundt become anxious.” Could an employer fire an employee for not adhering to a mandate?” he asks. “Could the police arrest those who fail by accident, confusion, or even negligence not to sign up? Could a hospital decline to treat those who did not comply with a mandate?”

The answer is ‘No.’ As Paul Krugman explains, “If individuals don’t have insurance, they won’t be penalized, they’ll be automatically enrolled in an insurance plan.  That’s actually a terrific idea,” he adds, “not only would it prevent people from gaming the system [by becoming “free riders”] it would have the side benefit of enrolling people who qualify for S-chip and other government programs, but don’t know it.”

How will the government know whether or not you have insurance? Under Edwards’ plan, every time you come in contact with the government or a health care provider (filing income taxes, enrolling your children in a public school, showing up at an ER or a doctor’s office) you would be asked for your insurance policy number, just as you are routinely asked for your social security number. If you didn’t have one, your name and social security number would be typed into the system, automatically enrolling you in a public sector plan.

Then, if your income is too high to qualify for a full subsidy, you would be billed for your fair share, either as part of the payroll tax you now pay for Social Security and Medicare, or ( if you are self-employed) through your income taxes. (There are, of course people who don’t earn a salary and don’t file income taxes, but the majority are very poor, and would qualify for the full subsidy anyway).

Forcing Americans to pay their share of health insurance may sound Draconian, but again, this is exactly what Medicare does, and very few people object. Yes, the tax takes a chunk out of their paychecks, but the vast majority feel secure knowing that when they are 65, they can count on receiving health care no matter how sick they are. And there is every reason to believe that a public sector program modeled on Medicare would be just as popular as Medicare itself.

Which brings me to Kevin Drum’s question. In Washington Monthly, he writes: “a Rube Goldberg enforcement program like [Edwards’] does nothing except highlight the absurdity of individual mandate healthcare plans in the first place. If you're really this serious about getting every man, woman, and child in the country enrolled, why go through all this? Why not just do it like Medicare, where the funding mechanism is the existing tax system and everyone is enrolled automatically? It amounts to the same thing and it's cheaper, easier, and less intrusive.”

There are four reasons: First, in the recession we’ll be facing in 2009,  it will be much harder to persuade Congress to pass a tax increase than it will be to persuade legislators that everyone should have  health insurance—just as we now require everyone to sign up for auto insurance.

The second reason is closely connected to the first: many of the taxpayers who elect those Congressmen don’t want to pay taxes into a single Medicare-for-all system. A 2007 poll shows that while 76 percent of Americans favor offering a government subsidized plan to Americans who don’t have employer-based insurance, only 26 percent of favor paying more income taxes to expand either Medicare or Medicaid. Seventy-four percent are opposed.  In other words, just as in Massachusetts, everyone favors universal care, but the majority of voters do not want to pay higher taxes to support it.

…the polls also reveal that 80 percent of Americans like the private insurance they have now--or at least they like it better than an unknown alternative. Their main worry is that they will not be able to afford what they have in the future.  They do not want to be told that we are all going to be funneled into a brand new government-funded Medicare-for-All System.  They want the choice of keeping the devil they know (i.e. their private-sector insurance).

Finally, in order to afford universal health care, we will have to be more careful about wasting health care dollars. This means that we can’t cover every pill or product that someone decides to advertise on TV. All three Democratic candidates have called for independent research comparing just how effective new products and procedures are when tested, head to head, with existing products. (This is something that we don’t do now. A new product can win FDA approval simply by showing that it is better than a placebo).

If we have only a public sector plan, everyone will blame “the government” or “socialized medicine” when they are told “No,” their insurance won’t cover the pink pill that is twice as expensive as existing products because medical research says it is no better. If we have both public sector and private sector insurance, private insurers will usually follow the public sector’s decisions about what the cover—if they don’t, private insurers will have a very hard time competing on price.  Thus, those who fear “socialized medicine” will begin to understand that even private insurers cannot cover every pill, product or procedure that comes down the pike—at whatever price the manufacturer chooses to charge. Premiums would be unaffordable.

Over time, if private insurers are forced to compete with public sector insurance on a level playing field (which means that all insurers offer community rating and that all offer benefits that are, at a minimum, as rich and comprehensive as Medicare), I think that the majority of Americans will wind up picking the public sector plan.  The public sector plan should be able to offer better value for our health care dollars because it doesn’t have as many extra expenses: Medicare doesn’t have to return profits to investors; it doesn’t have to advertise and lobby Congress, and it doesn’t pay its executives the seven-digit salaries that for-profit insurers feel they must pay in order to compete with each other.

But right now, many Americans are nervous about health insurance. And they don’t trust government. They need time to decide whether they feel more comfortable with for-profit insurance or a public program. In the meantime, we need to ensure that everyone is covered, and that everyone helps weave the safety net. That’s why we need community rating and mandates. It’s all about solidarity. 

Here’s more on mandates [original at this link]:

The Wall Street Journal has been running a poll asking readers how they feel about mandates requiring that everyone sign up for health insurance. Asking “What should the federal government do about the uninsured?” the Journal gives readers three options:

(1) Require everyone to have insurance coverage, but keep private insurance.

(2) Adopt a single-payer, government-funded system.

(3) The government shouldn’t require everyone to have health care.

…347 people had responded, with 40 percent favoring mandates, 31 percent picking single-payer, and 29 percent saying the government should keep its sticky mitts off our free-market health care system.

[What’s surprising is] that 40 percent of the Journal’s relatively affluent readers voted for mandates since some of them are healthy and wealthy enough that they could easily “self-insure” by saving enough money in a health savings account to cover all but catastrophic medical expenses and then buying a low-cost, high deductible policy. Premiums for high-deductible insurance are going to be significantly lower than the premiums for mandated policies designed to ensure that everyone has comprehensive coverage (i.e. benefits comparable to what Medicare offers, plus maternity and other coverage younger people need).

Nevertheless, 40 percent think it is fair to require that everyone to pay into the pool while another 31 percent pick a single-payer system that would be funded by taxpayers.

Of course, 71 percent isn’t everyone. Consider the curmudgeon who sent in this comment: “Medical needs are endless...You are not your brother’s keeper no matter what the Bible or any other book written by superstitious savages says.” That is why we need mandates. …this fellow is not going to sign up voluntarily.

And see this link for an interesting blog debate about the practicality of mandates; following is a brief quote:

To illustrate the difficulties in actually using a mandate, Bob points us to the penalties being developed by the Massachusetts Department of Revenue for citizens who fail to buy health insurance. The 2008 proposal would tie the penalty to the lowest coverage cost offered through that state's health care program, and would be $912/year for a person older than 26 years. As he points out, the burden would fall most heavily on the group that makes just too much money to receive subsidies.

[And] nearly the same problem [exists] in California's health care reform proposal, where a couple with a household income of $54,000 would have to fork over $12,000 for coverage. It's difficult to see how this can work.

There are two issues here. First, most of these state efforts assume that whatever universal health coverage is achieved must be comprehensive, an extremely expensive proposition. (Yesterday's news that US health care in 2006 had crossed three different annual financial thresholds - $2 trillion, 16% of Gross Domestic Product and $7,000 per person - ought to be sufficient evidence of that.)

But as a practical matter in getting a program underway, it may make far more sense to shoot for universal coverage of basic care services. Of course, defining "basic" is the trick here, for several reasons. (This is a terrifically complicated problem. Does basic include three liver transplants? Is it the same for a healthy person and one with spina bifida, or does it change with health status? How can we define it?) While social justice is an undeniably compelling reason to implement universal coverage, there's a lot more to the universal coverage issue than simply that. Without universal coverage for at least basic health services that associate dollars for every patient who presents, the nation's safety net hospitals will gradually be overwhelmed by the demand for uncompensated care. (Today's NY Times article on Atlanta's Grady Hospital's financial dilemma does a pretty good job describing the reality of this problem throughout the country. A few weeks ago, I also wrote about Grady's problems and how they're at the edge of the much larger looming health care crisis.)  A "basic" program would be far less expensive and easier to finance than a comprehensive program. And it should be possible to create a basic program for all Americans, and then let insurance companies build market-based supplemental programs on top of them.

Second, a mandate effectively caters to the insurance industry, suggesting that the only way that universal coverage can be achieved is for people to buy coverage (and let the insurance companies take a profit). But universal coverage could be built in other ways as well. For example, there is no reason why we couldn't establish next generation community care clinics around the country, and designate a range of primary care providers who would "take assignment" for any care delivered through the program. Anyone in America could show up at a clinic or a designated provider and receive the basic care they need without paying much or anything. The care would be detailed in the EHR and a bill submitted to the Feds or their intermediary.

A mandate would also create extremely complex and expensive administrative issues. If we required everyone to buy coverage - including all those who aren't subsidized but who would have trouble affording it - then we'd have to establish a monitoring/tracking function that could make sure that everyone did what they were supposed to do, and then punish the offenders.

But the deeper problem with the state and national reform efforts currently on the table is that they finance reform upfront by requiring a lot more money from the people paying the bills, while talking in vague platitudes about cost containment. All the real concessions come from the purchasers, and virtually none come from a health care sector where we KNOW that care and cost are extraordinarily variable between providers, and that between a third and half of all care and cost are unnecessary or inappropriate.

As well as this link; a few quotes from the blog and subsequent comments follow:

It seems that the Mass Department of Revenue is in the process of drafting new regulations to up the penalty for people who do not buy health insurance. If they are approved, the maximum penalty for those who do not buy health insurance would jump from $219 per year to a maximum of $912 in 2008. The penalty is estimated to be half the per person cost of the lowest priced health plan available.

Penalties would vary by age and the time a person was without health insurance. A 26 year-old would have a penalty of $672 per year and those over 26 would pay $912. So, a family of two adults over 26 would pay about $1,800 in penalties if they didn't buy health insurance (a reader has correctly pointed out children are not covered by the mandate).

The state health plan administrator- The Connector--has said that about 290,000 of the states 400,000, that were believed to be uninsured when the program was launched, have purchased coverage. But most of these people are those that get either all or most of their premiums paid by the state. Among those who get no subsidy, relatively few have chosen to buy insurance likely because they cannot afford the thousands of dollars in premiums for the minimum policy with a $2,000 deductible.

At a practical level, we are talking about middle class families being required to buy a health insurance policy costing $6,000 to $9,000 a year (with a $2,000 deductible) or having to pay a $1,800+ penalty….

It is notable that the senior Medicare Part D drug benefit is voluntary but the vast majority of seniors have purchased it. Why? Because the government pays 75% of the costs and it is affordable. The Part D experience shows that if insurance coverage is affordable people will buy it.

The Massachusetts experience tells us if it is not affordable, people will not--or maybe more appropriately cannot--buy health insurance. It's one thing to mandate health insurance coverage, but as we are learning in Massachusetts, the real challenge is making it affordable.

Sample comments:

Commenter 1: No disrespect, but I'm surprised how much this debate about mandates seems to be no longer about policy, but politics, even in policy circles. Here's why I think that.

First, Hillary Clinton is not proposing mandates without subsidies. No one is. Has she said anything to contradict the claim that people won't buy insurance if they can't afford it? It's strange to think that she wouldn't be aware of this.

In order to have a fair and successful mandate policy we will have to provide subsidies for the working poor and much of the middle class (so long as we have the most expensive health care in the world). That doesn't make Obama and the Republicans right any more than it makes Clinton right, because she accepts it.

What we should be discussing is mandates WITH subsidies, not mandates OR subsidies…

The 25 year-old, in contrast, is probably not sick or very conscious of the possibility of developing a costly chronic disease. The attitude of the Young Invincibles as we all know, is very different from the attitude of the Old Vulnerables. It seems clear to me that you will have to subsidize health insurance more heavily to get the Young Invincibles to participate than you would the Old Vulnerables. That is, you would have to subsidize them more if you start from the assumption that premiums should be community-rated without respect to age. If the actual average cost of a 25 year-old is $1,500 instead of $6,0000 (or whatever the numbers are), then part of the solution could be to allow for greater tiering on the basis of age….

Here is a parting question for everyone who thinks mandates are a bad idea: if the Feds were to offer Medicare-like penalties for anyone who doesn't participate in health insurance, but didn't call the penalties "mandates," would you be happy? If you would, then why do you get so worked up about the financial penalties of mandate supporters?

Commenter 2:

As many have commented in the past, insurers cannot be expected to offer health insurance on a guaranteed issue and community rated basis without a mandate that everyone have insurance. At the same time, health insurance is not affordable without subsidies up to incomes well into the middle class. Moreover, as you indicate, health insurance at uniform community rates is a poor deal for young, healthy people.

Massachusetts allows insurers to charge older people up to twice as much as the young for health insurance. They call this modified community rating, and I think it makes sense. The other useful potential strategy, which Massachusetts does to a limited degree (for 19-26 year Olds), is to have a more lenient definition of minimum acceptable coverage for younger people. I think it would make sense to allow policies with an individual deductible up to $5,000 for the under 40 population, while a more comprehensive policy might be mandated for those over 40. Medicare's approach of charging a penalty if one does not sign up for coverage within a specified time of initial eligibility with the surcharge growing as a function of how much time has elapsed between initial eligibility and when insurance is applied for is fair and reasonable, in my opinion. At the same time, financial penalties are not fair if subsidies are not sufficient to make coverage affordable.

Commenter 3:

Here's a mandate that works and is already in place - it's the IRS. Why are we trying to solve healthcare affordability and access with a focus on keeping private insurers flush in their present business model? We are saying the young don't have to buy insurance because their need is small, but we want their offsetting good health along with free ride (to the insurance industry) mandated premiums to keep money coming into the system. Then we also want to charge older people up to twice what we would charge younger people because they use the system more. Why don't we just scrap this crap and recognize that if we fund healthcare based on income affordability and not health we'll make it fair and simple for everyone. The young would presumably pay less anyway because their income would be less, middle income more and the wealthy even more. And when older people retire and if their income drops they would pay accordingly. Why would we want to make older people pay twice the rate to help put them in a financial positon of needing higher and higher subsidies? By using the income tax system it will make people aware of the enormous cost healthcare is inflicting on this country. If we hide the cost in subsidies where will the drive for reform come from? Certainly not the insurance industry that will demand higher and higher mandates and subsidies. The tax would have to be a separate line on the forms and not subject to all the tax breaks the rich have been able to lobby for themselves.

Commenter 4:

I think the only part of [Commenter 3] that I agree with is that a taxpayer funded system should include a highly visible and transparent dedicated tax. My favorite candidate for such a system would be a payroll tax, but the rate would have to probably be somewhere between 13% and 15% of salary and bonus income depending on whether we capped the wages to which the tax applies at the current limit for Social Security taxes ($102K in 2008) or if there is no cap like the Medicare tax. Of course, those whose income comes from interest, dividends, capital gains, rent, etc. would not pay any payroll taxes. So, to insure equity, we would have to integrate payroll and income taxes. For example, we might set the combined tax rate at a flat 30% of gross income from all sources after an allowance equal to federal poverty level (FPL) income which is currently a bit over $20K for a family of four. If the deduction were a flat $20K for a family, the tax liability at the $100K income level would be $24K (30% * ($100K - $20K)). However, for those who incur payroll taxes, those taxes would count toward the total tax liability. I would even count the employer's share of FICA and new healthcare taxes (if applicable), but the employer's share would also count as income. As a practical matter, most people who earn their income from wages would pay lots of payroll taxes but no income taxes whereas those who have only investment income would pay nothing in payroll taxes but 30% of income (after the FPL allowance) in income taxes.

Under this approach, young professionals on Wall Street and elsewhere would pay huge incremental taxes relative to what they pay under the current system making it a poor deal for them. As for the elderly, I think it is important to note that every age cohort has one key expense item that looms large in its budget. For young people, it's buying and furnishing a home or paying rent for an apartment or condo. For the middle age, it's paying for college, big ticket life events like weddings, and saving for retirement. For the elderly, it's healthcare. A reasonably healthy elderly couple can support a comfortable middle class lifestyle on far less income than a young family because the older couple probably owns their home free and clear, their children are fully grown and on in their own, and, if retired, they no longer have job related expenses like commuting, business clothes, lunches out, etc.

The Thorny Issue of Rationing

And here’s a discussion of when and why rationing could make sense:

Americans seem to be less willing [than Europeans] to take no for an answer and more willing to try almost anything, no matter how expensive or how slim the odds, to prolong life. … It has made us obsessed with medical advances and turned this country into the world’s research laboratory. …But much of it is simply wasteful. Expensive procedures…are often no more effective than basic ones, according to research. Yet doctors can keep on getting reimbursed for the expensive ones. “Basically, anything that doesn’t kill patients is paid for by Medicare and insurance companies,” said Jonathan Skinner, a health care researcher at Dartmouth College. …We Americans tend to treat any rejection of a health claim as some conspiracy by insurance companies, the government, doctors and the pharmaceutical industry. In other countries, people have arrived at a better understanding that health care necessarily involves economic triage [reference].

Concerns about Stifling innovation

The argument that switching to a single-payer system would stifle innovation is based on the fact that since the U.S. spends so much more on healthcare than other nations, it enables researchers to obtain superior financial compensation, which leads to more medical discoveries in our innovation-rich environment. The counter-argument states that there isn’t any proof:

…that it is the difference in health care systems that has caused the agglomeration of research facilities in the U. S. Even if the U.S. were a single-payer system, drug companies, etc. would still do research and it is likely that much of it would be carried out in the U.S. just as it is now. In addition…much of the research that is done here is funded directly or indirectly by the government. [And,] given that European countries can free ride on this research, comparing the amount spent in the two countries may not accurately reflect European willingness to fund health care research since the two figures may not be independent. If the U.S. spent less, European countries might be induced to spend more [source].

Concerns about Long wait for care

When it comes to waiting for care--while people in the US go without needed healthcare because of cost more often than people do in the other countries--waiting time for specialized healthcare services (e.g., elective surgery) is typically shorter in America than in other countries, at least for insured Americans. However, the US ranks low when it comes to the prompt accessibility of appointments with primary care physicians, often waiting six or more days for an appointment, and having trouble making an appointment on weekends and evenings [reference]. So, waiting time for non-emergency care is an issue in countries with universal healthcare. Nevertheless, things are improving in many of them [reference]. In other words, there are problems with both systems and the question is whether access to excellent primary and specialist care, even if there's a longer wait for elective surgery, is a better option than not being able to afford excellent care.

Federal Employees Health Benefits Program (FEHBP-UHS) + Private Insurance

Clinton and Obama want insurance coverage to be modeled after the FEHBP. The FEHBP-UHS + Private Insurance proposals would offer a public sector alternative insurance plan to everyone, which would compete with private plans. Today, the annual premium for FEHBP coverage for a family can cost more than $12,000, with the government (taxpayers) currently paying about 75% of that amount on behalf of the federal employees. That leaves the employee to cover 25% of the premium (e.g., $3,000/yr.) plus copays and deductibles out of his or her own resources; it is highly unlikely that low income people would be able to afford it. At the same time, providing an adequate subsidy—or to limit the individual’s total out of pocket exposure (for premiums, deductibles and copays) to some acceptable percentage of income (6.5% has been suggested)—would likely be a tough sell to those who would have to pay for the subsidies through increased taxpayers.

It’s been argued, therefore, that the public plan should compete on a level playing field that requires all costs to be covered out of its premium revenues with no additional subsidies from general federal (or state) funds. Moreover, administrative costs should include all costs incurred including those covered by other government departments besides the Center for Medicare and Medicaid Services (CMS). For example, when a 65 year old signs up for Medicare today, he or she does so through the Social Security Administration (SSA) and not CMS. The Treasury Department collects the taxes and enforces compliance and borrows money in the capital markets that funds CMS, yet CMS does not pay any of these costs including a cost of capital charge. Private insurers, both for profit and not for profit, are generally required to pay premium taxes to the states where they operate. CMS should be subject to the same requirement. The business model (from a revenue generation standpoint) should be the U.S. Postal Service. Its mandate is to break even out of revenue from postage and associated fees (registered mail, certified mail, insurance, etc.). If it starts to run a deficit, it applies for an appropriate rate increase to bring revenues back into line with costs. Ideally, insurance exchanges should also be incorporated into the mix in order to provide risk adjustment payments to all insurers (including the public entity) that wind up with an insured population with above average health risk and likely healthcare costs. Medicare Advantage already does this, and some insurance executives say it is a pretty good and sophisticated system.

And consider the following:

Most proposals that build on the current system would ensure universal coverage by requiring that all individuals purchase coverage and that employers either provide coverage to employees or contribute to premiums. Such mandates would be critical to ensure everyone is covered. Most proposals would also create new group insurance options, sometimes referred to as "exchanges" or "connectors" for people without access to employer coverage and for small businesses. These new health insurance exchanges would allow consumers a choice of private and public plans. Offering a public plan option like Medicare in these new health insurance exchanges would give individuals and businesses the ability to choose between private and public health plans. Most proposals specify a minimum standard benefit package for plans offered by employers and through the health insurance exchange.

Affordability of coverage would be assured through expansion of Medicaid and SCHIP for lower-income families and provision of premium assistance for lower- and middle-income people buying coverage in the new health insurance exchange. However, it is important that potential out-of-pocket costs also be taken into consideration when defining affordability under a mandate.

By building on multiple forms of existing group coverage and adding a new group insurance option, these proposals, on their own, would not make enrollment easier or more seamless. They would also retain much of the complexity of the current system. Automatically enrolling people through the tax system under an individual mandate would help ensure that people become and remain enrolled. The income tax system can also provide an administrative mechanism for income-related premium assistance and ceilings on out-of-pocket costs as a percentage of income.

These approaches would pool risk by building on the large risk pools of the employer market and public programs and create new health insurance exchanges with regulations against risk selection. The actual design of the new health insurance exchanges will be important, however, with respect to the restrictions against risk selection, the type of plans available for consumers, the extent of income-related subsidies and whether both out-of-pocket costs and premiums are taken into consideration when determining the amount a family pays.

By building on the current system, these proposals would cause minimal dislocation. People could keep their employer coverage as long as it met minimum benefit and affordability standards. By replacing small group or individual market coverage with coverage through health insurance exchanges or public programs, administrative savings could be achieved. If Medicare, Medicaid/SCHIP, and employer coverage were redesigned to reward health care providers for higher quality or more efficient care, even further savings are possible. Success will depend on effective national leadership, collaboration between the public and private sectors, and the creation of the information and infrastructure including information technology.

Financing would be a mix of federal and state general revenue taxation, employer and individual premium contributions, and modest cost-sharing. Subsidies for low-income families would offset all or part of their premium and out-of-pocket costs; broad risk pooling would help keep the size of subsidies low. The financial distribution of costs is likely to be closely proportional to earnings, and more progressively shared than financing under most approaches that provide tax incentives for coverage through the individual market. Some proposals would fund the federal portion of costs by repealing or not renewing tax cuts for higher-income households, thereby increasing the progressive nature of the overall financing. [reference]

Given how enormously difficult it will be (and has been) to change the way we provide both health insurance and healthcare, it is very likely that we will have to build on the current private sector employer-based health insurance system, which currently provides health insurance for approximately 170 million Americans (including family members). It is probable that most people with such insurance like what they have, or are at least satisfied with it, or don’t want to risk trading it for some unknown approach that may require them to pay more money (via taxes) for less coverage than they have now. The unions that currently have good and secure coverage (especially those in the public sector) are likely to be especially insistent on keeping what they currently have. Furthermore, many large employers may be reluctant to give up their role in providing health insurance even if they could pay a payroll tax instead that was no more expensive than what they are paying now. One reason may be that they want to remain involved in areas such as wellness and disease management in order to proactively maintain as healthy a workforce as possible. These are some of the reasons why a combination of employer-based and publicly-funded insurance strategies is the doable at this time.

Note that Edwards call for “Health Markets,” which are nonprofit purchasing pools that, like FEHBP-UHS, offer competing public and private health plans. They would establish tax credits to help subsidize the cost of insurance purchased through Health Markets, and expands public insurance to serve more low income adults and children. Also note that Gravel’s voucher system would also have private insurers.

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[End Note 4] Is it necessary to increase taxes in order to fund a publically-funded universal healthcare SYSTEM (UHS)?

It is doubtful that a publically-funded UHS can be funded without tax increases for some. If it could, all costs would have to be covered from premiums paid by individuals and/or employers, as well as from copays and deductibles (if any), which is not very likely. As detailed in the Financing and Payments section, if is more likely that some of the following will occur:

Some propose that at least a portion of the tax increases can be offset by such things as:

A blog discussion about the willingness of upper income folks and their willingness to accept increased taxes to fund UHS is at this link.

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Dr. Beller’s Bio

Dr. Stephen Beller is a clinical psychologist, author, researcher, software inventor, CEO/President of National Health Data Systems Inc., and a principal of the PHIN Consortium, a group of I.T. vendors and health consultants offering innovative healthcare products and services. His life goal is to work with others to help re-direct the course of humankind, so we don't have to be ashamed of the world we’re leaving our children.

Toward that end, Dr. Beller spent the past 25 years in creative pursuits, including inventing unique software systems, writing about the healthcare crisis and cures, and developing close personal and professional bonds with fine individuals across the globe.

Dr. Beller's current activities are devoted to:

For more, please see his extended bio here.

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 Updates

Added the following blog debates on 1/10/08:
Concerns about the practicality of mandates
Willingness of upper income persons to accept increased taxes for universal healthcare

Added the following blog debate on 1/11/08:
Are mandates fair


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