Cover Story - October 2008
Tex Med . 2008;104(10):14-24.
By Ken Ortolon
Athens family physician Douglas Curran, MD, says nearly a third of the patients he treats at East Texas Medical Center-Athens have no health insurance and cannot afford to pay for their care out of their own pockets.
"Our little hospital is really struggling because of that, as well as those of us who practice there," Dr. Curran said. "We're looking at probably a full 30 percent of our patient population that has no resources at all. We can't keep doing that. It's not sustainable."
Leaders of both the Texas Medical Association and the American Medical Association say they are at least somewhat optimistic that the burden of the uninsured may soon shrink as political pressure rises for Washington to do something about access to care. Temple cardiologist Jim Rohack, MD, AMA president-elect, says expectations are growing that Congress will attempt to address the uninsured in 2009.
In addition, the issue has become a major focus of both presidential candidates this year. Democratic nominee Sen. Barack Obama and Republican candidate Sen. John McCain both have proposals they say will provide health coverage for a large number of the uninsured. Senator Obama's plan calls for a massive new program to provide health insurance for anyone who wants to purchase it. Senator McCain, on the other hand, wants to shift the emphasis away from employer-sponsored health insurance to individual ownership and foster competition in the insurance market to bring down costs.
"The AMA does not endorse a candidate for president; however, we are pleased that health care reform has already made its mark on the 2008 presidential campaign, with candidates from both parties releasing proposals for health care reform, including coverage for the uninsured," Dr. Rohack said.
AMA hopes to keep health care on the front burner of the presidential race through its Voice for the Uninsured campaign, which has its own plan for health system reform.
While AMA is at least optimistic that the candidates are paying attention to the plight of the uninsured, experts who have examined both the Obama and McCain proposals say there is still too little detail in either plan to be able to tell how successful they might be or exactly how they would be paid for.
Health policy analysts say Senator Obama has proposed a plan for covering the uninsured that is much more aggressive and likely much costlier than the plan proposed by Senator McCain.
At the heart of Senator Obama's plan is creating a new national health plan that would be available to all Americans. The plan would feature a benefit package similar to that offered through the Federal Employees Health Benefits Program (FEHBP), and insurers could not turn down anyone because of a preexisting condition. Low-income individuals and families who do not qualify for Medicaid or the Children's Health Insurance Program (CHIP) would receive federal subsidies to help pay for the coverage.
Senator Obama also proposes establishing a National Health Insurance Exchange to help reform the private insurance market. Plans participating in the exchange would have to offer benefits at least as generous as the new national health plan and could not charge higher premiums based on someone's health status.
Another key component of Senator Obama's plan is a "play or pay" requirement for employers. Employers who do not offer or make a meaningful contribution to the cost of health insurance coverage for their employees would be required to contribute a percentage of their payroll toward the cost of the new national health plan.
Other elements of Senator Obama's plan include:
- A mandate that all children have health insurance;
- A small business health tax credit of up to 50 percent of premiums paid by an employer on behalf of workers;
- Expansion of both Medicaid and CHIP to cover more Americans living in poverty, and
- Flexibility for states that already have initiated health system reform to continue such efforts.
Senator Obama also says his plan would lower cost by supporting disease management programs and coordination of care, promoting patient safety, establishing an institute to study comparative effectiveness of different treatment options, investing $10 billion per year over the next five years to advance adoption of electronic health information technology systems, and expanding funding for training primary care physicians.
Dr. Rohack is pleased to see discussions of comparative effectiveness, not only in Senator Obama's plan but also by a growing number in Congress. He says having a trusted source for making comparisons between therapies will enable physicians and their patients to make better decisions about treatment options.
While Senator Obama's plan relies on government programs to expand coverage for the uninsured, Senator McCain hopes to encourage more families and individuals to purchase coverage through a major shift in how the federal tax code treats health care costs. Senator McCain says his plan would restore control to patients themselves.
"What he's attempting to do is to go after one of the core economic drivers that most economists believe is an important reason that we have the high spending in health care that we do, which goes to the tax treatment of health care," said Gail Wilensky, PhD, senior fellow at Project HOPE, an international health education foundation.
Senator McCain's plan calls for repealing tax exclusions that employers currently receive for providing coverage to their workers. He replaces those exclusions with direct refundable tax credits of $2,500 for individuals and $5,000 for families to offset the cost of their own insurance coverage. Employer-sponsored insurance would still be available under the McCain plan, and workers could use their tax credit to pay their share of employer-sponsored plans or to purchase coverage elsewhere.
He also would promote competition to lower the cost of insurance by allowing families and individuals to purchase health insurance nationwide rather than having to choose only from plans offered in their state.
Senator McCain also would:
- Create a nonprofit corporation to contract with insurers to cover those who have been denied insurance in the past;
- Reduce prescription drug costs through reimportation of drugs and faster introduction of generics;
- Expand health savings accounts;
- Emphasize prevention of chronic illnesses;
- Promote coordination of care;
- Speed adoption of health information technology; and
- Enact tort reforms to protect physicians who follow clinical guidelines and adhere to safety protocols.
The McCain plan does not address physician workforce. Roland Goertz, MD,CEO, and executive director of Heart of Texas Community Health Center Inc., which sponsors a 36-resident family medicine residency program, says that may indicate a lack of understanding that workforce issues are a critical problem.
"For us, it's very critical that somebody wakes up and understands that if you want to train tomorrow's physicians, it costs money to do so, " he said.
Where's the Beef?
Dr. Goertz has been closely following the presidential candidates' proposals on health system reform and says there are many "big picture" ideas in both plans, but neither campaign has released many specifics of how their plans would work or how they will pay for them.
"It appears that McCain will prefer an insurance-based model, which has been part and parcel of what the Republicans' platform on health care has been," said Dr. Goertz, who also serves on the American Academy of Family Physicians Board of Trustees. "And the Obama platform is going to be a little more inclusive of diverse ways of providing coverage and not just relying on the commercial insurance venue."
Dr. Wilensky, who was administrator of the U.S. Centers for Medicare & Medicaid Services under President George H.W. Bush, also says there is little specificity in the candidates' proposals, particularly Senator Obama's plan. For example, the Obama plan does not spell out how he would achieve his call for mandatory coverage for all children. The plan also says the new national health plan would provide coverage similar to that provided to members of Congress under the FEHBP, but Congress and federal employees have more than one option under that program.
The assumption, she says, is that the plan would be similar to what she called the Blue Cross and Blue Shield standard option, which apparently is the plan chosen by most federal workers. If so, that could be pricey for uninsured Americans to purchase, even with some type of federal subsidy, Dr. Wilensky says. That plan currently costs nearly $1,000 per month for family coverage, she says.
"The federal government, by its rules, contributes 72 percent on average and federal workers pay 28 percent," Dr. Wilensky said. "That's still a fair amount of money, so it's not clear what kind of support he's thinking about for low-income families."
Also, there is no indication in what the Obama campaign has released about how much employers would have to contribute if they do not offer coverage to their workers or whether plans offered by employers would have to provide the same level of benefits as the candidate's new national health plan.
"If the 'pay' part of play or pay is relatively low, that definitely could encourage employers to just say 'Here's my payment, I'm out of here,' especially if the requirements of what it takes to be an okay plan start getting quite strenuous," Dr. Wilensky said. "That makes the pay part more attractive."
There also is speculation that Senator McCain's plan to eliminate tax breaks for employers could lead them to drop health coverage for their workers. Dr. Wilensky says that may be true for some small employers, but she thinks large to mid-size employers will continue to offer coverage because it's an important part of their efforts to recruit and retain the best employees.
While the two plans appear to be far different in approach to improving access to care, some health policy analysts say there are some similarities.
"I think the two plans have more in common than they have different," said Greg Scandlen, director of Consumers for Health Care Choices, part of the Heartland Institute, a nonprofit research and education organization. "They're both gung ho about health information technology, pay for performance, and coordinated care for people with chronic conditions; neither one is very specific about how it's going to be implemented, how it will be enforced, exactly what they want to do."
For example, Mr. Scandlen says Senator McCain's emphasis on individual ownership of insurance could fit neatly with Senator Obama's proposal for a national insurance exchange as a way to deliver both choice and portability. "And I don't see any reason why Obama couldn't use McCain's individual tax credit as a way of subsidizing lower-income people" under the former's national health plan proposal, he added.
The real difference between the two plans may be cost. Senator Obama estimates his plan would cost somewhere between $50 billion and $65 billion per year. Senator McCain says his plan would be budget neutral since eliminating employers' tax exclusions would offset the refundable tax credits provided to individuals and families.
Dr. Wilensky, who has advised the McCain campaign on what she calls an "unpaid and informal" basis, says Senator Obama's cost estimates are overly optimistic. She says the health system reform plan offered by Sen. Hillary Clinton during her unsuccessful bid for the Democratic nomination had an estimated price tag of $110 billion per year. Her plan was very similar to what Senator Obama has proposed, she says.
Dr. Wilensky says the difference is that Senator Obama based his cost estimate on the assumption that his plan will save the average family $2,500 per year in health care costs.
"He has assumed that some of the changes that he's introducing, many of which are fine changes, are going to recoup savings so fast that he will be able to take account of them within the first term of his administration," Dr. Wilensky said. Ideas such as better management of chronic illnesses, more emphasis on prevention, and investment in rapid adoption of health information technology should slow spending, she says.
One of the things Mr. Scandlen likes best in both health system reform proposals is the concept of a national insurance market to allow the purchase of health insurance across state lines. He says that could have a dramatic effect in terms of making insurance affordable for many of those currently uninsured.
He says the cost of private coverage varies dramatically from state to state because of the varying levels of regulation. Allowing individuals to purchase insurance across state lines would give residents of heavily regulated states an option to purchase lower-cost coverage, he says.
A study released in early August by economists at the University of Minnesota concluded that the number of uninsured could be reduced by as much as 25 percent if the United States created a national insurance market.
"It would reduce the number of uninsured by 25 percent without any federal expenditures, which is astonishing when you think about it," Mr. Scandlen said.
The economists found that the impact in heavily regulated states might be even greater. They concluded that the uninsured rate in New Jersey, for example, might drop by as much as 49 percent if residents could shop for insurance in a national market.
Dr. Wilensky also likes the idea of a national insurance market, but says Senator Obama's national insurance exchange, as proposed, would actually add to the regulatory burden on health plans. That, she says, may drive premiums up rather than making them more affordable.
Mr. Scandlen agrees. "Unfortunately, I think Obama with his national health insurance exchange would actually add to the regulatory burdens rather than reducing them. It would be a whole new level of regulations that the carriers would have to comply with."
The AMA View
While AMA is not choosing sides in the presidential election, it has laid out a three-part plan to expand coverage that appears to lean heavily on some of the same ideas as Senator McCain's plan, particularly changes in who gets the tax breaks for purchasing health coverage.
"Clearly, AMA's plan is to have a significant change in the federal tax code," Dr. Rohack said. AMA wants to change the tax code "so that individuals have the same tax benefit that employers do when they're purchasing health insurance."
The AMA's Voice for the Insured campaign calls for subsidies for those who most need financial assistance obtaining health insurance, choice for individuals and families in what health plan to join, and fair rules of the game that include protections for high-risk patients and greater individual responsibility.
Under the AMA proposal, the subsidies could be in the form of tax credits or vouchers that Americans could use to purchase insurance. Workers could apply the credits or vouchers toward employer-sponsored or other coverage, giving them more choice and greater portability of coverage, AMA contends.
More streamlined and uniform health insurance market regulations - similar to what the candidates have proposed - would permit market experimentation to find the most attractive combination of plan benefits, cost-sharing, and premiums. AMA also says high-risk individuals should receive additional targeted subsidies to enable insurers to keep premiums down.
Finally, AMA believes individuals should assume more responsibility for obtaining health insurance. Its plan would impose tax penalties on those uninsured individuals who can afford to purchase coverage.
Dr. Rohack says the goal of the Voice for the Uninsured campaign is to "keep the issue of health care reform and covering the uninsured in the minds of voters so that whoever they vote for will have a commitment to solving the problem in office."
AMA will continue to highlight the plight of 47 million uninsured Americans right through Election Day in November, Dr. Rohack says.
"We're trying to make sure that both candidates don't lose sight of the reality that an unhealthy American workforce is not going to allow America to be sustainable as a country of wealth and opportunity," Dr. Rohack said. "Clearly we can't continue using the emergency room as an American model for universal access."
TMA Launches Health System Reform Effort
The Texas Medical Association has begun an effort to develop some core principles that it believes any national health system reform plan should include.
Under a resolution sponsored by the Dallas County Medical Society and adopted by the TMA House of Delegates in May, the TMA Board of Trustees appointed a Select Committee on Health System Reform. The committee will examine current TMA and other stakeholders' policies and proposals to deal with health system reform and the uninsured and to compare those policies to the stated positions of the presidential candidates.
Athens family physician Douglas Curran, MD, chairs the panel and says it hopes to develop a set of broad recommendations to guide deliberation on access for the uninsured in the next Congress.
"Rather than responding in a reactionary manner to what they're doing, we're going to try to put something out there that looks at some of the big-picture items that we think are important," Dr. Curran said.
The board charged the committee with developing core principles for use in evaluating both presidential and national legislative proposals on health system reform. The committee plans several meetings this fall and will submit its report to the House of Delegates in May 2009.
While the committee's deliberations are still very preliminary, Dr. Curran says there seems to be some consensus that Congress must address primary care workforce issues.
"We've got to have a primary care workforce that can adequately see patients, and they have to be adequately paid," he said. "That's just not happening right now."
Ken Ortolon can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email at Ken Ortolon.
Comparing the Candidates' Health Care Reform Proposals
For more information, see the Summary of Presidential Candidates' Health Care Reform Proposals on the TMA Web site.
Live Webcasts Featuring Candidates' Advisers
Also, you may listen to kaisernetwork.org's Ask the Experts webcasts with advisers to presidential candidates John McCain and Barack Obama discussing the candidates' health reform proposals.
A discussion with David Cutler, health policy adviser to Sen. Barack Obama and professor of economics, Harvard University, took place on Wednesday, Oct. 8. Watch the webcast on kaisernetwork.org at www.kaisernetwork.org/ask/candidates/obama .
The discussion with Jay Khosla, health policy adviser to Sen. John McCain, took place on Wednesday, Oct. 16. Watch the webcast on kaisernetwork.org at www.kaisernetwork.org/ask/candidates/mccain .
Candidates Essays' on Health Care Reform
Senators John McCain and Barack Obama present their ideas on health care reform in brief essays in the current New England Journal of Medicine (NEJM ) :
Access to Quality and Affordable Health Care for Every American , by John McCain
Modern Health Care for All Americans , by Barack Obama
NEJM Video Roundtable: Health Care in the Next Administration
Economics of Health Care
" As Senators Barack Obama and John McCain battle over how best to control spending and cover the uninsured, they are both filling their speeches, advertisements and debating points with authoritative-sounding statistics about the money they would save and the millions of Americans they would cover." Read more from The New York-Times in " On Health Plans, the Numbers Fly ."
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