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Why should we care about the uninsured? Adults and children without insurance are given diagnoses at later stages of illness, receive fewer preventive and curative medical services, and have worse health care outcomes than those with insurance.3 The uninsured spend approximately 40 percent less than otherwise similar patients who have insurance, paying about 30 percent of the costs of their own health care. The remaining costs are uncompensated, and most are passed on to the government; the federal government pays nearly $25 billion per year to finance health care for patients without insurance.
State and local governments also bear a substantial financial burden for uncompensated care. State tax dollars support public hospitals and in some cases private hospitals that serve as regional trauma centers and provide safety-net services. These large and growing financial burdens have, in some cases, required counties and states to ask for dedicated local tax increases.
The most recent concerted effort to ensure universal health coverage was President Bill Clinton's ambitious and far-reaching Health Security Act, which was put forth more than a decade ago. This plan would have provided universal coverage, while redesigning the financing, structure, and provision of health care. It was the scope and reach of the Clinton proposal that proved to be its downfall, and this lesson has shaped the current policy debate about the uninsured.
Health care has again emerged as a major issue in the presidential election, owing to the increasing cost of health insurance and anxieties among Americans who are insured about losing their jobs and insurance. President George W. Bush and Senator John Kerry have both advanced proposals to cover the uninsured and reduce health care costs.
The candidates' proposals, as they have been described in the campaign through September, differ sharply in terms of design, cost, and anticipated increase in coverage for the uninsured. The costs of the plans are, of course, closely tied to the number of people they envision covering. The Kerry proposal projects the enrollment of nearly 27 million uninsured people, at a cost to the federal government of $653 billion over the next 10 years. The Bush proposal is a more modest effort, increasing federal spending by about $90 billion over the next 10 years and extending coverage to an estimated 2.4 million uninsured people.4 To put these figures into context, the new Medicare drug coverage is expected to cost about $400 billion to $540 billion over the next 10 years.
President Bush has advanced a series of incremental changes intended to increase coverage and lower health care costs. The plan includes a refundable tax credit (i.e., a credit that families receive even if they have no federal tax liability) of up to $1,000 for a single person and $3,000 for a family of four for the purchase of health insurance. These tax credits are fixed dollar amounts that decrease with income. A single person earning less than $15,000 would receive $1,000 to purchase insurance, and there would be no credit for single people earning more than $30,000. Bush has also proposed allowing people to deduct the cost of qualified high-deductible health plans from their taxable income and to start a tax-deductible health savings account. Such tax-sheltered accounts for health care costs would provide an additional method for families to finance their health insurance; and because they make explicit the cost of health services, such accounts would be expected to increase consumers' cost-consciousness when they use medical services.
Bush's plan would also allow small businesses and associations to purchase insurance through large purchasing pools. Although this proposal would increase the size of the risk pools for small employers, the Bush plan would provide no direct financial assistance to employers or workers for purchasing insurance. On balance, the risk pools could reduce the number of uninsured Americans by about 300,000. Finally, the president has proposed medical malpractice reforms modeled after those enacted in California that would establish a cap of at least $250,000 for noneconomic damages. These reforms would be expected to reduce malpractice premiums, the practice of defensive medicine, and ultimately, health care costs.
Senator Kerry's health care proposal differs dramatically from Bush's in its approach to covering the uninsured and in the magnitude of the coverage it envisions. First, Kerry would extend coverage by Medicaid and the State Children's Health Insurance Program (SCHIP) to people who are currently ineligible for such coverage — single adults and childless couples living below the poverty line and parents with incomes of less than 200 percent of the poverty line. He has also proposed extending the same coverage to more children by raising the cutoff level to 300 percent of the poverty line. Instead of continuing today's federal–state matching arrangements in these programs, Kerry would have the federal government finance 100 percent of the costs of the expansion. Full federal funding is likely to result in higher rates of program enrollment.
Second, Kerry would create a Congressional Health Plan, modeled after the Federal Employees Health Benefits Program. The plan would allow small businesses with 50 or fewer workers that do not offer health insurance today to choose from the same health plans offered to federal employees and receive a refundable 50 percent tax credit. Larger employers could also participate in the Congressional Health Plan. In addition, the federal government would pay 25 percent of the premiums for uninsured persons between 55 and 64 years of age and 75 percent for the unemployed.
Third, the Kerry plan includes a federal "stop-loss" (reinsurance) program that would pay 75 percent of the health care claims each year that exceeded a dollar (loss) threshold (e.g., $30,000). This program is designed to reduce the cost of health insurance by 10 percent for qualifying firms. Kerry seeks to make insurance more affordable to employers and workers and to increase coverage through this approach.
Finally, Kerry has proposed reforms to our medical-malpractice system that would limit punitive damages and reduce the frequency of claims by requiring the use of a medical specialist to determine whether a claim is reasonable. He has also advanced an approach to reducing the costs of defending malpractice claims through the use of nonbinding mediation before a case comes to trial.
Both candidates' proposals build on the current system and avoid the broader restructuring and redistribution of coverage proposed a decade ago in President Clinton's health plan. There are, however, substantial differences in the scope and costs of the two proposals. Limiting the restructuring of the health care system may improve the political prospects of both approaches.
Source Information
From the Department of Health Policy and Management, Rollins School of Public Health, Emory University, Atlanta.
References
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