Most Americans are willing to pay higher taxes to make health care reform possible, but, like politicians, they disagree about what reforms should take place.

Should the government mandate a health care plan or should insurance carriers do a better job of providing coverage?

The Democrats, led by Presidential candidate Senator Barack Obama, plan to rely on a “play or pay” system that would improve access to insurance and move the United States toward universal coverage. This system builds on the predominating employer-sponsored insurance coverage that has been a cornerstone of the American workforce since the 1940’s. Under the Democrat’s plan — which is a resurgence of the plan of choice for many Democrats in the 1990’s — employers would be required to offer employees insurance coverage or pay a tax.

This plan would retain private insurers, but would heavily regulate the industry to ensure that all Americans had access to coverage. Provisions are in place to allow currently insured Americans to keep their current coverage, if they so choose. Under Obama’s plan, Americans without access to other group coverage could either choose a new government health care plan that would be similar to Medicare, or choose a private insurance option from a national health insurance exchange.

Obama also plans to establish purchasing pools for businesses to increase access to coverage, provide subsidies to low-income families for the purchase of health insurance, and expand current government programs, like Medicaid and the State Children’s Health Insurance Program to cover more low-income Americans. Further, regulations would be in place to prevent insurance companies from denying coverage for pre-existing conditions or charging high premiums to sicker individuals.

The impact that Obama’s plan might have on coverage is impossible to assess. It depends on the extent of subsidies offered, prices of premiums, and total payroll tax offered to employers. For example, if the employer’s tax is set too low, many employers would likely choose to pay it rather than continuing to offer coverage, and enrollment in a national plan could be substantial – substantial enough that the funds may not exist.

Also, like McCain’s plan, Obama’s plan may not cover all of the uninsured Americans today. The Republican’s plan offers no mandates for coverage, but the Democrats do mandate coverage for children. With no mandate on adult health care, many uninsured adults could remain without health insurance. (Obama has not ruled out a mandate for adults in the future if the plan does not lead to universal coverage.)

The Democrats plan to finance this new health care system by repealing tax cuts adopted by the Bush administration for families making more than $250,000 annually. (Interestingly, the Congressional Budget Office already plans on these tax cuts expiring in 2010, so their expiration may not generate the necessary $50 to $65 billion to finance the program.) The tax paid by employers who do not offer coverage would also help fund government coverage.

Like the Republican plan, the Democrats also plan to control costs by encouraging the use of electronic medical records, promoting disease management, emphasizing prevention and public health, and paying providers based on health outcomes. All of these are certainly laudable goals for either side of the political aisle, but it is unlikely that any of these measures will significantly reduce costs in the short run.

Senator John McCain and the Republicans support a system of free markets and deregulation, while Senator Barack Obama and the Democrats support employer mandates and new regulation as a means of reforming our broken health care system and expanding access to health coverage. Both of the candidates promote a platform of health care reform, but there are certainly no guarantees that any reform will come about in a timely fashion. Even if he can incite reform, the likelihood of a new system looking anything like either of these two plans is remote. Both plans still leave behind uninsured Americans and lack significant funding sources. Change is coming, but which change is best for all Americans?

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