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Health system reform debate returns to national spotlight

Several strategies for improving access to health insurance have been proposed, but what would they cost and who would pay?

By Joel B. Finkelstein, amednews staff. Nov. 17, 2003.

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Washington -- With the presidential election campaign getting off the ground, comprehensive health system reform is back on the radar screen.

A report from the Robert Wood Johnson Foundation's Covering the Uninsured project offers estimates on the scope and cost of 10 proposals that use a handful of different strategies to expand access to coverage.

The plans include some combination of Medicare and/or Medicaid expansion, tax credits or other tax-based incentives, premium subsidies, employer mandates, managed competition arrangements, and subsidized or government-run insurance pools.

Overall, the cost of the proposals are a mere drop in the bucket compared with the $1.6 trillion that Americans already spend on health care every year, but the question remains: Who will foot the bill?

"Are we ready to pay for our fellow man, today?" asked Len Nichols, PhD, vice president of the Center for Studying Health System Change. "We weren't in 1990."

Baby steps

Incremental proposals promise more limited impact but cost much less to implement than more comprehensive plans.

Tax credits are the basis of most incremental approaches. The main instrument preferred by the Bush administration is tax credits, along with the liberalization of markets to make more affordable health insurance products available.

Other proposals call for tax credits to be used in conjunction with a buy-in option to Medicaid to ensure individuals have an insurance option they can afford. Tax credits could also be used to replace the current employer-based system of tax incentives to create a more equitable system for the individual health insurance market. Such proposals include expanded access either through Medicaid or government-run purchasing pools.

The various tax-credit strategies are estimated to add between $26 billion and $36 billion a year to what the federal government spends on health care. Coverage would be extended to 12 million to 20.5 million uninsured Americans, depending on the plan's specifics.

According to the administration's 2004 budget request, the tax credits proposed by Bush would cost less than $10 billion a year and would help about 4 million uninsured people obtain coverage.

Pooling together

Slightly more ambitious approaches involve the federal or state governments acting as group purchasers, creating health insurance pools through which individuals could purchase coverage.

Under these proposals, the purchasing pools would be combined with premium subsidies to help low-income workers buy individual insurance available through the programs. They would also take advantage of managed care competition strategies, in which individuals pay more for more comprehensive coverage, as a cost-control measure.

The report estimates that these approaches would cover about 12 million to 15 million of the uninsured at an annual cost of between $23 million and $37 million.

Several of the Democratic presidential candidates have proposed strategies that adopt such an approach to increase access by building off the current market-based system of health insurance.

Former Vermont Gov. Howard Dean, MD, Sen. John Kerry (D, Mass.) and Sen. Joseph Lieberman (D, Conn.) have introduced plans that would include such measures in combination with the incremental approaches outlined above. Estimates put the reach of their proposals at around 30 million people. They would cost between $590 billion to $932 billion over 10 years.

Ante up

In the revolving cycle of health care economics, play-or-pay approaches are also back in favor now that California has adopted a law that mandates companies with more than 50 employees offer their workers coverage or pay into a program that will do it for them.

While the employer mandate is the backbone of these proposals, they include other market vehicles to ensure affordable health insurance products are available to small businesses, as well as self-employed individuals. Premium subsidies would be designed to ensure that even very-low-income workers could afford to buy health insurance and that Medicaid patients could be folded into the larger subsidized market.

These approaches are estimated to reach around 37 million of the uninsured for between $32 billion and $57 billion in extra national spending.

Democratic presidential candidate Rep. Richard Gephardt (D, Mo.) has proposed a plan that calls for employer and individual tax credits to be used in conjunction with just such a coverage mandate. That approach would add 31 million to the rolls of insured Americans at a cost of about $2.5 trillion over 10 years, according to his campaign.

Everybody now

The goal of the most ambitious proposals is virtually universal coverage. One strategy calls for the states to extend Medicaid-like benefits, either through a single-payer system or a choice of plans. It would cover everyone not already receiving public health benefits. State residents would receive a minimum benefits package at no cost, with the option of paying for more comprehensive coverage.

Because of the administrative savings of covering essentially entire states under one program, this strategy offers a lot of bang for the buck, experts said. It would extend coverage to 40.3 million, essentially all legal citizens currently without insurance, and cost less than $33 billion a year on top of what the country already spends.

Democratic presidential candidate Rep. Dennis Kucinich (D, Ohio) has proposed changing to a single-payer system, based on Medicare, that would cover everyone at a cost of $6 trillion over 10 years.

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