Money talks, and in this case, it’s talking pretty loudly—the U.S. spends more on health care bothas a percentage of GDP and per capita than any other country in the world. Yet 45 million Americans are uninsured, and those who are insured face a complex and overworked system where access can be spotty.
What’s the Issue?
The major issue is how to get the best health care to the majority of people. This includes how to control the runaway costs that have contributed to the insurance coverage shortfall. Other issues wrapped up in cost are prescription drugs and the efficiency and accuracy of the system.
Costs
Health care costs come in two forms—individual and social.
Individual
People tend to be most concerned with their individual health care costs, which can be broken down into roughly three categories: out-of-pocket costs (anything that the individual must pay on his or her own, including co-pays for doctor visits), insurance premiums (the fee an individual pays for health coverage), and prescription drug costs. All three have been on the rise for reasons such as:
- Technological advances. Expensive treatments are so much more widely available now that patients sometimes utilize more than one new advance, which is like buying two pairs of the same sneakers—unnecessary and expensive. A few candidates propose studying which new treatments are most effective in order to reduce test redundancy.
- The 1997 legalization of direct-to-consumer advertising for pharmaceutical companies. Not only have their sales shot up as patients “ask their doctor” if a particular drug is right for them, but doctor visits may have increased as well. Furthermore, drug companies now have added incentive to spend more on marketing which accounts for some of the price increases.
- Fewer people signing up for health insurance because of rising premiums. Even with group discounts, such as those plans offered through an employer, the cost is too much for some people. By going it alone, not only are out-of-pocket costs naturally higher, but the uninsured tend to wait longer before seeking treatment, exacerbating their illness or problem.
- Administrative costs. The Health Maintenance Act (HMO) of 1973 intended to reduce this problem by requiring patients to first see a primary care physician before going to a specialist. However, the referral system that it spawned overwhelms both primary care physicians and specialists alike, with much time being devoted to tracking down necessary referrals.
- Plans with low co-pays. Proponents of high-deductible insurance plans argue that plans with low co-payments encourage the consumer to opt for pricier treatment. The cost different between the co-pay that the consumer pays and the remainder that the insurance company pays is passed back on to consumer through higher premiums.
Social
In addition to individual costs are social costs. Increases in the number of chronic and often preventable diseases such as heart disease, Type II diabetes and obesity are taking their toll on society. Chronic diseases account for 75% of the 1.4 trillion dollars Americans spend on health care per year. Some of those costs are funded with taxpayer money through the Medicare, Medicaid, and SCHIP programs (for the elderly, poor, and children). Some candidates are advocating for an expansion of these public programs, or for one universal program to replace private coverage.
Prescription Drugs
Another major hurdle for health care reform is the pharmaceutical industry. The United States does the majority of the world’s pharmaceutical research & development, yet drug prices here are 60% higher than in most countries.
One reason is that many foreign governments are allowed to negotiate directly with pharmaceutical companies for more favorable prices. Government subsidies also account for lower costs. A solution to rising prescription drug costs would be to allow the U.S. government to negotiate wholesale drug prices for either the population at large, or even just for Medicare, Medicaid and SCHIP (taxpayers would benefit from the savings). Another (short-term) alternative on the table is to allow the re-importation of drugs from Canada.
Another cause of high drug costs is the advent of direct-to-consumer advertising in 1997. The consumer often pays for the explosion in drug marketing and company profits through higher prices.
Accuracy and Efficiency
A final-money saver would be improving accuracy and efficiency. In a wired age, medical practitioners and insurance companies still rely on paper for the majority of their record keeping. This wastes not only time, but money too. For example, the far-reaching referral system relies on a long series of phone calls, notes, and paper processing. A centralized computer system would cut down on the staff required to police referrals for both doctors and insurance companies. Furthermore, some believe that electronic records would reduce human error and thus the risk for costly malpractice suits.
Other cost-saving measures include preventative health spending, especially for chronic diseases and catastrophic debt relief, for those with overwhelming emergency medical expenses.
How does this affect me?
Traditionally, health insurance was one of the perks of a steady job, but rising costs now threaten the global competitiveness of businesses and health benefits are shrinking. This leaves expensive individual coverage as the only option, and many, especially the young and therefore relatively healthier, often opting for the risky route of no coverage at all.
A problem with many private plans is that coverage can be denied for those with pre-existing conditions or the previously uninsured. Say your health plan expires and you decide that because you’re healthy you won’t buy health insurance for a few years. Down the road, when you decide to seek coverage, you might be denied on the grounds that you’ve been uninsured. Similarly, if you have health coverage but need to switch to a new one, a pre-existing condition diagnosed or treated 6 months prior is grounds for denial or limitations of coverage.
In addition to individual costs are social costs. Increases in the number of chronic and often preventable diseases such as heart disease, Type II diabetes and obesity are taking their toll on society. Chronic diseases account for 75% of the 1.4 trillion dollars Americans spend on health care per year. Some of those costs are funded with taxpayer money through the Medicare, Medicaid, and SCHIP programs (for the elderly, poor, and children). Some candidates are advocating for an expansion of these public programs, or for one universal program to replace private coverage.
Prescription Drugs
Another major hurdle for health care reform is the pharmaceutical industry. The United States does the majority of the world’s pharmaceutical research & development, yet drug prices here are 60% higher than in most countries.
One reason is that many foreign governments are allowed to negotiate directly with pharmaceutical companies for more favorable prices. Government subsidies also account for lower costs. A solution to rising prescription drug costs would be to allow the U.S. government to negotiate wholesale drug prices for either the population at large, or even just for Medicare, Medicaid and SCHIP (taxpayers would benefit from the savings). Another (short-term) alternative on the table is to allow the re-importation of drugs from Canada.
Another cause of high drug costs is the advent of direct-to-consumer advertising in 1997. The consumer often pays for the explosion in drug marketing and company profits through higher prices.
Accuracy and Efficiency
A final-money saver would be improving accuracy and efficiency. In a wired age, medical practitioners and insurance companies still rely on paper for the majority of their record keeping. This wastes not only time, but money too. For example, the far-reaching referral system relies on a long series of phone calls, notes, and paper processing. A centralized computer system would cut down on the staff required to police referrals for both doctors and insurance companies. Furthermore, some believe that electronic records would reduce human error and thus the risk for costly malpractice suits.
Other cost-saving measures include preventative health spending, especially for chronic diseases and catastrophic debt relief, for those with overwhelming emergency medical expenses.
How does this affect me?
Traditionally, health insurance was one of the perks of a steady job, but rising costs now threaten the global competitiveness of businesses and health benefits are shrinking. This leaves expensive individual coverage as the only option, and many, especially the young and therefore relatively healthier, often opting for the risky route of no coverage at all.
A problem with many private plans is that coverage can be denied for those with pre-existing conditions or the previously uninsured. Say your health plan expires and you decide that because you’re healthy you won’t buy health insurance for a few years. Down the road, when you decide to seek coverage, you might be denied on the grounds that you’ve been uninsured. Similarly, if you have health coverage but need to switch to a new one, a pre-existing condition diagnosed or treated 6 months prior is grounds for denial or limitations of coverage.
Furthermore, the cost of chronic disease and emergency care for the uninsured is spread across society, so the excuse "it's not my problem" doesn't work when it comes to a healthy society
Proposals for health care reform run the gamut from a health care revolution—scrapping everything and starting fresh—and tinkering with the current system to ensure that fewer people fall through the cracks. And within those two camps are the vastly different ways in which reform can be made—either through federal programs and oversight or market-based alternatives that rely on consumer savvy. How those changes are made will have major financial and health implications for our generation as we start aging and taking care of our parents.
Proposals for health care reform run the gamut from a health care revolution—scrapping everything and starting fresh—and tinkering with the current system to ensure that fewer people fall through the cracks. And within those two camps are the vastly different ways in which reform can be made—either through federal programs and oversight or market-based alternatives that rely on consumer savvy. How those changes are made will have major financial and health implications for our generation as we start aging and taking care of our parents.
What are the Candidates Saying?
Joe Biden
Biden intends to streamline the system to reduce costs—introduce electronic real-time records and create a uniform, efficient claims submission system, thereby eliminating wasted time and reducing physician errors. While he believes in universal access, he seems to be waiting to see what works in states such as Massachusetts that are making health care innovations. He believes in reducing the liability of families and businesses for catastrophic medical expenses—one of the biggest causes of medical debt.
Sam Brownback
Brownback intends to reduce health care premiums and make coverage more affordable to all by encouraging regulatory competition among states. Regulatory competition, under Brownback’s scenario, would allow citizens from one state to be able to purchase insurance from a neighboring state if it had more favorable terms. In addition, Brownback would encourage Association Health Plans (AHPs), which would be available to employees of small businesses. Currently, 2/3 of the working uninsured work for small businesses that have neither the money nor the employee numbers to afford a large, corporation-style health plan. Brownback is the sponsor of the Independent Health Record Bank Act of 2006 that would create a centralized system of storing and accessing one’s own medical records. The bill never made it past committee. On Brownback’s list of naughty and nice are acupuncture and aromatherapy and HSAs, respectively.
Hillary Clinton
That
Clinton learned from her past attempt at health care reform is apparent
in her new plan. The plan eliminates most of the central bureaucracy
that bogged down her first plan in 1994. The new plan requires that
all Americans be insured through a variety of means, including
employers (most employers are required to provide coverage though small
businesses are exempt), government programs, or individual purchase of
programs. Included in the latter is an option to buy into a government
run plan. People buying coverage on their own would be assisted
through a variety of tax breaks. Parts of the plan itself would be
financed by eliminating George W. Bush's tax cuts for the wealthy.
Other
highlights include disease prevention for high-cost preventable
diseases such as diabetes and cardiovascular disease, paperless record
keeping using incentives and federal programs to ensure widespread
adoption, coordination of better care for the nation’s chronically ill
(expenses for the chronically ill are a huge burden on all), the end of
insurance discrimination for those with pre-existing conditions,
assessment of best medical practices, reduction of prescription drug
costs by allowing for more generic drugs, legalizing re-importation of
drugs and limiting direct-to-consumer marketing, and the institution of
logical malpractice plans, using incentives for doctors to admit
medical error and negotiate directly with patients.
John Cox’s bottom line is all about competition. If elected, he would reduce health care costs by increasing efficiency and choice within the system. He proposes ending the imbalance between the cost of prescription drugs in the U.S. and in other countries by ending “foreign governments' subsidizing drug costs at Americans' expense.” He also proposes ending the employee tax deduction for health insurance. Typically these deductions benefit wealthier people who work for companies that can afford coverage. Eliminating the tax deduction would create larger tax revenue for the government and level the tax playing field.
Senator Dodd believes in government solutions to the nation’s health care. During his time in the Senate, he has sponsored numerous amendments to the Public Health Service Act from establishing a clinical trials database to improving health care for newborns and those living with HIV/AIDS. None of these bills has made it out of committee during the past two congressional sessions.
Through required coverage, “shared responsibility,” and regional Health Care Markets, Edwards intends to simplify the health care system while spreading the burden of health coverage among businesses, government, and individuals. A hallmark of his system is the Health Care Markets. These markets are “non-profit purchasing pools that offer a choice of competing insurance plans” with at least one public plan similar to Medicare. The markets are available to those who cannot obtain insurance through an employer or public health care, as well as to those working for businesses choosing not to offer their own plan. The reasoning is that with health care providers required to sell to all individuals and not just low-risk ones, savings would be found through the increased purchasing pool and the drastically reduced overhead typically spent on weeding out high-risk people. Edwards’ plan also has provisions for investing in preventative care, reducing error through electronic records, and changing the fee system from the current fee-for-service to one that rewards good practices.
Giuliani is anti-government when it comes to health care. Any solution to the current crisis (though he does not believe the U.S. necessarily has a health care crisis) should be found in free-markets, through businesses and individuals, not the U.S. government. A key component of his plan is tax-code reform, offering tax exemptions of up to $7,500/individual and $15,000/family. Though he doesn’t propose universal coverage, or required coverage, Giuliani would try to reach more uninsured through his Health Insurance Credits, though no details on how that would work. Other components including reforming medical liability in order to reduce ridiculous lawsuits, streamlining the FDA so that drugs can get to market faster, expanding Health Savings Accounts, investing in IT, and tying states’ Medicaid payments to ability to prevent chronic diseases.
Mike Gravel
Simplify is the name of the game. Senator Gravel’s approach to health care reform is to provide all U.S. citizens with annual health care vouchers tailored to each person’s needs. People would be free to choose which doctor to go to with their voucher, eliminating the referral system, but potentially clogging the offices of the better doctors. Vouchers would be accompanied by a small co-pay and deductible, with the option of purchasing more comprehensive plans. Gravel contends that his voucher program would lift the burden of health care from businesses and make them more competitive. His plan also includes centralized electronic medical records. A retail tax would be used to pay for the program.
Chuck Hagel
Though it’s hard to find any information about a health care plan on Chuck Hagel’s hard to find campaign website, the Senator actually has developed the outline of a health care plan through the Health Care Commission he convened in 2006/7. The plan calls for a non-political federal Health Care Transformation Commission whose mandate will be to develop a basic health plan, set national standards for health IT, assess new medical technology, and establish national standards for best practices, data collection, quality assessment, and research. In addition, all citizens would receive a basic health care plan that covers preventative care and focuses on health care coordination.
Mike Huckabee
Mike Huckabee maintains that health care in the U.S. should be covering individuals, not businesses, and that more money should be spent on preventative health, instead of chronic health care. This emphasis on prevention is no pop comment—he has adult-onset diabetes and lost 100 pounds to bring his health back in line. Huckabee also advocates expanding Health Savings Accounts to everyone, not just those with high deductibles, and moving to an electronic records system. States such as Massachusetts (which just developed its own required health care plan), could be used as “laboratories” to see how different methods of health care work. Governor Huckabee oversaw one such “experiment” with ARKids First, which provides health care for 70,000 kids of working families who cannot afford health insurance.
Duncan Hunter
Steve Kubby
Steve Kubby’s health care reforms center on empowering the consumer—through Medical Savings Accounts, tax-deductible health expenses for all (not just large corporations as is the current case), and the unbundling of health coverage to allow for simply catastrophic health insurance. Steve Kubby also backs the use of medicinal marijuana, having used it to treat the adrenal cancer he was diagnosed with twenty-three years ago. He was given six months to live at the time. Today, Kubby is the National Director of the American Medical Marijuana Association.
Dennis Kucinich
Health care reform in the form of a universal single-payer system is at the top of Dennis Kucinich’s list of major issues. Under his and John Coyners’ bill, H.R. 676 introduced in January, there would be a United States National Health Insurance Program that would cover all citizens for primary and preventative care, prescription drugs, mental health and emergency care. The only legal private health insurance companies would be those covering additional benefits, such as plastic surgery. The program would be financed through current sources of government revenues for health care, an increase in income taxes on the top 5% of income earners, a progressive tax on payroll and self-employment income, and a small tax on stock and bond transactions. The bill also calls for employment training for those whose jobs have been eliminated due to decreased administrative needs.
John McCain
McCain does not include health care as an issue on his website. While he expresses concern about the inadequacies of the nation’s health care, he has yet to offer a plan, or shown any interest in solving this problem. He does believe that cigarettes should be taxed and classified as a drug and subject to FDA regulations. Some of his guiding principles for health care debate include choice of doctor, ability to seek redress from HMOs, and continuity of care when jobs change. He does not believe in universal health care, but favors increasing access to Health Savings Accounts and increasing tax benefits for those with lower incomes.
Barack Obama
Barack Obama has proposed a three-pronged attack—coverage for all through either current or new plans, increased efficiency by modernizing the health care system, and a focus on preventative health. To increase coverage to all Americans, Obama would make available a national health plan similar to that available to federal employees—one that would be required to cover even those with illness or pre-existing conditions. In addition, he would expand Medicaid and SCHIP, to ensure that all children are covered. Subsidies, a National Health Insurance Exchange, and required employer contributions would round out the coverage. To modernize the current system, Obama proposes, among many other things, to ensure quality services through incentives and tracking disparities in care, to invest in electronic medical records to streamline coordination of care and reduce medical errors, and tackle the rising costs of prescription drugs through re-importation measures and increased oversight of the pharmaceuticals’ anti-competitive practices. Lastly, Obama proposes an assault on the many chronic, preventable illnesses that drain US health resources by working with schools, employers, families and individuals, and the government to increase awareness and access to healthy lifestyle options.
Ron Paul
Ron Paul is quick to point out that the HMO Act of 1973, which requires large employers to provide HMO insurance for their employees and which has been cited in creating a lot of today’s health care woes, is an act of government and not the free market. Calling for health “freedom” and not health care, Congressman Paul, who is also a doctor, favors free market solutions, such as Health Savings Accounts, to lower costs of health care and remove the current system for it’s morass of public-private solutions. He blames the government and third-parties, such as insurance companies, for spiraling costs. He favors government ability to negotiate prescription drug prices for Medicaid and drug re-importation from Canada. He sees a phased elimination of Medicare, Medicaid and SCHIP, as people are encouraged to move over to HSAs where they will control their tax-deductible health savings and become more discerning health consumers.
Bill Richardson’s health care plan tackles coverage, cost, and care through government mandates. His plan would guarantee health coverage for all Americans, offering the health plan used by members of Congress for those who cannot obtain health insurance through an employer or eligibility for one of the public programs (Medicare, Medicaid and SCHIP). The plan would also require insurance companies to stop disqualifying people for coverage based on pre-existing conditions. Sliding tax-credits would be used to help with affordability and interest rates would be waived for medical debt placed on credit cards. Savings would be found in streamlining the current inefficient system—investing in health information technology through savings bonds, negotiating lower prescription drug prices through Medicare, and eliminating the tax-shelter of high deductible health insurance plans. Richardson also proposes banning smoking in all workplaces and requiring insurance companies to spend at least 85% of revenue directly on care, and not on administration.
Though it’s still too early to say how Mitt Romney’s plan of required health coverage in Massachusetts is going to work out, it is clear that he was able to tackle a national issue on the state level prior to running for president. Massachusetts had about 500,000 uninsured people prior to the start of the law, and spent about $1 billion/year to provide emergency care for those people. Over 1/3 were young, healthy people who took the risk that their health would remain good in order to save on insurance premiums. Another group were those eligible for Medicaid but weren’t yet in the system. And a final group were those working poor in low-end service or part-time jobs who weren’t given health insurance. Romney’s plan found a way to address the needs of each group of uninsured, using the $1 billion that would have otherwise been spent on emergency care for the uninsured (the federal government provided an additional $1 billion over three years). While Romney won’t necessarily bring the MA changes to the nation at large, he is definitely in favor of private, market-based solutions and HSAs and has a track-record of health care reform.
Tom Tancredo’s plan for health insurance isn’t sweeping. In fact, he has linked it to his pet cause, illegal immigration. Citing the $1 billion that U.S. pays to treat illegal aliens (required by law for anyone who shows up in an emergency room), Tom Tancredo proposes tightening illegal immigration for reasons of economics, security, and health costs. In addition, he favors association health plans, which allow small businesses to band together to purchase health insurance for their employees at a reduced rate. Health care ranks low on his list of issues.
Fred Thompson
There doesn’t seem like a lot in health care that Fred Thompson is for. Recent votes have been against pharmaceutical re-importation from Canada, against allowing the self-employed to fully deduct the cost of their health insurance, against allowing people to sue HMOs, and against Medical Savings Accounts. There is nothing on his site about his plan for improving health care. He has no record of sponsoring health care related bills. All we know is that he is solidly against nationalized health care, and that he is sure to employ his federalist stance of states’ rights if he decides to tackle this challenge.