Health Care for All--Three Plans Compete

Harvey I. Sloane was a man ahead of his time. One year ahead.

In 1990, Sloane, a physician and a two-term Democratic mayor of Louisville, Ky., ran for the Senate and tried to make health care reform the centerpiece of his campaign. He failed. “It was just too complicated an issue to deal with, at least at the time,” Sloane recalls.

In 1991, Harris Wofford, a college professor and Pennsylvania Democratic state official, made health care reform a centerpiece of his Senate campaign. He won.

And Wofford’s victory has made all the difference.

Suddenly, just in time for the 1992 presidential campaign, the long-awaited debate over reshaping America’s health care system seems to be starting in earnest. Already, more than a score of plans for solving the nation’s health care problem have been proposed, each accompanied by its own array of controversial features, problems and political pitfalls.

But despite the seeming Babel of conflicting ideas, the comprehensive plans proposed so far all fall into three broad categories that present voters and their representatives with some fundamental choices.

--The first group of plans--advocated by leading liberals and some major labor unions--calls for national health care systems modeled on the government-owned, cradle-to-grave systems employed in countries such as Canada, Britain and Sweden.

--A second set of plans--proposed by leading Democratic and Republican moderates--would keep the present structure, in which most Americans are insured by privately run, employer-paid plans, but would seek to cover those now without insurance by requiring all employers to offer coverage or pay a special tax.

--The third set--advocated by conservatives--would seek to restore a free market in health care by replacing employer-paid plans with insurance purchased by individuals and families; government subsidies would aid those too poor to buy their own insurance.

Besides the comprehensive plans, a fourth set of proposals--including one introduced recently by 23 Senate Republicans--eschew broad reform altogether. They concentrate instead on less sweeping ideas, such as proposals to make it easier for small businesses and self-employed individuals to obtain insurance.

The debate over all this is likely to be long and rancorous. Partisans on all sides expect Congress, the Administration and hosts of interest groups--from hospitals and doctors to organizations representing the elderly and the poor--to spend much of the next year vying for public support for their approaches, culminating in a showdown after the presidential election.

What makes the issue so difficult is that all of the plans involve basic trade-offs--personal choice versus lower costs, broader access to health care versus low taxes--that would require Americans to compromise basic values that many cherish. And none of the plans are easy to discuss within the constraints of political campaigns that concentrate on 30-second advertisements and 10-second sound bites.

“It’s a difficult, difficult issue for a candidate to really explain,” Sloane says. “Take just trying to explain the reasons for the high cost (of medical care): you’ve got cost-shifting, all that technology driving up costs, Medicare and Medicaid not paying the freight. . . . When you’re trying to reform the whole system, it gets pretty complex.”

What drives the debate, despite the complexity, is the increasing sense among politicians that the public is nervous and angry about health care issues. “People are saying, ‘We’re mad, we don’t like the system the way it is,’ ” says Sen. John D. (Jay) Rockefeller IV (D-W.Va.), who has been a longtime advocate of health care reform.

A poll of 1,000 Pennsylvania voters released two days after Wofford’s election, for example, found that 50% cited national health insurance as one of two issues that “mattered the most” to them in deciding how to vote. The issue is not likely to be so dramatically important in a national election. Nevertheless, suddenly no politician--not even President Bush, who has long avoided the issue--wants to be campaigning without a health care plan to call his own.

In a brief press conference Friday, Bush said that he hopes to unveil an Administration health care proposal sometime next year. And Rockefeller plans to host a forum for Democratic presidential candidates to discuss the issue in New Hampshire early in December.

“Health care reform used to be an issue about ‘them,’ ” says a senior congressional aide who has spent a decade working on the issue. He was alluding to the fact that in the past, policy-makers mainly worried about distinct subgroups of Americans who had fallen through the health care safety net--those who lacked adequate insurance or those who were too poor to afford quality health care.

Now, he says, as more and more middle-class families find their doctor bills mounting and their employers scaling back health coverage, “it’s become an issue about ‘us.’ ” In the Pennsylvania poll, for example, 75% of the voters said that their biggest concern about health care was rising costs. Only 12% cited lack of access to health care or lack of adequate coverage.

Cost is a key factor in all of the plans now under consideration. Although policy analysts believe that comprehensive reform can restrain future growth of the nation’s health bills, virtually no one believes that the health care system can be reformed for free. In particular, steps to cover the 30 million or more Americans who now lack insurance inevitably will be expensive. The key debate is whether that expense will be borne by taxpayers, by individual family budgets or by businesses.

In the past, some experts argued that so much money was wasted on improper or unnecessary care that reforms could free billions of dollars to cover the price of assuring coverage for all. Recent studies, however, have cast doubt on those projections, indicating that although waste exists, it will be far harder to root out of the system than optimistic forecasts had projected.

Paradoxically, of the three types of comprehensive reform plans now being circulated, the most radical in many ways is the one being proposed by conservatives, led by the Washington-based Heritage Foundation.

The conservative plan begins with a basic premise--that the essential problem with the American health care system is that the people who receive benefits, the average consumers, are not the people who pay the bills.

In 1950, for example, individuals paid 65% of the total national health bill. By the mid-1980s, because of the expansion of both government programs and employer-paid insurance, the individual share of the nation’s health bill had fallen to 27%.

In that sort of environment, the conservatives argue, cost control is doomed to failure. Workers receive no direct benefit from cost cutting while those who perform the cuts--corporate and government managers--do not have to live with the consequences, such as reduced services.

The way out, the conservatives argue, is to return responsibility for insurance to individuals and families.

Under current tax laws, the money a company spends to buy insurance for its employees is tax deductible, while money spent by individuals to buy insurance is not. That rule provides a $36-billion-a-year incentive for employer-paid insurance.

The conservative plan would reverse that rule. Companies would lose their tax deduction. They also would be required to take whatever money they currently spend on health insurance for workers and give it directly to their individual employees. Individuals, in turn, would be given a tax credit to cover part of the cost of insurance.

Those who are unemployed or who are paid too little to afford insurance would be given direct cash aid from the government to allow them to participate. An assigned risk pool would cover the uninsurable.

The Heritage plan has attracted considerable attention, including favorable mention from some Bush Administration officials. If it worked, the plan could employ competition to hold down the rapid growth of health care costs without creating a huge new government bureaucracy.

Critics, however, point to several major potential flaws.

First, the plan’s authors assume that all Americans are sophisticated enough to compete in the market for insurance. But the experience with life insurance, where millions of Americans have been the victims of scams and swindles that prey on those with low incomes and little education, raises questions about that assumption. Even affluent and well-educated Americans may find themselves at sea trying to choose among dozens of competing insurance plans.

A second problem is that a free market might not lead to major cost savings at all. So long as insurance covers the cost of serious illness, patients and doctors will have an incentive to use the newest--and most expensive--medical technology, critics note. Only government regulation can restrain the growth of such technology, they say.

National health insurance plans offer an opposite set of strengths and weaknesses.

Under such plans, all health care workers would be employed, directly or indirectly, by the government, which would collect tax revenues and use them to pay all the nation’s medical bills. Everyone would be guaranteed access to care, but significant amounts of individual choice would be lost.

Advocates of such plans argue that billions of dollars each year could be saved by eliminating the administrative overhead of insurance companies, each with its own set of forms and rules and procedures. Billions more could be saved by central planning that would cut down on waste and duplication in the nation’s health system, they claim.

Critics, however, say that those cost-saving projections are mythical, and that the creation of a huge new government health bureaucracy would merely aggravate current wasteful spending.

Moreover, the critics note, the countries that do have national health care systems, such as Britain and Canada, all have tried to limit costs by rationing care: long waits for surgery, delays in adopting new technology and rules that bar certain groups of patients from receiving certain types of care--no kidney transplants for elderly patients, for example.

Americans are unlikely to tolerate such restrictions, the critics say.

As a compromise between the extremes, several major health-related groups and leading members of Congress have proposed what are known as “pay-or-play” proposals. Under those plans, all companies would be required to provide insurance for their workers or pay a special tax to fund coverage for the uninsured. The result, in theory, would be universal coverage without a major change in the existing system of insurance.

Supporters of the idea argue that it would provide the best of both worlds--private insurance coupled with universal coverage.