Dean Offers Rival Health Care Proposal

Former Vermont Gov. Howard Dean on Tuesday unveiled a health care plan that he said would cover as many of the uninsured -- at a fraction of the cost -- as a sweeping proposal by Rep. Richard A. Gephardt of Missouri, a rival for the Democratic presidential nomination in 2004.

While Gephardt’s plan is centered on a large new federal subsidy to help private employers insure workers, Dean aims to increase access to health care primarily by expanding existing public programs that provide coverage for the uninsured.

Dean said his plan, like Gephardt’s, would extend coverage to about 30 million of the 41 million Americans the Census Bureau reports lack health insurance. But Dean projects he could insure those people for $88.3 billion a year -- a substantial sum, but only about a third of the $247 billion annually that Gephardt’s plan would cost by 2007.

In a speech at New York’s Columbia University, Dean previewed his line of argument with Gephardt by portraying his own plan as both ambitious and fiscally realistic. Gephardt responded by charging that the Dean plan would only “nibble around the edges” of the nation’s health care problems.

The exchange -- following several pointed volleys over health care between Gephardt and the other candidates during a recent debate in South Carolina -- underscores the central role that the issue is assuming in the intensifying Democratic race. The temperature could rise further on Thursday, when Sen. John F. Kerry of Massachusetts is scheduled to release his own plan for expanding access to health care -- one also expected to rely largely on expanding public programs.

Like most Democratic proposals since the collapse of President Clinton’s massive national health care initiative in 1994, Dean’s plan attempts to cover the uninsured without disrupting existing arrangements for the 85% of Americans with insurance.

“It’s a good gap-filling strategy that says let’s minimize disruption and maximize the way we build on existing structures to try to bring more people into the coverage net,” said Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured, an independent policy institute.

In an interview after his speech, Dean said he would pay for his plan by eliminating much of the 2001 tax cut law pushed by President Bush, including a reduction in the top rate for taxpayers earning more than $300,000 annually. He would also trim a promised cut in the estate tax under that law. Those provisions alone wouldn’t nearly cover the cost of Dean’s plan, but he said he has not decided which additional tax cuts he would seek to rescind.

Dean’s health care proposal is built on several initiatives. The plan’s centerpiece is an expansion of the existing state-federal partnership that provides health coverage for the children in working-poor families, the Children’s Health Insurance Program.

Dean said he would make eligible for the program all children and young adults under 25 in families with annual incomes of about $54,000 or less. At the same time, Dean would expand eligibility for the CHIPs program to all adults in families with incomes up to about $33,000.

An analysis conducted for Dean’s campaign by the Lewin Group, a health care consulting firm, projects those provisions would cover about 23.1 million of the uninsured.

Dean would allow adults who did not qualify for the expanded CHIPs program to buy into a new insurance pool modeled on the system that provides coverage for federal employees. Dean would provide tax credits to cover all the costs of those premiums after workers contributed an amount equal to about one-fourteenth of their income.

Dean also would let businesses with 50 or fewer employees buy into the new insurance pool. That provision would aim to reduce small firms’ insurance costs and encourage them to offer coverage.

Finally, Dean proposed two measures to help the unemployed retain coverage. He would require employers to contribute for two months to help laid-off workers buy coverage under the federal COBRA program. After that, he would have the federal government pick up 70% of the cost for such unemployed workers.

In all, the Dean camp estimates these initiatives would reach 30.9 million of the uninsured, roughly equivalent to Gephardt’s 30.4 million. The Dean plan would cost so much less because it is more narrowly focused on the single goal of reducing the number of uninsured.

In addition to providing nearly universal coverage, Gephardt’s plan aims to stimulate the economy by providing large grants to states (to offset health care costs for their employees) and large tax savings to private companies that now provide coverage -- which Gephardt said would translate into increased investment or higher wages.

Whatever the possible economic benefits, the result is that Gephardt’s plan would devote much of its spending to subsidizing public and private employers already providing coverage.

Dean said his plan was superior to Gephardt’s “because it can be paid for.... It’s targeted at those who don’t have insurance and small business, and ... it can pass [Congress].”

Gephardt charged that Dean’s plan could result in the federal government assuming costs now borne by business. By expanding eligibility for the CHIPs program without providing employers any subsidy to help pay the cost, Gephardt argued, Dean’s plan offers “large and small employers incentives to drop coverage.”

Dean said he would pressure employers to maintain coverage by providing preferences in federal contracting to those who do -- and revoking existing tax breaks for those who don’t. In a new mandate on business, he would also require that companies now providing insurance include workers’ children through age 24 in plans for their employees.

Those ideas drew fire from business groups. Kate Sullivan, director of health policy at the U.S. Chamber of Commerce, said Dean’s threat to withdraw tax breaks from firms that don’t insure their workers amounts to a mandate on employers for coverage. Opposition to such a requirement helped sink Clinton’s health care plan.