Serious problems in the nation's health system await the next administration
Tuesday, October 19, 2004
JEFF MAPES
Iraq will not be the only crisis that George Bush or John Kerry will have to deal with in the next four years. The winner of the presidential race also will be grappling with a health care system rushing headlong into serious crisis.
Just the bare facts ought to be dizzying enough to send either of them to the White House infirmary.
Costs are skyrocketing, to the point the United States is spending about 15 percent of the economy on health care, far more than any other industrialized country. Health insurance premiums have risen by 60 percent since 2001 -- more than 10 times the general rate of inflation.
The amount workers have to spend on those premiums is up by more than a third, if they're lucky enough to keep their coverage.
Perhaps most important, the number of uninsured has risen by more than 5 million since 2001 to about 45 million today. That's about one in six Americans younger than 65, when government-paid Medicare kicks in.
What the United States gets for all this money is questionable. America is 24th in the world in life expectancy, only 35th best in infant mortality.
A study by leaders at several academic health centers, including Oregon Health & Science University, reached this conclusion: "Despite this latest infusion of billions of dollars into health care, the house of American medicine remains severely distressed."
Finding the money
The two candidates have adopted hugely different approaches on this issue, one that affects every American.
Kerry, the Democratic presidential nominee and a senator from Massachusetts, has staked his domestic agenda on an ambitious and expensive health care plan aimed at slashing the number of uninsured while driving down health-premium costs for businesses and individuals. Kerry does this by using most of the money that he would raise in rolling back President Bush's cuts for taxpayers earning more than $200,000 a year.
In contrast, even the Bush campaign acknowledges the president's health care plans will cover a only a small fraction of those who don't have health insurance.
But aides say the president is instead focused on several proposals aimed at reducing the overall cost of the health care system, including ones aimed at curbing lawsuits and at spurring consumers to choose more cost-efficient health care. And that will eventually increase coverage by making it more affordable, the president argues.
These divergent approaches were a frequent topic in the final presidential debate, which was devoted to domestic issues.
"We have a fundamental difference of opinion," said Bush. "I think government-run health (care) will lead to poor-quality health, will lead to rationing, will lead to less choice."
The president added that the U.S. system "is the envy of the world because we believe in making sure that the decisions are made by doctors and patients, not by officials in the nation's capital."
Kerry had his own accusations.
"This president has turned his back on the wellness of Americans," Kerry said, contending that the system is beginning to fall part because of the rising number of the uninsured.
"Children across our country don't have health care," Kerry said. "We're the richest country on the face the of the planet, the only industrialized nation in the world not to do it."
In fact, Kerry doesn't simply try to adopt a government-run system, like the one in Canada and most other developed countries.
And, unlike President Clinton, who saw his plan for universal coverage founder in Congress a decade ago, Kerry would not require employers to provide health coverage to their employees.
Instead, he seeks a new set of incentives using some $650 billion over the next 10 years, which represents the bulk of the money raised from increasing taxes on the wealthy.
To increase coverage for the uninsured dramatically, Kerry would have the federal government pay the full cost for the poorest children in the country. Now states pay one-third the cost of Medicaid, the major health care program for the poor.
In exchange, states would have to agree to expand their coverage for lower income families.
At the same time, Kerry would provide tax incentives and subsidies to allow individuals to buy into the same federal health plan that covers members of Congress. That approach is aimed at increasing coverage for many people who don't work for large companies and have problems finding affordable insurance.
More money; wider coverage
Perhaps the most unusual wrinkle in Kerry's plan is that he wants the federal government to pick up much of the cost of catastrophic care. This "reinsurance" plan calls for the federal government to pay 75 percent of the cost of care over a specified limit, which would start at $30,000 in 2006 and rise to $50,000 in 2013.
Brad DeLong, an economist for the University of California at Berkeley who worked in the Clinton administration on its health care plan, said this proposal could have a major beneficial impact.
Now, for health insurers, "a large part of their winning the financial game is figuring out how to push the hot potato of someone who is really sick onto someone else," he said.
Under the Kerry proposal, DeLong added, insurers could worry less about avoiding the sickest patients and more on enrolling people in attractive health care plans that emphasize prevention.
By shifting catastrophic care to the federal government, the Kerry proposal also would lower premium costs and, his campaign claims, encourage more employers to provide coverage.
An independent study by the Lewin Group, a Washington-based consulting firm, found that Kerry's proposals would extend coverage to an additional 25 million Americans, compared with 8 million for the Bush plan.
"From the standpoint of the uninsured, the Kerry plan is significantly more ambitious than the Bush proposal," said Ken Rutledge, president of the Oregon Association of Hospitals and Health Centers.
Emergency room visits
That's an important point to many health care experts, who point out that even people with private insurance are financially affected by the uninsured. That's because those without insurance do get care -- but often only after they are sick enough to go to the emergency room.
For example, Rutledge noted that Oregon hospitals had about $490 million in bad debt and charity care last year -- an increase of 60 percent from the year before. And many of those costs end up being shifted on to private insurers, he said.
But a giant question hanging over the Kerry plan is its cost. The Lewin Group estimated that the Democrat's proposal would cost $1.2 trillion over 10 years, nearly twice what the Kerry campaign says. The American Enterprise Institute, a conservative think tank, puts it even higher, at $1.5 trillion.
Megan Hauck, deputy policy director for the Bush campaign, said Kerry's plan would involve the federal government in virtually every health insurance policy.
"He's spending billions of dollars on people who already have health insurance," she said, arguing that the reinsurance proposal would give the government tremendous clout over anyone who has a major medical procedure.
Jason Furman, the Kerry campaign's economic policy chief, strongly disputed the Lewin and Enterprise Institute estimates. He said the Lewin Group misunderstood Kerry's Medicaid proposals and was disavowed by the firm's founder. And he charged that the think tank was essentially working as an arm of the Bush campaign.
On the Republican side of the ledger, the president has passed his big health care reform. That was the Medicare bill that extended prescription drug benefits to the elderly, at a cost of more than $500 billion over the next decade.
In this campaign, the president's proposals are admittedly more modest.
Bush proposes that small businesses be able to escape state regulations by banding together in national associations that could provide cheaper insurance. He also wants to provide additional tax incentives to expand the use of health savings accounts.
Expanding health savings accounts
These accounts, which are a favorite of free-market advocates, were authorized by the Medicare bill. Similar to a 401(k), they allow people to save money tax-free that can be spent on health care. The idea is to match them with high-deductible insurance plans. That way, supporters argue, consumers have an incentive to shop carefully for such things as generic drugs and the most cost-efficient health plans.
"Health care costs are on the rise because the consumers are not involved in the decision-making process," Bush said in the last debate. He argued that health savings accounts are a "way to make sure people are actually involved with the decision-making process on health care."
Furman, from Kerry's campaign, argued that the savings account would mostly benefit the well-to-do and have little effect on those who are sick and need a lot of medical care.
The president also has pushed heavily for limits on malpractice awards, saying they also are responsible for rising health care costs. Though studies show awards are a small percentage of overall health care costs, the Bush campaign says lawsuits lead to other problems.
Hauck, the Bush policy expert, said doctors are forced to order unnecessary tests and avoid discussing quality-control issues with each other to avoid lawsuits. And the high cost of malpractice insurance has led to shortages in some specialties, particularly in rural areas, she said.
Kerry opposes limits on damage awards, saying that would be unfair to people who are seriously hurt by poor medical practices. Instead, he argues that expert panels should screen out frivolous cases.
Jeff Mapes: 503-221-8209; jeffmapes@news.oregonian.com
