Bush vs. Clinton: Different Diagnoses of Health Care Crisis : Governor argues for major surgery on troubled U.S. medical system while President prefers a less drastic course of treatment

There can be no serious talk about the U.S. economy without talk about what the rising cost of health care is doing to it. The $800 billion that Americans will spend this year on health care--government and private spending--is eating up 14% of the gross national product. Health care spending is growing far in excess of inflation and consuming an ever-larger percentage of the nation’s economic output.

Yet the United States has a dismal infant mortality rate for a developed nation. Thirty-seven million Americans are uninsured. Crushing medical bills are a leading cause of personal bankruptcy. With hundreds of thousands of workers laid off during the recession, many have found, for the first time, what it’s like to live without employer-provided health insurance. Those who still have coverage--but see burdened employers scaling back coverage to save money--are among what health care experts call the “worried well.”

It is because the health care crisis has hit home in a large segment of the middle class--who also happen to be voters--that the issue is front and center in this presidential campaign.

The Bush Approach: Build Carefully on What Exists

President Bush has called health care the “Grand Canyon” of philosophical difference between himself and Gov. Bill Clinton. Bush is right about that. Bush believes that the U.S. health care system, with its well-trained physicians, fine hospitals and top research and technology, needs some adjustments but is not in need of major overhaul. Clinton, as does Ross Perot, agrees that U.S. practitioners and technology are among the best in the world--but maintains that decent health care is available to too few and is too expensive. To remedy that, Clinton, and Perot in far less detail, recommends major restructuring of the health care system.

The spine of Bush’s plan is tax credits and tax deductions. Bush wants to make insurance more affordable, through tax credits or vouchers, to more of the working poor who do not now qualify for Medicaid. Eventually, a family of four, with an adjusted gross income of $14,300, would receive a maximum credit of $3,750. A family of four with an income of up to $60,000 but without employer-provided insurance could take a tax deduction of $3,750, providing about $1,050 to help with buying insurance.

At the same time, Bush would restrict Medicaid funding in part to force states to model their systems on health maintenance organizations (HMOs, e.g. Kaiser, Maxicare, Cigna) that stress less expensive preventive care.

Bush estimates that the plan would cost $100 billion over five years, but he has offered no clear explanation of how it would be paid for. Aides have suggested that savings from Bush proposals to streamline administrative procedures and reforming medical malpractice laws would cover the costs. In fact, both Bush and Clinton take aim at administrative and malpractice excesses. These sources of spending are the easy targets to attack. Here’s why.

In Truth, Just How Much Fat Can Be Cut Out of Health Administration?

There are about 1,500 private health plans nationally, all with their own administrative costs. As Consumer Reports pointed out recently, a key characteristic of the U.S. health care system is an obsession with making sure that patients get only what their insurance entitles them to and nothing more. That means that hospitals must keep meticulous track of everything, down to the last aspirin.

While government reviewers work to ensure that Medicare and Medicaid patients haven’t been under treated, private insurers want to make sure patients are not being over treated. As a result, private physicians have been forced to hire extra office help to deal with the demands of paperwork. And thus, not surprisingly, as much as 20% of health care spending goes to administrative costs.

Both Bush and Clinton have proposed that insurers no longer be allowed to refuse to cover people with pre-existing conditions. They also both want to change the way that insurers treat small firms. Because insurers typically charge small companies higher premiums than large ones, many small businesses cannot afford to offer employees any or adequate insurance.

Guarding against malpractice lawsuits, or “defensive medicine,” is another key reason given for the high cost of health care. It’s hard to quantify how much and how often physicians administer unnecessary tests and treatment in order to protect themselves from lawsuits. Neither is it known how much overtreatment is demanded by anxious patients.

In any case, health care economists generally agree that even if there were only one insurer, and not 1,500, and even if unnecessary care and fraud were eliminated, the nation would gain only a one-time reduction in health care spending of about 15%. None of this deals with the rising costs of prescription drugs and medical technology--new sophisticated machines that tell doctors a little more for a lot more money--and the fundamental problem of ensuring that everyone has access to basic affordable medical care.

Clinton agrees with Bush on weeding out fraud, defensive medicine and containing administrative costs. But he says the Bush plan doesn’t go far enough.

The Clinton Approach: Reform a System That Is Basically Flawed

Clinton seeks to address the affordability of health care by proposing a way to push spiraling health spending costs into line. Clinton’s carrot--and stick--approach to holding costs down is his key difference with Bush, and it’s a significant difference.

Clinton proposes that a federal board, composed of consumers and health care experts, set national targets for health care expenditures every year and also set minimum benefit levels for insurance plans. Employers would be required to cover employees. That requirement would be phased in for small employers, who would receive tax credits. Everyone not covered by employers would be covered by the government.

Clinton says he wants consumers to have access to “managed care” networks (again, HMO-type networks). He wants to limit a network’s total spending--without interfering with its practices. Budgets tailored in each state will create “real incentives” for hospitals, insurers and doctors to reduce bureaucracy, eliminate unnecessary technology and practices and cut waste, he says.

Clinton’s Plan Is Intriguing--but Not Yet in Total Focus

How will these budgets be enforced? The answers vary among experts. Critics say it inevitably means unworkable government price controls; others say it simply means “managed competition,” in which HMO and other private health care networks could offer better prices and give greater emphasis to preventive care. In that sense, Clinton’s plan is the Rorschach test of health plans; various advocates see in it what they want to see. But Clinton’s two key intents are clear: Put a firm lid on spending and make sure that everyone has medical coverage.

Clinton suggests that his plan could be paid for by curbing waste and bureaucracy. Health economists look at that claim with the same skepticism that they apply to a similar Bush claim. Both plans, economists suggest, would require new revenues.

Perot has outlined only broad strokes of a health care plan in his book, “United We Stand.” Perot proposes establishing a national health board as an independent federal agency to oversee cost containment and comprehensive health care reform efforts. He wants to determine a basic benefit package for coverage for everyone and “appropriate tax treatment” of health benefits. He also would ask states to submit comprehensive health care reform proposals that meet agreed-upon principles and cost-containment targets. Perot says that the nation has the talent and the money; only leadership is lacking.

Polls indicate that Americans want everyone to have decent medical care but may be leery of what it will cost. Polls indicate that people like the idea of national health insurance but they don’t want government in charge of it. And polls indicate that Americans want health care to cost less--but don’t support curbs on costly new technology. The problem, says former Surgeon General C. Everett Koop, is that whoever will be the President will face three seemingly incompatible elements: access, cost and quality. If the President can’t lead by poll, health care is the perfect example of where he must lead by vision.

Bush does a good job of pointing out what ails America’s health care system, but his plan provides little incentive for consumers of health care--individuals and employers--and providers of health care--physicians and hospitals--to change. Perot’s plan is no more than bullet points. Clinton’s plan lacks some important details, too, but he does show a willingness to shake up a chaotic and patchwork health care system. And that, it seems to us, is what’s needed.