The Presidential Candidates' Health Care Plans: A First Look

By Karen Davis and Sara Collins

Health care is the top domestic issue in the 2008 presidential campaign, with rising costs and the growing ranks of the uninsured putting pressure on candidates to offer concrete plans for health system reform. According to a recent Wall Street Journal/Harris Interactive poll, providing health coverage to the uninsured is the top-rated health policy issue, with slowing inflation in health care costs a close second. The public's views are echoed by those of health care opinion leaders, including experts, those providing health care, business, consumers, and government officials. So far, the three leading Democratic candidates have offered health care reform proposals. Two Republican candidates have also unveiled elements of their health plans. The Commonwealth Fund and its Commission on a High Performance Health System will analyze candidates' ideas as they are introduced and as additional details become available. The proposals offered to date are a welcome development and promise to trigger an important national debate on our values, and on our commitment to achieving a high performance health system.

Expanding Health Coverage: Democratic Candidates
Expanding access to health insurance is key to improving the overall health system, as demonstrated by the Fund's recent State Scorecard on Health System Performance. Across states, better access to care and higher rates of insurance are closely associated with higher-quality care, including better preventive and chronic care. There are striking similarities in the proposals to expand health coverage put forth by three of the leading Democratic candidates, Senators Clinton, Edwards, and Obama.

All three candidates would build on the strengths of the current system—pooling risk in large groups, generating efficiencies through employer-based coverage, and building on the success of public programs such as Medicare, Medicaid, and the State Children's Health Insurance Program (SCHIP). By expanding coverage under sources of health insurance that work for millions of Americans, they would minimize disruption in the current system and extend its advantages to others.

To extend the benefits of group health coverage to those not covered under employer plans—primarily small business employees, the self-employed, and those outside of the workforce—the three Democratic candidates would each create a new purchasing pool. Senators Clinton and Obama would build on the Federal Employees Health Benefits Program (FEHBP), while Senator Edwards would create regional health markets. Clinton and Edwards would include a new "Medicare-like" public insurance option through the purchasing pool—providing a competitive alternative to private insurance designed to help keep premiums low.

All three would reform the terms on which private plans are offered: requiring insurers to accept all applicants, charge the same premium, and guarantee renewal of the policy annually, regardless of health status. They all also set standards on the portion of spending insurers must devote to medical care, as opposed to administrative or marketing costs.

Senators Clinton and Edwards would require everyone to have coverage, while Senator Obama would require coverage for children. Given the new coverage options, all three of the proposals would likely cover nearly all of the uninsured.

Notably, all three candidates are willing to expend considerable new federal budget dollars to ensure the adequacy and affordability of coverage. Senator Edwards puts the price tag at $90 billion to $120 billion a year, while Senator Clinton places it at $110 billion. Senator Obama's plan is estimated to require $50 to $65 billion in new revenue.

Expanding Health Coverage: Republican Candidates
While most Republican candidates acknowledge that there are serious problems with the current system, they have not yet unveiled detailed health care proposals. Two candidates, Governor Romney and Mayor Giuliani, have offered some elements of their health platforms.

In contrast to the Democratic candidates, Governor Romney and Mayor Giuliani would not require people to purchase insurance, or employers to help pay for it. Instead, they would rely on tax incentives to induce consumers to purchase individual insurance coverage—now the weakest part of the insurance market. They would eliminate much state regulation of private insurance, and try to expand coverage without committing to new federal budget outlays.

As governor of Massachusetts, Mitt Romney promoted comprehensive health care reform legislation, passed in 2006, that requires all state residents to obtain health coverage and creates a health insurance "connector" to help individuals and small businesses obtain it. As a candidate, Governor Romney is opposed to a national version of this plan, instead proposing a "federalist" approach to encourage other states to develop their own, market-based reforms.

Both Mayor Giuliani and Governor Romney appear to support the use of incentives—removing the employer benefit tax exemption and replacing it with a standard income tax deduction—to move the system away from employer-based group coverage and toward the individual market. Governor Romney suggests expanding and deregulating the private health insurance market, but this could make it even harder than it now is for individuals and small businesses with poor "risk profiles" to find affordable coverage.

Improving Health Care Quality and Efficiency
For health coverage expansions to succeed, there need to be parallel efforts to improve the quality and the efficiency of the health system.

The three leading Democratic candidates would use pay-for-performance strategies to improve health care quality and efficiency. For example, Senator Clinton would reward physicians who participate in Maintenance of Certification programs through medical boards, and who demonstrate improved patient outcomes with higher reimbursement in federal programs. Senator Edwards would allow Medicare and the newly created health markets to pay providers based on their results, while Senator Obama would reward providers for achieving certain performance thresholds.

In addition, Senators Clinton, Edwards, and Obama would pursue comparative effectiveness research. They differ in whether the research should be undertaken by public, public/private, or independent bodies, but agree that a system is needed to test which treatments work best and disseminate this information to doctors and patients, as well as those who decide on covered benefits and payment rules.

The three Democratic candidates also would promote models to improve the management of chronic disease, and to address racial and ethnic health disparities.

Candidates from both sides of the aisle have expressed interest in promoting health information technology (HIT), transparency, and preventive health to achieve gains in health care quality and efficiency.

For example, Mayor Giuliani would encourage public-private partnerships to improve and set standards for HIT. Senator Clinton would require providers participating in federal programs to adopt interoperable HIT, extending an initial $3 billion a year fund to help providers implement it. Senator Obama would invest $10 billion per year over five years for nationwide adoption of standards-based HIT, including electronic medical records.

To inject competition into health care markets, Mayor Giuliani would disseminate information on price, provider qualifications, and outcomes, as would Governor Romney. Senator Obama would require hospitals and other providers to publicly report measures of health care costs and quality. Senator Clinton would develop a Web-based tool to make health care information and decision-support tools available to consumers, while Senator Edwards would create a health care "Consumer Report" to provide Americans with information to evaluate hospitals' effectiveness in treating patients.

Candidates also would invest in preventive care. Senator Edwards would implement national standards to ensure health plans cover preventive care, with minimal cost sharing. Under his plan, all Americans would be required to receive regular preventive care, and those who enroll in "healthy living programs" would be rewarded with lower premiums. Senator Clinton would require all health plans to cover preventive measures and coordinate public spending on prevention across federal programs. She would also bring free preventive care to schools, workplaces, supermarkets, and communities. Mayor Giuliani would promote healthy lifestyles and wellness programs and tie Medicaid payments to a state's success in promoting preventive care and tracking children's obesity rates.

These are just some of the elements of candidates' plans, and other proposals are likely to surface as the presidential campaign proceeds. This development is most welcome, and the ideas that have been advanced are worthy of consideration and debate. Many would form the building blocks for a high performance health system.

In some respects, however, the proposals don't go far enough. What's missing is a coherent, systematic strategy that would transform the health system to be the best in the world. The Commonwealth Fund and its Commission on a High Performance Health System will continue to follow the debate with great interest, analyze what is offered, and provide periodic reports over the course of the campaign to inform public understanding of the issues and strategies under discussion.

In the meantime, I'm interested in your feedback. Please e-mail me at kd@cmwf.org.

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September 2007



Written with the assistance of Martha Hostetter, editorial adviser.