Health Care Plan Details

John McCain would end the tax-free status of employer-paid health insurance premiums, replacing it with a tax credit to offset the cost of insurance -- making it easier to buy individual health plans, even for people who get insurance through their job. He would help states establish high-risk pools to subsidize insurance for people with pre-existing conditions. And he proposes a number of measures to reduce health-care costs while improving treatment.

Rival Barack Obama would make reasonably priced, comprehensive, government-sponsored health insurance available to every American. Obama would cultivate insurance industry reform through a National Health Insurance Exchange, where individuals could buy coverage, including the government plan, that meets generous standards. Obama would target subsidies to low-income people buying insurance through the exchange. Small businesses would get a tax credit to offset premium costs, while bigger companies that do not provide health insurance would face new taxes to help underwrite the government program. Parents would be required to insure their children. Like McCain, Obama would undertake to lower the cost of and improve care, and also supports a number of other health initiatives.


MCCAIN PLAN DETAIL
McCain promises to "provide access to health care for every American," by "restor[ing] control to the patients themselves."

Restructuring insurance: The central strategy of the presumptive Republican nominee's plan is to break the government-sanctioned monopoly for employer-sponsored health insurance: he would end the exclusion that protects company-paid insurance premiums from being taxed as employee income. Instead, everyone would get a refundable tax credit -- $2,500 for individuals and $5,000 for families -- to reimburse the cost of insurance. Those happy with the insurance available from their job could keep it. Dissatisfied employees, or those without insurance, could buy the coverage they prefer, from any insurer anywhere in the country. (Employers, too, could purchase insurance across state lines.) If insurance premiums were cheaper than the credit, the difference would be deposited in a Health Savings Account with expanded benefits.

Eventually, as more people bought their own insurance tailored to their needs, premium costs in the individual marketplace would presumably fall. Those with pre-existing conditions who remain shut out of that market could find coverage in a state-sponsored high-risk pool called a "Guaranteed Access Plan," with "reasonable limits" on premiums and subsidies for low-income Americans.

Lowering costs and improving patient care: Meanwhile, McCain proposes several initiatives to reduce medical costs, including:
Cutting Medicaid and Medicare costs
Permitting the import of safe prescription drugs and faster introduction of new generics
Emphasizing healthy habits, prevention, early intervention, and smoking cessation programs to lower the costs of chronic disease. McCain supports more federal research dollars to study chronic disease care and cure
Promoting coordinated care
Encouraging states to experiment with alternative forms of access, innovative Medicaid arrangements and insurance policies, and new licensing schemes for providers
Promoting rapid deployment of information systems and technology that allows doctors to practice across state lines
Making medicine more transparent by publicizing information on treatment options and physician and provider records, particularly about medical outcomes, quality of care, costs and prices
Tort reform to protect from lawsuits doctors who follow clinical guidelines and adhere to safety protocols.
Other health initiatives: McCain backs state experiments, particularly those based on patient choice, that provide long-term care to seniors. McCain would "advance" federal research into autism, and supports assistance for children who have it.

The McCain Record: It's "variable," says Dr. Georges Benjamin, the executive director of the American Public Health Association, which lobbies for universal coverage and a robust public health infrastructure, among other priorities. Last year, McCain voted with the organization 67 percent of the time; in 2005, it was 20 percent. Most recently, the Arizona senator opposed the SCHIP bill that some say would've expanded the children's health program. But, Benjamin cautions, the scorecard "doesn't give any credit for committee work, doesn't give any credit for behind the scenes work." On a bill to give the Food and Drug Administration regulatory authority over tobacco, for example, "We worked very productively with Sen. McCain's office." And, he adds, "he's been supportive of health research."


OBAMA AGENDA, IN DETAIL
Democrat Barack Obama's proposal is as at least as sweeping as his opponent's, but in a different way. It is certainly much more elaborate, detailed in a 15-page position paper. Obama pledges to "tackle the root causes of health disparities" in ways big and small.

Restructuring insurance: Obama would create a national health plan available to all Americans, including the self-employed and small businesses. The plan would feature comprehensive benefits, similar to those offered to federal employees (including members of Congress), and would guarantee eligibility. The insurance would be portable and affordable. Participating insurance companies in the new public program would be required to demonstrate that they meet standards for quality, health information technology, and administration.

Additionally, Obama would develop a National Health Insurance Exchange, a venue for individuals to purchase insurance, including the new public plan. The exchange would offer transparency, as well as rules and standards for participating private insurers. (Exchange plans, for example, could not deny coverage or base premiums on health status, and would have to be at least as generous as the public plan.) Meanwhile, all insurers, even those not part of the exchange, would have to dedicate a "reasonable share" of premium revenue to patient care rather than administrative costs or profit, and disclose that share. The exchange, in conjunction with the new public plan and other federal insurance programs, would also exert pressure on the medical industry by "aligning incentives for excellence" -- that is, it will reward providers for "achieving performance thresholds on outcome measures," rather than paying them for the amount of services performed.

Small firms would get a refundable Small Business Health Tax Credit of up to 50 percent against premiums they pay on behalf of their employees. Larger companies that "do not offer or make a meaningful contribution to the cost of quality health coverage" would have to pay a percentage of their payroll toward the costs of the national plan. Obama would reimburse employer health plans for a portion of the catastrophic costs they incur above a threshold, if the savings lower the cost of workers' premiums.

Obama would mandate health care coverage for all children, and expand eligibility for the Medicaid and SCHIP programs. Those who cannot afford coverage for themselves or their children but do not qualify for these government programs would get subsidies to buy insurance through the exchange.

Finally, individual states could continue to experiment with reform on their own, provided they meet the federal plan's minimum standards.
Lowering costs and improving care: Obama proposes a number of initiatives to improve medicine while lowering costs:
Reducing Medicare costs by allowing the government to negotiate drug prices in bulk, increasing generics, and slashing excessive subsidies under the Medicare Advantage program
Permitting the import of safe prescription drugs and faster introduction of new generics
Promoting prevention and wellness with assistance to schools, rewards for employers, and additional funding for public health training; supporting disease management programs to treat chronic conditions
Investing $50 billion over five years to deploy health information technology systems (including electronic medical records) and requiring a gradual implementation, while protecting patient privacy
Making medicine more transparent by publicizing information on treatment options and physician and provider records, particularly about medical outcomes, quality of care (including preventable errors), costs and prices
Establishing an independent institute to direct investigation into comparative effectiveness, and promoting "new models for addressing errors that improve patient safety, strengthen the doctor-patient relationship and reduce the need for malpractice suits"
Strengthening antitrust laws to prevent insurers from overcharging physicians for their malpractice insurance.

Other health initiatives:
Increase funding for biomedical research, and improve coordination both within government and with outside partners
Fight AIDS worldwide
Strengthen and improve enforcement of the Americans with Disabilities Act, and make Medicaid and Medicare more accessible to the disabled
Support parity for mental health coverage
Reduce mercury contamination in waterways, and require lead-safe child care facilities within five years
Fund at least $1 billion in autism research and increase funding for the Individuals with

Disabilities Education Act
The Obama Record: Obama has voted consistently to strengthen and increase access to government public health initiatives -- he voted with the APHA 100 percent in 2006 and 2007. "He's been very good on prevention and public health, on the state level as well as nationally," says the APHA's Benjamin. But, he adds, Obama isn't perfect: on the organization's 2005 scorecard, "he got an 80."


WHAT THE EXPERTS SAY ABOUT THE MCCAIN AND OBAMA PLANS:
While the Tax Policy Center calls both candidates' plans for insurance reform "highly progressive," it also concludes that both plans would be very expensive, and neither could come near to providing universal coverage -- though Obama's would come much closer.
In what it calls "a very preliminary analysis," limited by a lack of specifics from the candidates, the Tax Policy Center finds that Obama's plan would cost $1.6 trillion over 10 years, but would insure an additional 34 million people in 2018. However, another 34 million people will still lack coverage. (The Center projects that without reform the ranks of the uninsured will rise to 67 million by 2018.) By contrast, McCain's plan to replace the income exclusion with tax credits would cost $1.3 trillion over 1 years, yet access to insurance would peak five years into the program, with only about 5 million people getting new coverage. That's because the Center assumes that McCain's credits will be tied to the Consumer Price Index, which does not rise as quickly as health-care costs. (This is just a guess; McCain's campaign hasn't said how -- or if -- its credits would be indexed. But President Bush proposed replacing the income exclusion for insurance with a tax deduction indexed to the CPI.) As the credits fall behind insurance costs, people would drop out -- after 10 years, the increase in the insured would be just 2 million. Meanwhile, the total number of uninsured would rise to nearly 65 million. If McCain's credits were indexed to medical prices, they would cover more people, but the plan would cost more, too.

The Tax Policy Center projects that this "modest" increase will mask a large shift in the way people buy insurance. "Many small- and medium-sized employers would choose to drop coverage if their employees could obtain substantial tax credits for nongroup coverage," according to the center. "Also, the decline over time in value of the credit relative to premiums would reduce employers' incentives to offer insurance."
The conventional wisdom among health-care analysts is that individual and group insurance markets cannot stand equally side-by-side -- young and healthy people will leave group plans for cheaper individual policies, making the rump group left behind more expensive to insure -- and this could account for part of the disparity in outcomes between the two proposals. "The main problem with the McCain plan is that if you're going to use the individual market, you've got to regulate it," says Jonathan Oberlander, a health-care policy professor at the University of North Carolina at Chapel Hill. "You have to replace the employer market with some sort of pooling, and the individual market doesn't do that. A lot of people who are sick are not going to be able to get insurance." Oberlander notes that 34 states already have high-risk pools similar to what McCain would establish, and "they have a very mixed record. Even with the subsidies, the insurance is still expensive. There are benefit limits and there are pre-existing conditions limits." (The Tax Policy Center says that McCain's high-risk pools "could either turn out to be ineffective or very expensive.")

Theoretically, the same sort of cherry-picking, as it's called, could occur in Obama's National Health Insurance Exchange. But it's less likely, says Oberlander, because the additional regulation will effectively lead to something closer to community rating, where people pay average prices and the risks are spread across a large group of people. "They are trying to reform the individual market to make it like group health insurance." Still, he says, it will be hard to know how many people will actually get insurance under Obama's proposals without knowing the size of the subsidies and the terms of the new plans -- which the campaign has not released (or perhaps even determined).

The Tax Policy Center calculated that if the growth in premium cost were to slow by 1 percent a year, the cost of the plans would fall to $1.2 trillion for McCain and $1.4 trillion for Obama. But the center did not attempt to estimate the effect of the candidates' health initiatives on the cost of care, and Oberlander doubts that the initiatives offered by the candidates will do much either to lower costs or improve care, at the least in the beginning. "These things are all worth doing," he says. "But I don't think they'll save much money in a president's first term, and only modest amounts in a second term -- if they save anything at all." On the question of efficacy, "all of these things are really unproven. Electronic medical records might improve health, but it depends on how it's implemented. Disease management has a mixed record. It's no magic bullet. It's aspirational."
The National Federation of Independent Business, which has lobbied for 20 years for health-care legislation amenable to small business, will not endorse either candidate's agenda. However, the principles for reform enumerated at its dedicated health-care site, FixedForAmerica.com, as well as the organization's earlier positions on legislation, more neatly align with John McCain's proposals than Barack Obama's.