Commonwealth Fund on candidates' reform proposals
Envisioning the Future: The 2008 Presidential Candidates’ Health Reform Proposals
By Sara R. Collins, Ph.D., and Jennifer L. Kriss
The Commonwealth Fund
January 15, 2008
This report analyzes the health care proposals of eight Democratic and Republican 2008 presidential candidates—Hillary Clinton, John Edwards, Rudolph Giuliani, Mike Huckabee, Dennis Kucinich, John McCain, Barack Obama, and Mitt Romney. Their approaches to health insurance reform fall into three categories: 1) proposals that emphasize tax incentives for obtaining insurance through the individual market (Giuliani, Huckabee, McCain, Romney); 2) proposals that build on existing private and public group insurance with shared responsibility for financing coverage (Clinton, Edwards, Obama); and 3) proposals that aim to cover everyone through publicly sponsored insurance systems like Medicare (Kucinich). The report examines differences among the proposals, and evaluates them against key principles like affordability, provision of essential services, financial protection, streamlined administration, and fair financing.
Which Proposals Hold the Greatest Promise?
To evaluate these new policies, The Commonwealth Fund Commission on a High Performance Health System identified several key principles to moving the health system toward high performance. They include:
- Provision of equitable and comprehensive insurance for all
- Provision of benefits that cover essential services with appropriate financial protection
- Premiums, deductibles, and out-of-pocket costs are affordable relative to family income
- Health risks should be broadly pooled
- The proposals should be simple to administer with coverage that is automatic and continuous
- Dislocation should be kept to a minimum—people could stay in the coverage they have if desired
- Financing would need to be adequate, fair, shared across stakeholders.
Measured against these principles, the mixed private-public group insurance with a shared responsibility for financing proposed by the leading Democratic candidates and the public insurance reform proposals put forward by Kucinich have the greatest potential to move the health care system toward high performance. Both approaches have the potential to provide everyone with comprehensive and affordable health insurance, achieve greater equity in access to care, realize efficiencies and cost savings in the provision of coverage and delivery of care, and redirect incentives to improve quality. However, from a pragmatic perspective, the mixed public-private approach, which allows the more than 160 million people who now have employer-based health coverage to retain it — and does not require them to enroll in a new program as in the public insurance models — would cause far less dislocation.
The Republican candidates’ proposals for reform that rely on tax incentives and voluntary purchase of coverage in an unregulated individual insurance market are, on their own, unlikely to achieve universal coverage. Buying coverage in the individual market will continue to be challenging if tax incentives are not coupled with an individual mandate, minimum benefit standards, regulations against risk selection, and premium and out-of-pocket spending limits as a share of income. Providing incentives for coverage in the individual market without an individual mandate or regulations against risk selection would not pool risks. Insurers would still write individual policies rather than policies for a broad group of people. Moreover, because of the substantially higher administrative costs in the individual market, covering more people this way will only increase U.S. annual spending on insurance administration.
Executive Summary:
http://www.commonwealthfund.org/publications/publications_show.htm?doc_id=647708
Full report (58 pages):
http://www.commonwealthfund.org/usr_doc/Collins_envisioningfuture2008candplans_1092.pdf?section=4039
Comment:
By Don McCanne, MD
The policy principles listed above are key to moving us toward a high-performance health system - except one. Avoiding “dislocation” by allowing an individual to elect to continue with a private plan that limits choice of providers, limits benefits, and requires greater cost sharing does not move us closer to a high-performance system but is included for pure political reasons to appease those individuals who remain uncomfortable with the concept of a public insurance program that they don’t fully understand. All of the other principles listed should be an integral part of comprehensive reform.
Of the three basic models for reform, the Republican proposals that would use tax incentives for purchasing private, individual health plans can be dismissed as being non-responsive to the key principles listed.
In contrast, the concluding comments of this report seem to equate the private-public group insurance model of the three leading Democratic candidates with the public insurance model of Dennis Kucinich in their potential to move the health care system toward high performance. They conclude that pragmatism favors the private-public model since it would result in less “dislocation.” But you need to read the full report to see if they have made a case for equivalence of the private-public and the public models of reform.
The quotations in the following comments are from the Commonwealth Fund report.
“Both Republican and Democratic candidates, with the exception of Kucinich, envision a health insurance system that continues to be structured around private insurance markets with a supporting role played by public insurance programs.”
“With respect to affordability, all the leading Democrats (Clinton, Edwards, and Obama) have said that enrollees would pay a set percentage of their income on premiums, but have not specified the percentage or what would happen if affordable plans are not available. They have also focused exclusively on premiums when determining affordability, despite the fact that out-of-pocket costs can and do comprise a substantial share of family incomes, particularly in low- and moderate-income households.”
“The complexity and fragmentation of the current health insurance system often makes obtaining and retaining insurance difficult. Kucinich’s National Health Insurance program would provide the most seamless enrollment of the current proposals. The Democratic candidates that have proposed mixed private–public approaches would fill the gap in the current system with new group insurance ‘connectors.’ However, these proposals would not make enrollment easier or more seamless and would retain the complexity in the system.”
“Achieving universal coverage or expanded health insurance coverage will require a significant financial investment by federal and state governments, employers, households, and other stakeholders. Such a shared responsibility among stakeholders should be fair, based on ability to pay. None of the Republican candidates has identified a source of financing. The leading Democratic candidates would either roll back the tax cuts of the past few years or allow them to expire for households with incomes above $200,000 (Edwards) and $250,000 (Clinton and Obama). They have also identified other more minor sources of financing, as well as savings achieved through improved efficiency. The lack of details in their proposals on many key features — the size of the premium subsidies for low- and moderate-income families, the employer contribution, the increase in Medicaid and SCHIP income eligibility standards — means it is unclear whether the amount of identified financing will be sufficient.”
So how do the public-private and public models actually score on the principles for high performance?
- Provision of equitable and comprehensive insurance for all
The public model would be equitable by design, whereas the private-public model would use administratively complex mechanisms to attempt to achieve partial equity in the multi-payer system. The public model would provide comprehensive benefits, whereas the private-public model would likely establish a benchmark of basic coverage. The public model would automatically include everyone, whereas the private-public model would continue to leave out individuals who cannot pay the entry fees into a system that attempts to balance premiums, public subsidies, out-of-pocket expenses, and income qualifications.
- Provision of benefits that cover essential services with appropriate financial protection
The public model would include all essential services while eliminating financial barriers to care, whereas the private-public model would vary benefits and cost sharing in an attempt to keep premiums affordable (just as FEHBP does now).
- Premiums, deductibles, and out-of-pocket costs are affordable relative to family income
The public model shifts financing to the tax system which eliminates problems of affordability for the family, whereas the private-public model cannot ensure affordability for the family since the thresholds for premiums and out-of-pocket costs overlap, on a sliding scale, with family income, which also frequently is not stable.
- Health risks should be broadly pooled
The public model establishes a single, universal risk pool that includes everyone, whereas the private-public model continues to fragment risk pools while introducing cumbersome administrative mechanisms to attempt to reduce the perversities of adverse selection.
- The proposals should be simple to administer with coverage that is automatic and continuous
The public model is noted for its administrative simplicity, and it is automatic and continuous for life, whereas the private-public model perpetuates the administrative complexities of the multi-payer system, preventing enrollment from being automatic (a problem for a system that promises choice of plans from multiple potential sources), and resulting in inevitable interruptions in coverage.
- Financing would need to be adequate, fair, shared across stakeholders
The public model would financed through the tax system, ensuring adequate funding and fairness of contributions by all residents based on ability to pay, whereas the private-public model would be financed through an administratively complex system not unlike our current multi-payer system which would likely result in continued underfunding of safety-net programs for lower-income individuals, not to mention other deficiencies.
- Dislocation should be kept to a minimum — people could stay in the coverage they have if desired
So minimizing “dislocation” from existing private insurance coverage is the one principle wherein the private-public model is alleged to offer higher performance than the public model. But when you look at all of the other principles listed, The Commonwealth Fund got it wrong in their conclusion. Expanding multi-payer coverage through the private-public model of reform sacrifices the beneficial health policies of all of the other principles listed, in exchange for a political principle that provides no health system benefit.
But then maybe dislocation is a concept that we could still make use of. We should maximize the dislocation of the politicians who are standing between us and genuine reform.