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Health Care: Be Ambitious

October 08, 2000

Health care reform--or more accurately, the debate about small parts of health care reform--was a key theme in last week's presidential debates. Unfortunately, both Al Gore and George W. Bush--rather than taking the risk of trying to explain the trade-offs inherent in any health care reform or of suggesting solutions to core health care problems--have been playing it safe, articulating what they think voters want to hear and advocating policies designed to appeal to core constituencies.

Both candidates have spent most of their time championing reforms that are insubstantial when compared with their own party's previous proposals--or even with current proposals now being seriously debated off the campaign trail by health care experts in both the Republican and Democratic parties.

For example, Bush's proposal to give a $2,000 tax credit for health insurance to families with annual incomes below $30,000 falls far short of covering the average family policy, which costs more than $6,000.

Similar in its lack of reach is Gore's proposal to expand the existing federal Children's Health Insurance Program over the next five years to cover all children in working-poor families with incomes below 250% of the federal poverty level. That's no more generous than what many states have already agreed to offer. Moreover, the children who are the focus of both candidates' health reforms are generally the least costly Americans to insure; young and relatively healthy, they are what health economists coolly refer to as "the low-lying fruit."

That said, the two candidates have taken distinct positions on how to guarantee basic health benefits and to control health care costs, which are soaring at more than three times the general rate of inflation.

In the long term, Gore's plan to add a prescription drug benefit and otherwise reform Medicare could prove fiscally wiser than Bush's Medicare reform plan. While Gore would boost overall Medicare spending by $356 billion over 10 years, more than twice the boost proposed by his GOP rival, Bush would funnel the new Medicare dollars to private insurers, an idea that has led to major cost-inefficiencies in the "Medigap" add-on insurance programs now offered by private insurers. Medigap plans have been models of waste, with high administrative costs and great instability wherein insurers enter and leave the market and change benefits from year to year.

The structural problems that Bush sees in Medicare would hardly be solved by his key reform: letting HMOs and other private insurers draw up benefits packages that are in their best economic interests rather than in the patient's best interest.

Gore, by contrast, would have regional government buyers competitively bid for a basic package of essential health care services--cost-effective drugs and other well-proven medical treatments. That would use the government's market clout to drive down costs, much as other developed nations do now.

Gore's plan also addresses another growing problem that Bush slights: the likely increase in the number of uninsured Americans as the baby boomers either voluntarily retire or are forced into retirement before age 65, the Medicare qualification age. Gore would provide a $3,000 tax credit to compensate for home care, adult day care and respite services, and he would allow people between 55 and 65 to buy into Medicare. Gore's plan could usefully protect aging baby boomers from losing health insurance when they retire or "get retired," but the Democratic candidate has to show voters that he could structure the new benefit in a way that would not sap the Medicare trust fund.

Most health care policy experts believe that Congress won't consider fundamental change until cataclysmic problems put the health care system on the verge of collapse. However, some experts say that an implosion of the system might be closer than many Americans think. They point to problems like the growing precariousness of emergency health care hospitals in big cities like Los Angeles, despite the booming economy, and to the fact that an economic downturn could easily send the uninsured rate skyrocketing.

The problems have grown so dire that even once-staunch defenders of the present health care system like House Majority Leader Dick Armey (R-Texas) now believe that fundamental reform is essential. As Armey puts it, the growing number of uninsured and underinsured Americans "is clearly a structural problem we ignore at our peril."

The best example of this new, emerging consensus on the need for structural change comes from a plan devised by two key members of the House Ways and Means Committee, Reps. Jim McCrery (R-La.) and Jim McDermott (D-Wash.), and presented in an interview published in this month's edition of the Atlantic Monthly.

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