Health Care and Politics I – The Republicans

No matter which side of the political fence you sit on, most Americans agree that our health care system is broken. Health care costs in the United States are approximately 16% of our gross domestic product (GDP), and they are expected to reach 20% of the GDP by 2017. That amounts to a staggering $4.3 trillion! Costs are clearly out of control, yet 47 million Americans remain uninsured.

Health care reform is an important issue of the 2008 Presidential election, and both Republicans and Democrats are proposing radical changes that will change the face of health care delivery in this country. Both sides of the political aisle aim to make health care more affordable and control escalating costs. Both Republicans and Democrats also plan for employers having a smaller role in medical benefits. The differences in how each side wants to achieve these goals are striking, however.

The Republican plan, lead by Presidential nominee Senator John McCain, creates a national insurance market that gives consumers more power and choice than we currently have. McCain plans on eliminating the tax break given to employees if their employer provides health care. This tax exclusion dates back to the 1940’s and originally allowed employers to compete for workers by offering tax-free benefits instead of higher salaries. This also allowed employers to provide better benefit packages than employees could buy with their own after-tax dollars.

Under McCain’s plan, benefits would be taxed as income, generating nearly $3.6 trillion in government revenue over 10 years. However, he proposes a $2500 tax rebate for individuals, $5000 for families, to compensate for the increased tax burden. This is a more equitable allocation of resources, as each American — employed or unemployed — receives the same tax rebate under the new plan, while the tax exclusion now in place is based on the employee’s tax bracket. On the other hand, while employees would now be able to buy the same benefit packages as employers, the incentive for employers to provide coverage would come to an end. Some experts believe that under McCain’s plan, employers would stop paying for heath care within 3 to 4 years.

Without employer-provided coverage, individuals could choose a plan that better meets their needs, age, health status, and stage of life. McCain’s plan deregulates insurance markets and encourages competition. He would allow people to purchase insurance plans across state lines, enabling us to shop for lower-cost, more comprehensive plans that suit each person or family’s needs.

John McCain also plans to change the way Medicare receives payment for services. Rather than fee-for-service reimbursement, he proposes payment for episodes of care, and payments based on outcomes. These changes would encourage broader reform in the health care system and promote accountability among health care providers.

Further, John McCain plans to speed up generic drug development, encourage prevention in health care and the management of chronic diseases, adopt malpractice reform, and enhance the use of health information technology. However, under McCain’s plan, most uninsured Americans would remain uninsured. The high prices of health insurance, even with a tax rebate, may be unaffordable to low-income workers, especially if employers discontinue providing benefits. To improve access to coverage, McCain proposes a “guaranteed access plan” to create insurance alternatives for people still unable to afford or obtain health care. Currently, 34 states operate similar plans for medically uninsurable residents. Sadly, these plans encounter high costs, limited benefits, and exclusions for pre-existing conditions and offer no real relief from commercial insurance plans.

The Republican’s health care reform package is far from perfect, but is an interesting comment on the Republican’s view of free markets. This plan aims to treat health care as a resource, not an entitlement, and encourage nationwide competition. The Republicans believe that an important step in controlling health care costs is to treat Americans, not just as patients, but also as consumers.

In health care and politics: The Democrats, we will examine the health care reform plan of Barack Obama and the Democrats.

References

J. Oberlander (2007). Presidential Politics and the Resurgence of Health Care Reform New England Journal of Medicine, 357 (21), 2101-2104 DOI: 10.1056/NEJMp078202

J. Oberlander (2008). The Partisan Divide — The McCain and Obama Plans for U.S. Health Care Reform New England Journal of Medicine, 359 (8), 781-784 DOI: 10.1056/NEJMp0804659

R. Steinbrook (2007). Election 2008 — Campaign Contributions, Lobbying, and the U.S. Health Sector New England Journal of Medicine, 357 (8), 736-739 DOI: 10.1056/NEJMp078151