2004 Elections: Comparing the Candidates' Health Plans

By Suria Santana

Despite the current focus on national security and international affairs, American voters cite healthcare as one of their top campaign issues. According to a recent Commonwealth Fund (CWF) survey, nearly six in 10 Americans say that a candidate's view on health reform will be a very important factor influencing their vote this November.

Potential voters indicate support for a variety of policies that would provide coverage to uninsured adults and maintain healthcare financing as a shared responsibility between individuals, employers and government.

The candidates' healthcare reform proposals offer a range of policy options, some of which are similar in design such as relying on tax credits to make coverage more affordable. However, President George W. Bush and Senator John Kerry's proposals differ significantly on how much of the budget should be appropriated to healthcare initiatives. Kerry's proposal allocates several hundred billion dollars more for efforts to cover the uninsured. Both candidates' plans build on the existing health insurance system by focusing on cutting the cost of care and increasing enrollment in existing programs.

Third-party candidate Ralph Nader proposes a more radical path by "getting insurance companies out of administering care."

The Bush Plan

President Bush's plan for expanding healthcare access draws on tax credits to allow the low-income un-insured to buy individual policies. Healthcare analysts estimate that his proposal would cover approximately four million of America's 44 million uninsured with a net federal cost of $70 billion over the next 10 years.

Under Bush's plan, single adults would be eligible for up to $1,000 in tax credits per year with eligibility phasing out incrementally for people earning $15,000 to $30,000. Families with two or more children would receive up to $3,000 per year in credits with decreased eligibility for those whose incomes fall in the $25,000 to $60,000 range.

In addition, Bush supports legislation that would facilitate small employ- ers' initiatives to pool together in order to offer their employees better health coverage options. The president also proposes expanding the Health Savings Accounts, allowing participants to deduct high-deductible health plans' premiums from their taxable income.

Henry Aaron, Ph.D., senior fellow of economic studies at the Brookings Institution, believes that Bush's tax credits proposal may end up weakening the current employment-based healthcare system.

"Employers who are now sweating heavily trying to adjust to very rapidly rising costs of employer-sponsored insurance would just adore a reason to drop coverage," Dr. Aaron said. "The fact that employees would be able to gain access to tax credits would be a wonderful justification to do so."

According to Dr. Aaron, larger employers would be unlikely to drop coverage at first, but many small and medium-sized employers would welcome the opportunity to stop dealing with the health insurance business.

"As that happens, one could see a gradual erosion of the 'good employers' paternalism,' the belief that employers owe it to their employees to make health insurance available," he said.

The president has called for the immediate addition of 600 new or expanded community health centers to provide care for low-income Americans. His budget includes $1.5 billion for this initiative, a $114 million increase that would continue the administration's long-term strategy to add 1,200 new health centers over five years.

Bush has also proposed changes to the medical liability system that would ensure that penalties for non-economic damages in malpractice lawsuits do not exceed $250,000. He argued that such a policy would keep doctors from leaving their practice while saving the government at least $28 billion per year.

The Kerry Plan

Kerry offers a plan that would provide coverage for 27 million of the 44 million uninsured. The net federal cost of Kerry's plan is estimated at $895 billion over 10 years, according to a CWF report. His overall approach is mixed, combining public and private incentives with employer and individual tax credits, new group options and public program expansions.

As part of his expanded private insurance option, which would be open to all individuals and large and small employers needing affordable coverage, Kerry would establish a new group insurance pool within the Congressional Health Plan.

To hold down premiums, Kerry's plan would require the federal gov-ernment to reimburse insurance companies for 75 percent of catastrophic claims totaling more than $50,000, provided they pass the savings on to their policyholders.

Among the proposal's quality improvement provisions is a requirement that pharmaceutical benefit managers doing business with the federal government disclose any fees or discounts paid by the pharmaceutical industry. According to Kerry, such requirements will "close the loopholes that prevent more affordable prescriptions from making it to [the] pharmacy."

His "Technology Bonus" plan seeks to reduce administrative costs in healthcare by ensuring that all Americans have secure, private electronic medical records by 2008. The plan would require the federal government and private insurers contracting with the government to adopt some of the modern computerized methods for healthcare transactions used in other industries. Kerry argues that the $350 billion a year spent on non-medical items in healthcare can be cut in half with modern technology.

Dr. Aaron thinks technology improvement plans such as Kerry's are a good idea because they can result in greater efficiency and reduced medical errors. He does not think that record keeping constitutes a significant part of the increase in healthcare costs, however.

"I think a lot of elected officials give lip service to dealing with the rapidly rising cost of healthcare, but my own view is that none of the advanced proposals hold out much promise for curbing the growth of healthcare spending," he said.

The Nader Plan

Nader has called for a single-payer program, thereby cutting out insurance companies. His plan would "increase patient choice, expand coverage and save money." He claims that such a program would be able to provide healthcare with comprehensive benefits, quality and cost controls to all Americans.

Nader does not specify how the program would be implemented nor does he outline how much it would cost the federal government. His campaign office did not answer specific questions about his proposal, instead referencing the Labor Party's "Just Health Care" proposal for national health insurance. Under that proposal, a public fund would finance everyone's health insurance.

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