Auditing the Sprawling Spreadsheet of Bradley’s Health Care Proposal

Sorting through the campaign argument over Bill Bradley’s health care plan may seem as daunting as snapping together a toy with those three dread words: “Some assembly required.” Al Gore, citing a study by Emory University professor Kenneth E. Thorpe, says Bradley’s plan to cover the uninsured would cost $1.06 trillion over the next decade, more than the projected federal surplus. Bradley puts the cost at a (relatively) more affordable $65 billion annually. Who’s right?

Let’s start with a quick refresher on Bradleycare. Bradley would eliminate the two principal federal health-care programs for the poor: Medicaid and the Children’s Health Insurance Program. Instead, he would provide full subsidies to purchase private health insurance for children in families earning up to double the poverty level (about $32,000 annually) and adults up to 100% of poverty level (about $16,000). Partial subsidies would go to children up to 300% of poverty level and adults up to 200%. He’d add tax breaks to help uninsured adults with higher incomes buy coverage. And to ensure coverage would be available, he’d allow the uninsured to buy into the Federal Employees Health Benefits Program, which provides insurance for federal workers.

Thorpe (a former Clinton administration official) and Bradley aides agree that this approach would save about $40 billion a year in existing federal expenditures (mostly on Medicaid). And they agree that Bradley’s tax break would cost about $6 billion a year. After that, it’s fireworks.

The argument begins over the cost of insurance. Bradley’s advisors maintain that they can cover the uninsured for $1,800 per adult, $1,200 per child and $5,000 per family per year. Thorpe accepts the children’s number but disputes the others. Fully 95% of all insurance plans offered in the federal employees’ system cost more than $1,800 a year for adults, he notes; the average is $2,465. Bradley’s camp says those averages don’t matter because they’d pay only for low-cost plans; even if such plans aren’t widely available now, they figure, they will spring up to meet the new market. The Gore camp considers that logic akin to buying a house on the assumption that you’ll win the lottery next year.

The debate on cost shapes the debate on coverage. Anticipating more inexpensive plans, the Bradley camp believes its subsidy will cover all (or most) of the price of buying insurance. As a result, they calculate that 30 million of the 44 million uninsured Americans will buy into their system. Looking at the cost of existing health plans, Thorpe believes that most uninsured adults would still have to write their own check to cover the difference between Bradley’s subsidy and the actual price of insurance. Accordingly, he estimates only 15 million of the uninsured would participate in Bradley’s program.

To understand the next disagreement, it’s important to recall a key feature of Bradleycare. Bradley would provide his subsidies to everyone eligible under the income guidelines--even those who already receive insurance from their employer. That’s intended to help insured working families improve their coverage.

The dispute comes over how many families would qualify for those subsidies. Using Census Bureau figures on the number of Americans who earn less than the eligibility limits, Bradley’s campaign figures that about 84 million people (including both the insured and uninsured) could receive his subsidies.

Thorpe says that’s low-balling. He points out that the census figures on low-income people are based on household, not individual, income. So, for instance, if a 19-year-old making $10,000 a year as a waitress lives with two parents earning, say, $40,000 a year, all three would show up in census data as members of a household earning $50,000. But that waitress, in fact, would be eligible for coverage under Bradley’s plan. One study separating out these “sub-families” in 10 states found 35% more poor families than the census did.

Making similar calculations, Thorpe estimates that 97 million people would be eligible for Bradley’s aid. From that group, Thorpe projects that between 33 million and 39 million people now with private insurance would shift to Bradleycare; from their smaller base, the Bradley campaign thinks the total would be only 29 million. Bradley’s camp, teetering between optimism and fancy, says Thorpe’s calculations are irrelevant because Bradley would require insurance companies to cover adult children under their parents’ existing policies. Thorpe responds that such a mandate would produce higher premiums and higher government costs anyway.

The next major disagreement comes over the cost of Bradley’s plan to provide prescription drugs to the elderly. Bradley pegs the cost at $10 billion annually; Thorpe estimates $25 billion in Year One and $380 billion over 10 years. There’s no space here to fully explain their argument, but a Congressional Budget Office estimate of a plan slightly more generous than Bradley’s also yielded a $380-billion 10-year cost.

Inflation marks the final critical difference. Bradley’s $65-billion annual cost is expressed in 1999 dollars; some reporters have merely multiplied that over a decade to produce a 10-year tab of $650 billion. But that ignores inflation. Prescription drug prices have been rising at about 10% annually; the federal employees’ plan projects insurance premiums to grow 6% annually over time.

Bradley believes his approach would reduce medical inflation. But Thorpe has calculated that even if Bradley’s plan slashed drug and insurance inflation to 3% it would still cost nearly $900 billion from 2001 to 2010. Using more mainstream inflation assumptions, Thorpe estimates the 10-year cost at $1.06 trillion if Bradleycare reached 15 million of the uninsured. If it really reached 30 million, as Bradley believes, Thorpe says the cost would hit $1.5 trillion.

Maybe the Bradley proposal will produce insurance plans that simultaneously cost less and cover more family members, lower drug prices, and reduce premium increases. And maybe Bradley was right, when he claimed in a recent debate with Gore, that advances in medical technology (and more exercise by the elderly) could lower Medicare costs even as the retirement of the baby boom swamps the program. But any bookie happily would take the other side of those bets. Bradley’s goals may be worthwhile, but he hasn’t come close to demonstrating he can meet them at anywhere near the cost he’s projecting.

Ronald Brownstein’s column appears in this space every Monday.

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