|
 |
 |
 |
 |
 |
 |
 |
 |
|
Commentary and Outline: Senator Frist's Health Reform Proposal
Jeff Lemieux revised July 19, 2004 (to correct a typographical error) In a speech yesterday, Senate Republican Leader Bill Frist outlined a provocative health reform proposal. The proposal is bold and interesting -- a sharp contrast with the Senate Republican task force proposal, which was predictable and bland. Don't be fooled. If the Senator had been satisfied with that task force's recommendations (or with President Bush's health proposals, for that matter) he would not have been compelled to offer a plan of his own. Senator Frist's proposal shares several characteristics with Senator Kerry's campaign proposal: 1. Both are expensive. Senator Frist's proposal would be nearly as expensive as Senator Kerry's proposal (although his speech yesterday didn't mention a price tag). Frist proposes "generous refundable tax credits to all Americans with incomes below 200 percent of poverty." That would cost a lot and would do a great deal to shore up health coverage and reduce the number of uninsured. 2. Both are at least partially "paid for." The cost of Senator Kerry's proposal would be offset by rescinding tax cuts for people making over $200,000 a year. Senator Frist would cap or otherwise limit the tax exclusion for employer-paid health benefits. Of course, either funding approach would be politically difficult -- perhaps even unrealistic in the short run. But both are the right thing to do. (Capping the exclusion makes the most sense in the context of broad-based, refundable tax credits for health coverage, including coverage purchased through employers.) 3. Both include tax credits and expansions of public programs. Senator Kerry embraces individual tax credits and envisions a large expansion of public programs. Although the details differ, Senator Frist proposes a similar, hybrid approach to expanding coverage for the poor and near-poor. 4. Both address risk sharing or risk aggregation. In Kerry's plan, employers and health plans would be eligible for a subsidy reflecting the cost of their highest-risk enrollees. This would reduce health plans' potential losses from high-cost cases and lower the incentive for "risk avoidance." It should help high-risk people (or businesses with high-cost employees) obtain and maintain health coverage. Senator Kerry would also create new group purchasing pools patterned after the federal employees' health system. Small businesses that join the pools would receive a tax credit as an incentive to join the pools. Senator Frist would create a government-sponsored enterprise called "Healthy Mae" to help health plans manage the risk of high-cost enrollees. (The name is borrowed from "Fannie Mae," the public-private organization that bundles home mortgages for investors, thereby helping mortgage lenders manage their risk.) In essence, Frist's "Healthy Mae" proposal is a public-private version of Senator Kerry's direct subsidy idea. However, "Healthy Mae" would probably be less expensive than Senator Kerry's direct subsidy proposal, and it would be less likely to lead toward government regulation of health benefits. Senator Frist's proposals for risk aggregation or "pooling" are murkier. Frist would mandate that higher-income people obtain at least "catastrophic" or high-deductible health insurance (or else lose a tax benefit). According to his plan, this would "expand the size and quality of the insurance risk pool." In general, Frist's coverage mandate is an excellent idea. However, in most states, the new coverage would only improve risk pools if it was purchased through some sort of group -- an employer, an association, or a group purchasing pool -- not in the market for individual coverage. Moreover, Frist's proposal for Association Health Plans (AHPs) is very contentious -- it could actually hurt risk pools for small businesses in some states. It is not a substitute for broader-based pooling systems for small businesses. There are some other similarities between the Frist and Kerry plans. Both emphasize quality improvement efforts and information technology, including electronic medical records. Both would address medical malpractice to some degree. But Frist's efforts would almost certainly restrict lawsuits to a greater extent, and would thus save more money. Of course, there are differences of emphasis. Kerry's plan stresses employer-based coverage, and Frist's highlights catastrophic coverage, with spending accounts for routine health needs. Frist's plan goes beyond Kerry's by addressing long-term care. Frist's rhetoric sometimes goes "over-the-top" when he implies that a move toward catastrophic coverage wouldn't annoy doctors and hospitals as much as other health plans. In fact, if catastrophic health plans want to be profitable and popular with their enrollees, they will have to negotiate prices and fees with health providers just as diligently as more generous health plans. But on balance, Senator Frist's proposal lays down a very important marker in the health reform debate. He has put forward a comprehensive center-right proposal to complement Senator Kerry's center-left approach. His plan reflects themes of mandatory coverage and switching the tax preference for health care toward refundable tax credits that were explored earlier this year by one of the top health policymakers in the House -- Rep. Bill Thomas, chairman of the Ways and Means Committee. Of course, partisan stalwarts will parse both the Kerry and Frist proposals and attempt to accentuate their differences. And the details of how even similar visions are implemented do matter. Neither proposal is sufficiently detailed for policy analysts to be sure how it would work. Ultimately, liberals will be suspicious of proposals whose implementation could undermine employer-based coverage or public programs. Conservatives will always be cautious about proposals that could restrict private-sector innovation in health care, or cost taxpayers too much. But for now, the larger imperative is clear. Policymakers should concentrate on similarities and potential for compromise, not differences. Lawmakers on both sides of the aisle should carefully consider Senator Frist's new proposal, as well as Senator Kerry's health plan. Between their two plans, Senators Kerry and Frist are attempting to rise above the far-right, far-left partisanship and political rigidity that have historically stymied progress on health coverage and costs. SENATOR FRIST'S HEALTH CARE SYSTEM 2014 VISION (from www.frist.senate.gov, July 12, 2004) Universal Electronic Health Records Policy Goals. A patient-centered system absolutely demands an Electronic Health Record. To empower wired consumers with information, choice, and control, we need to harness the explosive power of information technology. Electronic Health Records must: (1) contain all necessary health information—from medical history to billing information; (2) be accessible from any internet portal; and (3) be capable of seamless use among all hospitals, doctors’ offices, and clinics. Widespread adoption will reduce errors, improve quality, eliminate paperwork, and improve efficiency. Once fully implemented, this will dramatically reduce cost. Specific Proposals 1. Within 10 years, all Americans should have Electronic Health Records that are individually owned, and privacy protected. 2. Government must establish universal interoperability standards within two years that allow the seamless flow of health information across computer systems. 3. All government health benefit programs, such as the Federal Employees’ Health Benefit Program (FEHBP), the Department of Veterans’ Affairs Health Care Program, and the Department of Defense Tricare Program, must have interoperable Electronic Health Records in place within 5 years-- by 2009. 4. Providers will be encouraged to rapidly deploy Electronic Health Records through payment incentives. The initial focus will be on academic health centers (the seat of health care training) and large hospital systems (who best capture economies of scale). Vulnerable patient populations cannot be left behind in this effort and, therefore, safety net providers will receive special attention as we develop this capability. Focus on Health Coverage for Children and Low-Income Americans Policy Goal. Despite Medicaid expansions and implementation of the Children’s Health Insurance Program (S-CHIP) in 1997, there are over nine million uninsured children. Nearly seven million of these children live in families with incomes below 200 percent of the federal poverty line. Over 16 million parents and grandparents with family incomes below 200 percent of poverty also lack coverage. We must provide more generous assistance to ensure all low-income Americans have affordable access to coverage, with a priority on helping low-income children-- and their parents—get health insurance coverage. Specific Proposals 1. Enroll all 5.6 million eligible children in Medicaid and the State Children’s Health Insurance Program (S-CHIP) within 24 months through a combination of streamlined enrollment procedures, increased financial outreach incentives, and a new national “Cover the Kids” enrollment campaign. 2. Provide generous refundable tax credits to all Americans with incomes below 200 percent of poverty, beginning with low income uninsured parents and children, that do not qualify for Medicaid or S-CHIP. These tax credits could be used to buy into either public or private programs. In addition, those low income people in public programs should be allowed to enroll in private coverage if they choose. 3. Double the capacity of our safety net Community Health Centers over the next 10 years. This will enable us to provide neighborhood-based primary and preventive care services to over 20 million uninsured and needy children and families by 2014, in about 8,000 new and expanded [sites]. 4. Invest more in prevention and public health. Smoking is the leading cause of preventable death in the United States, causing more than 440,000 deaths each year and direct annual medical costs of $75 billion. The prevalence of obesity, now the second-leading cause of death in the United States, has tripled in America’s children since the 1960s. Along with it, we have seen a dramatic rise in diabetes, heart disease, and disability-related illness. It is estimated that one-third to one-half of all new childhood diabetes cases are type II—the kind associated with obesity. If we can stop bad behavior before it starts, we can save lives and save money. Increase Personal Responsibility Policy Goals. Higher income Americans have a personal and societal responsibility to cover themselves and their children. Twenty percent of uninsured are from families with incomes above $50,000. Over two million uninsured children live in families with incomes above $40,000. We can expand the size and quality of the insurance risk pool and reduce the number of uninsured if these individuals get health coverage. Specific Proposals 1. Higher income Americans should be encouraged, through tax policy changes, to enroll themselves and their children in catastrophic high-deductible insurance policies. Provide Affordable Health Coverage for All Americans Policy Goals. Health care must be affordable for all Americans. At the same time, cost-saving measures can go a long way toward improving health care quality and value and reducing waste and inefficiency. Specific Proposals. 1. Phase in a limitation on the employer tax exclusion and allow people who purchase individual health insurance coverage to fully deduct (before taxes) the cost of their insurance. This means that people will be treated the same under the Tax Code whether they buy insurance on their own or through an employer. This would replace the current inflationary and regressive Code provisions with a more equitable system. 2. Make insurance more affordable and more consumer-friendly. Give individuals and small businesses more purchasing clout through state and regional purchasing pools and Association Health Plans (AHPs). 3. Establish a new national publicly-chartered, privately-run “Healthy Mae.” This would help insurers more broadly share risk, reduce administrative costs, and create a vibrant secondary market for health insurance just as we have done for home mortgages. It would make health insurance—particularly in the individual market-- more stable and affordable. 4. Pass medical litigation reform and patient safety legislation to stop the litigation lottery, curb frivolous lawsuits, and reduce medical errors. Ultimately, set up an expert medical court system with transparent decisions, limits on punitive damages, and scheduled compensatory damages to provide rapid relief to truly injured patients (instead of trial lawyers) and hold negligent doctors accountable. 5. Increase transparency and realign payment incentives to improve quality and efficiency. Some initial steps include fully funding government comparative effectiveness research and expanding Medicare pay-for-performance demonstration programs. Encourage Long-term Care Security Policy Goals. We have taken important steps forward to guarantee health security for our seniors in the Medicare Modernization Act. We have guaranteed millions of Americans affordable prescription drug coverage and access to preventive benefits, such as annual physical examinations. We need to build on this progress to provide further security for the growing long-term care needs of our nation. The situation is bad, and getting worse. The need for long-term care services will increase as our nation ages and life spans lengthen. Yet, retirees have too few savings to meet these needs, and must spend almost all their life savings to qualify for Medicaid. The corresponding burden on Medicaid is huge. One-third of Medicaid dollars go to long-term care—dollars that are not being spent on health insurance for poor adults and children. Specific Proposals 1. Provide a full above-the-line deduction for private long-term care insurance premiums. 2. Establish tax-free Lifetime Health IRAs, just like IRAs and 401(k)’s. These accounts can be used to save and pay for health care needs in your retirement. 3. Provide financial support for family caregivers. Translating Science into Cures Policy Goal. Translate promising biomedical research into tangible cures that help preempt illness, prolong life, reduce pain and suffering for Alzheimer’s, Parkinson’s, cancer, diabetes, and other illnesses. During the next decade, medicine itself will change through genetically-based diagnostic tests and personalized, targeted pharmacologic treatments that will enable us to move beyond prevention to preemptive strategies. A whole new frontier of medicine will unfold where we focus on delaying the onset of illness in a pre-symptomatic phase of many diseases such as cancer, cardiovascular disease, and Alzheimer’s. Specific Proposals 1. Target more federal research dollars to an increased commitment to translational research. Links: Senator Frist's Health Proposal (July 12, 2004) Senator Kerry's Campaign Health Proposal (undated, but originally published May 16, 2003) Senate Republican Task Force on Health Care Costs and the Uninsured Detailed Policy Proposals (May 11, 2004) Centrists.Org Commentary: Cover the Uninsured? Not This Week (May 11, 2005) Centrists.Org Speech: Understanding Health Coverage Policy in Washington -- The Borg vs. the Klingons March 29, 2004) |
|
|
|
Centrists.Org is a non-partisan, non-profit, organization formed under section 501(c)(3) of the tax code, and dedicated to public education on vital public policy matters. Contributions to Centrists.Org are tax deductible. Centrists.Org |
