Presidential Candidates' Health Care Reform Proposals

http://www.s of health care reform proposals by presidential candidates John Edwards (D), Barack Obama (D), and Rudolph Giuliani (R), in this issue we summarize health plans proposed by Mitt Romney (R) and Hillary Rodham Clinton (D).

Governor Romney's Vision for Health Care Reform
On August 24, former Massachusetts governor and presidential candidate Mitt Romney unveiled a proposal for reforming the health care system without new spending or new taxes. It is a market-oriented approach intended to make private health insurance more affordable, accessible, and portable; enhance quality and innovation; and reduce overall health spending growth. Most of the specific strategies aim to create lower-cost health plans, and encourage the purchase of private insurance in the individual market.

Tax Reform and Deregulation

• Revise the federal tax code to allow U.S. residents who purchase a health insurance policy that at least covers catastrophic expenses to deduct the full amount of premiums, deductibles, and copayments from their annual incomes. This provision is meant to even the playing field between those with employer-sponsored coverage and those who purchase coverage through the non-group market.
• Promote health savings accounts (HSAs) by eliminating the minimum deductible requirement and implementing full deductibility for all qualified medical expenses (including premiums, out-of-pocket spending, deductibles, and copayments).
• Offer federal incentives to states (through access to federal funds) to reduce health insurance regulations, such as benefits mandates and restrictions on managed care plans, in order to reduce the cost of private coverage and expand choices for consumers.

Medicaid Reform

• Turn Medicaid into a block grant program with fewer federal regulations, allowing states to tailor programs and give subsidies to residents to purchase private insurance and containing federal Medicaid costs. This is intended to permit states to innovate and develop reforms that best meet their residents' needs.
• Allow states to redirect existing federal and state funds for "free care" for the uninsured to sliding-scale premium subsidies for low-income uninsured residents to purchase private insurance.

Quality and Health Information Technology

• Offer federal incentives (not yet specified) to states to promote information technology, electronic medical records, transparency in cost and quality, HSAs, and coinsurance products.

Medical Liability Reform

• Place federal caps on non-economic and punitive damages in medical malpractice lawsuits; encourage "health courts" run by judges who have experience in medical liability cases as well as alternative dispute resolution and sanctions for repeated filings of frivolous suits.

The Romney campaign estimates that the tax reforms alone would encourage two to six million middle-income uninsured residents to purchase private insurance, and lead to a 6.2 percent reduction in U.S. health care spending.

Senator Clinton's "American Health Choices" Reform Plan
On September 17, 2007, New York Senator and presidential candidate Hillary Rodham Clinton unveiled American Health Choices, a health care plan that would enable Americans to keep their current coverage or purchase new public or private coverage options. The plan builds on earlier proposals to contain health care costs and enhance value and quality. Key features of Clinton's proposed reforms are summarized below.

Coverage Expansion Strategies

• Establish "Health Choices Menu" as part of the Federal Employees Health Benefits Program (FEHBP), offering all Americans an efficient, Medicare-like public plan and private insurance options that emphasize proven and effective preventive care, as well as chronic care management.
• Offer a refundable, income-related tax credit to be used to purchase health coverage, designed to cap the percentage of income spent on premiums while maintaining consumer price consciousness.
• Impose an individual mandate to obtain affordable coverage.
• Require large employers to provide health insurance for their employees or contribute to the cost.
• Offer small businesses a tax credit to continue or begin offering coverage.
• Strengthen Medicaid and SCHIP, filling gaps such as lack of coverage for poor, childless adults (while also investing in public hospitals and community health centers).
• Offer a tax credit for retiree health plans to offset catastrophic costs, to help keep plans affordable.
• Reform private insurance rules: require insurers to guarantee issue and renewability, so that individuals are not denied coverage or renewals due to health conditions; limit rate variation based on age, gender, or occupation; and set a minimum stop-loss ratio to ensure that most premiums are used for the provision of care (versus profits and marketing).

Quality and Value Enhancement Strategies
The Clinton proposal emphasizes modernizing health systems, reducing waste, and promoting prevention and high-quality care through the following policies:

• Offer financial incentives to physicians to adopt health information technology and to achieve better patient outcomes.
• Pressure pharmaceutical companies to offer "fair" prices and accurate information.
• Establish and fund a Best Practices Institute to link efforts by the Agency for Healthcare Research and Quality and the private sector to fund comparative effectiveness research and dissemination of information to patients and physicians.

Cost Containment/Funding Sources
Funding for the above initiatives is expected to come from an estimated savings of $110 billion from the following sources:

• Discontinue parts of the Bush Administration's tax cuts for Americans with income over $250,000 ($52 billion).
• Promote value and quality through information technology, prevention, chronic care coordination, and comparative effectiveness research ($35 billion).
• Phase out excessive overpayments to Medicare managed care plans ($10 billion).
• Reduce the Medicare/Medicaid disproportionate share hospital payments as the number of uninsured declines ($7 billion).
• Allow Medicare to negotiate drug prices, promote generic drug competition and re-importation, increase Medicaid rebates, and enhance oversight of drug company relationships with providers ($4 billion).
• Limit the current employer tax exclusion (whereby employer contributions to workers' premiums are excluded from taxable income) for very expensive health plans, for those with income over $250,000/year ($2 billion).