Top Advisors to Obama and McCain Debate Possible Health Care Policy Changes in Next Administration

With an estimated 47 million Americans lacking health insurance, the subject of health care in the next administration has taken center stage as presidential nominees Barack Obama and John McCain approach Election Day. Senior health care advisors to both nominees hashed out the similarities and differences between the candidates’ stances at a jam-packed “great debate” at HSPH on September 12, 2008, that filled Snyder Auditorium, two overflow rooms, and part of the Kresge cafeteria.

A webcast of the debate is available on the NEJM web site. 

The two speakers — David Cutler, senior health care advisor to Democratic nominee Obama, and Gail Wilensky, senior health care advisor to Republican nominee McCain — both are health care economists. They said that the candidates agree on a number of strategies aimed at lowering the cost of medical care in the United States — including beefing up information technology, paying more attention to preventive care, and improving the evaluation of quality and cost-effectiveness — but added that the nominees’ ideas for helping to cover the uninsured and underinsured are sharply different.

Obama would retain the current employer-based health insurance system, while McCain would allow individuals to continue purchasing employer-sponsored plans with a new refundable credit or use the credit to purchase insurance that better suits their needs. McCain would end the federal tax exemption for the portion of health insurance paid by employers, requiring individuals to report the amount as taxable income.

Obama Plan in Brief

 

“Senator Obama says we should build on what works, not tear it down,” said Cutler, Otto Eckstein Professor of Applied Economics at FAS, in his opening remarks during the event.

Obama’s goal is to insure 98 to 99 percent of all Americans, in part by using money saved by repealing the Bush tax cuts for the wealthy, to offer federal subsidies to low- and middle-income residents to help them buy coverage, Cutler said. But the system would continue to be employer-based for most Americans.

To make sure individuals get the coverage they need, the Obama plan would prohibit insurers from denying applicants based on preexisting conditions, he said.

The Obama plan would mandate that all children be covered, but the Democrat would only seek to force all adults to get insurance if the voluntary approach were to fail, he said.   

“You have to make it affordable and accessible,” Cutler said. “Once you do that, the vast majority will get coverage.”

Obama would also mandate that all businesses — except for small ones — offer coverage, or pay an assessment that would help people buy insurance through either a private plan or a new government program similar to Medicare, if they are unable to get coverage through their employers.

McCain Plan In Brief

 

By contrast, McCain seeks to focus on strategies that will slow spending growth and provide patients with the opportunity of more choices to buy the health care plans that meet their needs, said Wilensky, a senior fellow at Project HOPE, an international health education foundation. Wilensky is also former Administrator of the Health Care Financing Administration. McCain proposes to reform the tax code so that families will receive a refundable credit of $5,000 ($2,500 for individuals), which they can use to help pay for their employer-sponsored plan or to buy any other plan. Offsetting the new refundable credit, employees would be required to include any employer contributions to their health plans as part of their taxable income.

McCain’s approach would allow Americans to continue buying their employer’s plans since most large and mid-size employers would likely continue to offer coverage to attract good workers, said Wilensky. But importantly, she added, the approach would not limit help with purchasing insurance to where an individual works.

“If you tie insurance to employers, in a mobile labor economy, you are ensuring disruption,” Wilensky said. She added that this also tends to hide the expense of coverage and helps drive up costs, which is the single biggest driver of increased numbers of uninsured.

McCain also proposes creating a national insurance market to make insurance more competitive. People would be able to cross state lines to buy their insurance, and individuals and small businesses could use any association or organization to purchase their insurance. This would provide more choices, Wilensky said, as some states do not require their plans to cover as many benefits as others.

McCain would not mandate insurers to offer plans to those with pre-existing conditions, Wilensky said. Instead, he proposes federal funding to help states pay to set up pools to insure those with high medical costs, since such individuals may not be able to get it on their own or only at very high cost.

While Obama has set a goal of insuring 98 to 99 percent of Americans, Wilensky said McCain’s objective has not been framed that way. His objective is to provide financial means so that people can buy insurance and give them access to lower-cost insurance, she said.

BIPARTISAN EFFORTS

 

Despite disagreement on the way health insurance should be made available, both economists said that they are optimistic something can get done in the next Congress, no matter who wins the White House, if a true bipartisan effort is made.

“We have to learn to grab the opportunities,” Wilensky said, claiming that McCain’s plan, in contrast to some past Republican efforts, “is a very serious proposal.”

Cutler agreed that it will take a bipartisan effort. “I see a lot of interest across the country, from both Democrats and Republicans,” he said.

But both advisors made it clear that the key to solving the problem of the uninsured ultimately rests on reducing the cost of care.

“We need a radical transformation of the system,” Cutler said.

Both advisors said improving information technology is critical to free health care providers to spend more time on patient care rather than on paperwork.

Also important are efforts to determine which procedures are effective and which ones are simply a waste of money, they agreed.

In addition, public health programs must focus on reducing obesity and smoking, the two agreed.

Implementing efforts such as these and others could reduce the cost of care by $2,500 per family per year, Cutler said.

“The Great Debate: Health Care in the Next Administration — Obama vs. McCain” was sponsored by HSPH and the New England Journal of Medicine (NEJM). The debate was moderated by Arnold Epstein, chair of the HSPH Department of Health Policy and Management and an editor at NEJM. Panelists were Karen Davis, President, Commonwealth Fund; Jon Kingsdale, Executive Director, Commonwealth Connector; and Thomas Lee, Network President, Partners HealthCare.

Michael Lasalandra.  Photos by Steve Gilbert.