Comparing the Candidates on Health Care

The New England Journal of Medicine compares the candidates visions for health care reform. (Hat-tip: PalMD)

On John McCain:

The McCain campaign emphasizes key advantages of this approach. First, the current tax exclusion disproportionately benefits higher-income Americans, since its value depends on a worker's tax bracket. Providing an equal credit to all Americans is a fairer allocation of federal revenues, and since the credit is refundable, even those who do not pay taxes would qualify for federal payments. Second, the tax exclusion benefits only persons with employer-sponsored insurance, whereas under the McCain plan everyone, including the unemployed and workers whose employers do not offer coverage, would receive a credit to purchase insurance regardless of where they obtained it.

In terms of cost control, the McCain plan offers several initiatives aimed at spurring competition and changing the status quo in health insurance and medical practice. It would deregulate the insurance market to allow insurers to sell policies across state lines; residents of states that extensively regulate insurance (for example, by mandating covered benefits) would be able to shop nationwide for less comprehensive, less costly health insurance policies than those available in their home states.

McCain's plan also calls for changing the way Medicare pays for medical services -- moving away from fee-for-service reimbursement and toward bundled payment for episodes of care and payments based on outcomes. The hope is that Medicare payment reform would drive broader changes in the health care system.

In addition, replacing the invisible, unlimited tax exclusion with a visible, limited tax credit could slow health care spending. Making employer premium payments taxable income would make insurance costs more transparent to workers, many of whom are unaware how much their employers are paying for their insurance. And since Americans would receive a fixed credit, the expectation is that they would seek out lower-cost, less comprehensive insurance plans, fostering competition among insurers. Other cost-control provisions include speeding up generic-drug development, encouraging prevention, improving care for chronic diseases, and adopting medical malpractice reform.

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On Barack Obama:

The Obama campaign emphasizes that its plan offers a choice of insurance options. Rather than deciding whether public or private insurance is a better model, the plan would allow people to choose between them. In addition, the new national health plan and insurance exchange would provide insurance pooling and purchasing power that, along with insurance-market regulation, would effectively address the problems that Americans without group coverage encounter when trying to purchase affordable insurance on the individual market.

The Obama campaign says that the insurance exchange, by providing broader pooling and cutting marketing expenses, can reduce administrative expenses in private insurance and promote competition. The plan also calls for a new system of reinsurance, whereby the federal government would reimburse employers for a portion of the costs they incur for employees with high-cost, catastrophic medical cases -- theoretically enabling businesses to reduce insurance premiums and particularly benefiting smaller businesses whose risk pools are too small to spread the costs of expensive cases.

Other cost-control measures include accelerated adoption of electronic medical records, promoting disease management and better coordination of long-term care, paying providers on the basis of performance and outcomes, strengthening prevention, permitting the federal government to negotiate prescription-drug prices for Medicare patients, cutting excessive payments to private health plans contracting with Medicare, and establishing an institute for comparative-effectiveness research to generate information about effective treatments.

I recommend reading the whole thing, but I do have a couple comments.

1) McCain and Obama emphasize different things, and this is the source of the weaknesses in both of their plans. The primary weakness of McCain's plan is that it does little ostensibly to help the uninsured and may exacerbate the problem. Whether decreasing the cost of coverage through competition and deregulation will increase the percentage of covered individuals is unclear. On the other hand, while Obama's plan emphases increasing coverage, it has little in the manner of cost control measures. His plan assumes cost savings through electronic medical records and prevention, but whether these measures will be effective is questionable.

Each plan has a different emphasis, and both of them rely on untested assumptions. Only history will tell whose assumptions were right.

2) Without taking a position on my preferred program, I will say the following: any health care reform plan that assumes you can get something for nothing is destined for abject failure. TANSTAAFL. I am deeply concerned that both proposals smack of an almost delusional belief that this law can be cheated. Obama seems to believe that by taxing the rich and the magic of prevention he will produce the trillions of dollars needed to adequately cover all Americans. Paying for this is possible, but it will require significantly more than just rolling back the Bush tax cuts. McCain, on the other hand, believes that deregulating the market will immediately and magically make something that costs a lot of money as cheap as water. This may happen eventually, but if it does it certainly won't be quick.

Neither of them strike as particularly realistic about this issue.

3) Something is missing from both plans that needs to be there: addressing the primary care provider shortage. This point is made by Kevin, MD in an open letter to both candidates:

Senators, at a time where Baby Boomers are approaching age 65, the outlook on who will care for these new Medicare beneficiaries is dismal. A survey from the Journal of the American Medical Association found that two percent of graduating medical students say they plan to work in primary care internal medicine. Let me repeat that. Two percent...

I do not hear any solutions addressing this issue on the campaign trail. No suggestions to, i) reform the dysfunctional physician payment system which rewards expensive procedures at the expense of office visits for preventive and chronic care; ii) encourage medical students to enter primary care fields by forgiving their medical school debt; and, iii) fairly reconciling the wide chasm between specialist and generalist salaries.

The simple fact is that unless you solve the primary care issue, neither of your plans will be successful.

Unless we reform medicine to make primary care more attractive to new doctors, all the candidates reforms will be for not. You can fix how we pay for medicine all you want, but if there is no one there to provide it you are still screwed.

I agree with Kevin. That is a glaring absence in both proposals.