More about these plans' effects on: Intro · Uninsured · Economy · Quality Of Care · Employers

By Marilyn Werber Serafini, National Journal
© National Journal Group Inc.
Friday, Oct. 26, 2007

Requiring individuals to have health insurance doesn't necessarily mean that it will be available at a reasonable price. Still, National Journal's judges say that the Democratic candidates' plans, which all include mandates, would do a better job than those of their Republican counterparts of holding down patients' out-of-pocket expenses without causing them to forgo needed care.

That is partly because the Democrats would have Uncle Sam pick up more of the tab. Although some of the Republican plans are projected to save the federal government money, each of the Democratic proposals is estimated to cost taxpayers about $100 billion a year. "A big part of it is that the subsidies are higher" in the Democratic versions, said Ed Howard, executive vice president of the Alliance for Health Reform. "Subsidies for the low-income help minimize the adverse economic impact of individual mandates."

Hillary Rodham Clinton, for example, proposes to give low- and middle-income people a refundable tax credit to help pay insurance premiums. John Edwards wants the federal government to offer sliding-scale subsidies to families earning up to $80,000.

Clinton, Edwards, and fellow Democrat Barack Obama all want to establish universal coverage programs through which individuals could buy private insurance or join a public plan similar to Medicare. The Republicans candidates generally would steer people toward the private insurance market.

Conservatives have contended that moving away from the employer-based health insurance system would give individuals more power to make choices and thus improve competition, quality, and prices. The current market for individual insurance, however, makes it difficult or impossible for people with poor health -- or a history of serious illness -- to buy coverage.

Rudy Giuliani's plan "induces millions [of people now covered by employer-provided insurance] to move to the individual market, where high deductibles abound," Howard said. Mitt Romney, meanwhile, proposes to deregulate state insurance, which could lead to insurance policies with lower premiums but fewer benefits, according to Howard.

John McCain gets credit from John Goodman, president of the conservative National Center for Policy Analysis, for a plan "completely transforming the way in which federal government subsidizes private insurance and the way people have access to it." McCain would give individuals a refundable $2,500 tax credit ($5,000 for families) to encourage them to buy health insurance. If a policy cost less than the amount of the tax credit, the remainder could be deposited in a health savings account.

When it comes to making health insurance affordable and making sure that the sickest people have access to care, National Journal's experts give the Democratic proposals higher marks than the GOP ones. All three Democratic candidates' plans would prohibit insurers from turning down applicants based on pre-existing conditions or health status. Romney and Giuliani would direct people to buy insurance on their own in the individual insurance market, where insurers often exclude the sickest people or charge them considerably higher prices.

The evolution of the health care debate since the 2004 presidential campaign has thrust a new challenge into the mix. Can the government make Americans into more efficient purchasers of health care services to help lower costs for everyone involved?

When the Republicans controlled Congress and the White House, discussion turned to so-called consumer-driven health care. Conservatives designed health savings accounts to encourage competition in the health care marketplace; these plans allow consumers to save pre-tax earnings and spend them to get the health care services of their choice from the medical providers of their choice. The theory was that, given price and quality information, consumers would be prudent shoppers.

Overall, the GOP hopefuls scored better than the Democrats when National Journal asked the judges which plans would encourage patients to seek value for their money. Giuliani would make it easier for people to get health savings accounts and to buy out-of-state insurance. He would allow Medicaid enrollees to use government and employer contributions to buy private insurance.

Romney says he would lower the cost of insurance and increase consumer choice -- by allowing Americans to deduct the cost of health insurance and out-of-pocket medical expenses if they at least have a catastrophic insurance policy; by encouraging the use of health savings accounts; and by allowing states to deregulate the insurance industry. McCain would allow individuals to get insurance through any organization or association, including an employer. Consumers could purchase insurance in other states, and veterans could carry their VA dollars to other medical providers.

"Only the Republican candidates endorse the idea of patients managing their own health care dollars, an idea strongly supported by President Bush," Goodman notes. The Democrats are silent on this subject."

Consumer Impact

Hillary Rodham Clinton proposes giving low- and middle-income people a refundable tax credit to help them pay health insurance premiums, which could not exceed a yet-to-be-defined percentage of family income. People could keep their current coverage or choose from a menu of private insurance options, plus one Medicare-style public plan offering, under a program similar to the federal employees' health program. Insurance companies could not deny coverage based on pre-existing conditions, health status, race, or several other factors. Insurers participating in federal programs would have to cover preventive services. John Edwards wants the federal government to offer sliding-scale subsidies to low- and middle-income people in the form of a refundable tax credit for couples earning up to $80,000 a year. Insurance companies would have to spend 85 percent of premiums on patient care and would be barred from denying applications for coverage based on pre-existing conditions, medical history, age, or job. Edwards would require the Justice Department to conduct an antitrust review of the health insurance market, and would push for a patients' bill of rights. He wants to give individuals a choice of insurance plans, including a public plan based on Medicare. He would allow consumers to import prescription drugs from Canada. Rudy Giuliani proposes tax breaks for people who get health insurance outside of the employment-based system. He hopes to create more health plan options by giving insurance companies relief from government mandates. Giuliani would offer an income-tax exclusion of up to $15,000 for families without employer coverage ($7,500 for individuals) to help them buy private insurance and contribute to expanded health savings accounts. In states where insurers must offer "expensive" benefits, thus making health care options more costly, Giuliani would allow people to buy out-of-state insurance. He wants to give low-income Americans a tax credit and allow them to buy private insurance using Medicaid funds and employer contributions. He would block-grant federal funds to states to enroll eligible uninsured people in Medicaid and SCHIP. Giuliani would streamline the approval process for drugs. He wants more private competition in Medicare's prescription drug program. John McCain would provide all individuals with a refundable $2,500 tax credit ($5,000 for couples) as an incentive to buy health insurance. If a policy cost less than the amount of the tax credit, the remainder could be deposited in a health savings account. The tax credit would replace the existing tax exclusion for employer-sponsored health plans. Consumers would be able to purchase insurance from out of state. He would give veterans the opportunity to carry their VA dollars to other medical providers. Individuals could get insurance through any organization or association, including an employer, and people could carry policies from job to job. Barack Obama would create a national health insurance exchange to help individuals and businesses purchase public or private health coverage. Insurers could not reject applicants because of illness or pre-existing conditions. The benefit package would be similar to the one that federal employees get, including coverage of essential medical services, preventive, maternity, and mental health care. Low-income people would receive subsidies to buy into the public plan or to purchase insurance. Obama would allow people to import drugs from developed countries after they are determined to be safe. Mitt Romney would allow Americans to deduct the cost of health insurance and out-of-pocket medical expenses if they at least have a catastrophic insurance policy, but he would "remove the tax incentive to overinsure and overconsume health care services." He hopes to expand access to health savings accounts by removing the current requirements for high deductibles, and he would help low-income Americans pay their insurance premiums. He would set benchmarks and provide federal incentives for states to "deregulate and reform" their health insurance markets -- with the goal of lowering the cost of insurance and increasing consumers' choices. He would try to make private coverage more affordable for middle-income Americans by encouraging state-level reforms. States could use federal Medicaid funds to extend private coverage to low-income people lacking other insurance.