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The Major Presidential Candidates on Health Care (Page 2)

How will the candidates slow or reduce the rising cost of health care?

Senator McCain Senator Obama
Cost Containment
  • Adopt malpractice reforms that limit frivolous lawsuits and excessive damages and provide safe harbors for practice within clinical guidelines and safety protocols.
  • Promote competition among providers by paying them only for quality and promote use of alternative providers (e.g., nurse practitioners) and treatment settings (e.g., walk-in clinics in retail outlets).
  • Invest in prevention and care of chronic illnesses.
  • Increase competition and reduce administrative overhead costs of private insurance by permitting sale of nationwide insurance (i.e., not regulated by the states).
  • Require drug companies to reveal the price of their drugs; allow re-importation of drugs; and encourage faster introduction of generics and biologics.
  • Provide consumers with more information on treatment options and require provider transparency regarding medical outcomes.
  • Invest $50 billion toward adoption of electronic medical records and other health information technology.
  • Promote insurer competition through the national Health Insurance Exchange and by regulating the portion of health plan premiums that must be paid out in benefits.
  • Improve prevention and management of chronic conditions.
  • Initiate policies to promote generic drugs, allow drug reimportation, and repeal the ban on direct price negotiation between Medicare and drug companies.
  • Pay Medicare Advantage plans the same as regular (traditional) Medicare.
  • Require hospitals and providers to publicly report measures of health care costs and quality.
  • Promote and strengthen public health and prevention.
  • Reform medical malpractice while preserving patient rights by strengthening antitrust laws and promoting new models for addressing physician errors.

Source: Kaiser Family Foundation, 2008 Side-by-Side Summary

Analysis

Health care bills are impacting individuals and businesses now more than ever.

  • Individual and family insurance premiums, deductibles and co-pays are skyrocketing.
    • Employees are paying $3,354 in premiums for family coverage.
    • The total cost for employer-sponsored family coverage now averages $12,680 a year, up 5 percent from 2007.
  • Americans are struggling to keep up with the rising costs: A recent report estimates that 57 million Americans live in families that have difficulty paying medical bills, and 43 million of those people have health insurance.
  • Health-care costs are hurting American businesses that face competition from abroad. Many manufacturers have not been able to expand or create new jobs due to rising health care bills. More and more manufacturers are shipping jobs overseas or scaling back operations as a result.
  • As for federal spending, the United States spends roughly 16% of its GDP on health care, which is 33 to 50% more than any other industrialized nation.

Looking at the Plans

Both candidates have a variety of cost containment measures in their plans.

It’s difficult to put an exact figure on how much each measure would save.

But we can look at the ideas underlying each measure.

First, both candidates want to adopt some version of medical malpractice reform.

  • While there may be merit to regulating medical malpractice lawsuits, it’s unlikely that these changes will have substantial savings over the long-run.
  • The Whatif Post has shown that medical malpractice lawsuits are not increasing costs significantly, and this recent study by the Center for Studying Health System Change backs up that finding.

Second, only the Obama plan talks about health information technology (HIT) as a way to cut costs over the long-term. The Senator gains points in our book for pledging $50 billion for the adoption and implementation of a standardized system.

  • As we showed in this As We See It article, a national HIT system would have significant savings, to the tune of $78 billion per year once fully implemented.
  • The high start-up cost of such a system is a major barrier to getting it up and running. We recommended that the federal government take a leadership role on this issue.

Third, when it comes to prescription drugs, both candidates would

Only the Obama plan would repeal the 2003 ban on direct price negotiation between Medicare and the drug companies, which could lead to huge savings on prescription drug spending.

  • Allowing Medicare to negotiate for lower drug prices would save federal health care dollars and lower the cost of drugs for individuals with private insurance because private insurance companies use Medicare pricing as benchmarks.

Fourth, that both candidates want to improve chronic disease prevention and management is a smart move when it comes to containing costs.

  • Low-income, uninsured individuals with chronic conditions tend wait too long before seeking medical assistance and then rely on the emergency room for care, which drives up costs system wide.
  • Of the 10% of patients that run up 70% of the U.S. health care bill, most are suffering from one of the following five diseases: diabetes, congestive heart failure, coronary artery disease, asthma and depression.

The two plans also make references to broader initiatives such as pay-for-performance (P4P) programs (McCain) and private insurance reforms (Obama) that go along with the proposals in the next section about how to improve health system performance overall.

How will the candidates improve health system performance?

Senator McCain Senator Obama
Improving quality/health system performance
  • Change provider payment to encourage coordinated care (eg., pay a single bill for high quality heart care rather than individual services).
  • Provide Medicare and Medicaid payments for diagnosis, prevention, and care coordination and bar payments for preventable medical errors or mismanagement.
  • Require transparency by providers with regard to medical outcomes, quality of care, costs, and prices.
  • Establish national standards for measuring and recording treatments and outcomes and use technology to share information on “best practices”.
  • Promote deployment of HIT to improve chronic disease care and to allow doctors to practice across state lines.
  • Where cost effective, employ telemedicine and clinics in rural and underserved areas.
  • Support an independent institute to guide comparative effectiveness reviews and required reporting of preventable errors and other patient safety efforts.
  • Reward provider performance through the National Health Insurance Exchange and other public programs.
  • Address health disparities, promote preventive care and chronic disease management, and require quality and price transparency from providers and health plans.
  • Require health plans to collect, analyze and report health care quality data for disparity populations, and hold plans accountable.
  • Expand funding to improve the primary care provider and public health practitioner workforce, including loan repayments, improved reimbursement, and training grants.

Source: Kaiser Family Foundation, 2008 Side-by-Side Summary

Analysis

We spend more money per person than any other industrialized nation on health care, yet access to efficient, affordable and quality care is often lacking.

The proposals selected by the candidates reveal their underlying beliefs about the role the government should play in reforming the health care industry.

Senator McCain favors a limited government role in regulating the health care system.

He advocates pay-for-performance (P4P) initiatives and payment reforms as a way to improve quality.

  • Pay-for-performance initiatives measure provider improvement on a number of indicators and offer financial rewards when improvement is shown.
    • P4P programs have had mixed results so far. They are often under funded, so that even when providers do show improvements, the financial rewards are miniscule.
    • Critics argue that P4P programs just encourage improvement on the selected indicators but do not help with larger reform or promote competition between providers.
  • Reforming payment options has widespread support.
    • Rather than paying providers for each procedure they perform (which encourages overwork and inefficiency), insurance companies would pay providers for a package of services per patient under McCain’s plan.
  • Critics argue that this might also lead to doctors being paid less than if they collected fees for every procedure performed.

Senator Obama favors greater government oversight and involvement.

  • One of the ongoing problems with our health care system is that expensive, newer technology, prescription drugs and procedures are overused by doctors, even when older versions would be just as effective.
  • This drives up costs, in the form of higher insurance premiums, for everyone.
  • Senator Obama’s plan to set up an independent, comparative effectiveness institute would allow the government to:
    • Collect information about the efficacy of newer procedures and
    • Essentially ration the overuse of these procedures through legislation
  • Senator Obama favors increased government involvement with insurance as a way to cut costs and improve quality.
    • Those insurance companies that provide coverage through the National Health Insurance Exchange would not only be required to cover all applicants, but they would also have to provide information about the quality and outcomes of their services.
    • Other private insurance companies would hopefully follow suit as a result of the competition generated by the Exchange providers.

Senator Obama also advocates a government role in expanding the primary care workforce.

  • As we explained in this post, the number of primary care doctors is diminishing as a result of low pay and high medical school bills for these doctors.
  • Making health insurance accessible will not guarantee that an individual can receive primary care unless the number of generalists increases.

Continue to page 3 to find out how much the plans will cost…

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