• Assessing The Candidates' Healthcare Plans - Does It Matter?
  • November 18, 2008 | Author: Thomas S. Campanella
  • Law Firm: Baker & Hostetler LLP - Cleveland Office
  • Amid the election hoopla and well-founded handwringing about the economy, healthcare reform appears to have taken a back seat -- at least temporarily. However, with more than $2 trillion of the nation's spending outlays going to healthcare, reform is sure to figure prominently as a new administration and Congress begin to wrestle with the federal budget mess. While neither candidate advocates the extent of government regulation envisaged by the Clinton Health Security Plan, their proposals reflect a broader philosophical divide over the role of government in healthcare.

    Sen. John McCain's (R-Ariz.) plan aspires to create a vigorous individual insurance market through a combination of incentives and free market initiatives. Using a refundable tax credit approach ($2500 for individuals; $5000 for families) for health insurance paid directly to the provider of coverage (i.e., private insurer or employer), the McCain plan seeks to encourage individuals to purchase healthcare insurance on their own, thus engaging them to take ownership of benefit decisions for their families. It is anticipated that making the individual a prudent purchaser of healthcare benefits will result in an overall positive impact on quality, access and cost. To further facilitate this approach, the McCain plan also would deregulate the non-group insurance market by permitting the purchase of individual policies across state lines.

    Sen. Barack Obama's (D-Ill.) approach to healthcare reform would be to put government in more of a facilitator role. Using quasi-mandates, such as requiring insurers to cover children up to 25 years of age and prohibiting coverage denials based on pre-existing conditions, the Obama plan would augment and reorder the ground rules for insurance coverage via federal regulation. The centerpiece of the Obama plan is a national health insurance exchange that would provide individuals who cannot obtain healthcare benefits through their employers, and small businesses with the opportunity to purchase coverage from a range of private insurance options. Additionally, a new public plan functioning as a risk pool facilitated by the government would be established for covering the poor. Both plans would be based on benefits currently available to participants under the Federal Employee Health Program (FEHP).

    Financing their proposals remains a challenge for both camps as neither approach is without controversy. The McCain plan would eliminate the tax exclusion for employer payments for employer-sponsored coverage. As a result, the cost of employer-sponsored coverage less the proposed tax credit would be imputed to employees as income. By contrast, the Obama plan would require all employers to offer employee health benefits or contribute to a new public program ("pay or play"). While it is estimated that both plans would cost more than $1 trillion over 10 years, analysis and reviews of the McCain and Obama plans differ (sometimes wildly) regarding the effectiveness of each candidate's proposal for reducing the ranks of the uninsured.

    Given that public funds comprise nearly 50 percent of total healthcare spending, there will be extreme pressure for the new Congress to squeeze every healthcare dollar possible from the federal budget. In theory, the current economic turmoil, the deficit and the funding of two wars could force some tough decisions about healthcare spending that need to be made. The results of this action could well result in substantive healthcare reform—just not the kind either candidate currently envisions.