WASHINGTON —It isn’t streamlined, it isn’t logical, but America’s cobbled-together system of paying for medical care does cover 85 percent of the population.
And despite the chorus of pleas for a sweeping redesign of America's medical insurance system as the 2008 presidential race heats up, a top-to-bottom makeover seems less likely than a series of reforms that aims to fill in gaps in coverage.
The calls for a far-reaching redesign of the health care system are as loud as they were in 1993, when a newly elected Bill Clinton tried to persuade Congress to enact a form of national insurance — the last time a president took on the issue.
But while the 2008 presidential contenders are talking about health insurance, most of their ideas are familiar ones aimed at expanding insurance coverage rather than reinventing the system.
Ideas from presidential hopefuls
Democrats John Edwards and Sen. Barack Obama, for instance, would do on the federal level what Massachusetts is now doing through a state mandate: require employers to either cover their employees or help finance their insurance.
Republican contender Rudy Giuliani takes a different tack: he'd offer the uninsured a hefty tax break so they could afford to buy insurance in the private market. President Bush offered a similar idea in his State of the Union address, but Congress has shown little interest in it.
Democratic presidential hopeful Sen. Hillary Clinton, who played the leading role in her husband’s failed effort to get Congress to enact a form of national insurance, is focusing on preventive care to reduce spiraling medical costs, calling for the expansion of low-cost clinics in places such as malls, supermarkets, and schools. She also has championed mandating the use of information technology to make it easier for doctors to transmit medical data electronically, with the goal of reducing medical errors.
Republican contender Mitt Romney touts his success as the former governor of Massachusetts at working with the legislature to enact a state universal coverage plan. But he stresses that, as president, he wouldn’t attempt an all-encompassing national plan, instead allowing each state to devise its own approach. Like other Republican candidates, he advocates helping low-income people purchase their own health insurance in the private market.
Whether the new president is a Republican or a Democrat, a redesign will be difficult to pull off . Insurance companies, pharmaceutical firms and medical device makers , all of whom have a vested interest in averting radical change, are big campaign contributors and are strongly represented by lobbyists in Washington.
That helps explain Congress’ reluctance to do more than tinker with a system that left an estimated 44 million Americans without health insurance last year.
Many of them did not require medical care, but a survey by the National Center for Health Statistics found that 6 percent of the population, or about 18 million people, reported that they were unable to get needed care due to cost at some time during the previous year.
Why have this Congress and President Bush, and their predecessors, not been able to redesign the system and cover those without insurance?
Could Congress have enacted a “universal” system in which all 302 million Americans have all their medical bills paid for by the taxpayers?
Incremental politics, patchwork system
In theory, yes.
But in practice, America’s system is a result of compromise. It is a creation of a series of votes in Congress, and only a bill with a majority can become law. Incremental politics has produced a public-private system.
Today most Americans have health insurance and most get it through their employer. It wasn’t always so. In 1940, only 10 percent of the U.S. population was covered by some form of health insurance. And there were no federal insurance programs such as Medicare and Medicaid.
Then, during World War II Congress ordered employers to limit wage increases, but permitted adoption of insurance plans as an alternate form of compensation. By the 1950s employee benefit programs had become commonplace, especially in industries with strong unions and collective bargaining agreements.
The original Medicare plan, which Congress enacted 42 years ago, was created because President Lyndon Johnson had huge majorities in the House and Senate.
In the past 10 years Congress has enacted two significant expansions in health insurance: one in 1997, with the creation of the State Children’s Health Insurance Program (SCHIP), which now serves more than 6 million children in low-income families and 600,000 adults.
The other expansion was Medicare Part D, created in 2003, which provides prescription drugs to Americans over age 65.
The alignment of circumstances that LBJ enjoyed in 1965 when he created Medicare has not re-occurred since. Clinton had fairly small working majorities in 1993 when he and Hillary Clinton attempted their reform.
The current patchwork system of paying for medical care results in disparities, with some low-income people going uncovered and affluent retirees having more coverage than they need.
Most at risk are those who don't have adequate medical insurance because they are not poor enough to be eligible for the safety-net Medicaid program and yet can’t afford to pay insurance premiums. Often the only jobs they can get are ones with scanty or no health insurance benefits.
Baby Boomers reap huge transfers
Former Treasury Department official Eugene Steuerle, an expert on entitlements and tax policy at the Urban Institute, a non-partisan think tank, says that problem could be eased by a system of sensible or equitable rationing.
Medicare benefits now are so large “that most of us Baby Boomers are already scheduled to reap huge transfers from you who are younger,” he recently wrote in a policy memo.
A typical couple retiring in 2020, he said, will have paid about $100,000 in lifetime Medicare taxes. “For that price, this couple is scheduled to receive about $500,000 in lifetime Medicare benefits over and above the premiums it additionally pays in retirement,” he said.
“As long as I can simply shove the costs to you (the younger working person), the incentive is to take all I can get — that is, if I don't care how little government provides for the needs of my children, my grandchildren, and their world,” Steuerle said.
Another disparity arises from the tax break for employer-provided health insurance, which doesn’t extend to individuals who buy their own coverage.
Former Sen. Bob Dole, R- Kansas, found out in 1984 that the notion of treating employer-provided health insurance as a form of taxable compensation was highly unpopular. After floating that idea, Dole backed off, learning a lesson in how hard it is to reduce a benefit to which people have become accustomed.
Bush and some Republicans in Congress have proposed a tax break that would make it easier for individuals to purchase health insurance.
Expanding the federal program for children
While the chances of that idea becoming law appear doubtful, in the past few weeks both the House and the Senate have passed bills expanding the SCHIP program.
But the two houses will need to reconcile their differing bills and even then the final product faces the threat of a veto by Bush, who wants a smaller increase in the program than either house has approved.
Sen. Gordon Smith, R- Oregon, who supports reauthorizing SCHIP to the tune of $35 billion in added spending over five years, is in the ideological center of the Senate on this issue.
Some states include adults, unborn children and pregnant women in SCHIP, which could make the program a kind of precursor to national health insurance.
But while Smith supports SCHIP, he’s not ready to back a universal plan.
“The way we’ve structured it (SCHIP), I don’t think that it is a vehicle for national government-provided health care,” said Smith. “I’m not for that. I don’t see much that the government does that I want it do more of for me — and certainly not when it relates to the health of my family. But the government can set some rules and the government can provide a safety net.”
Anything more far-reaching than expanding SCHIP would be unlikely to get Smith’s vote and those of like-minded centrist senators and would stand little chance of becoming law.
Some Republicans are wary of expanding SCHIP because, according to the non-partisan Congressional Budget Office, it induces people who are not below the federal poverty level to switch from private coverage to the government program.
“For every 100 children who gain coverage as a result of SCHIP, there is a corresponding reduction in private coverage of between 25 and 50 children,” a CBO report concluded in May.
A Trojan horse for national insurance?
Critics see SCHIP as a Trojan horse opening the gate to national health insurance. The Senate bill, for example, would permit states to offer SCHIP coverage to families with income up to three times the federal poverty level, which would include a family of four earning $61,332.
Senate Republican Whip Sen. Trent Lott, R- Miss., said, “When you’re talking about getting free health care, for a family of three, and parents making $60,000, $70,000, maybe in some states that’s low income, but that’s upper income in my state.”
He said, “If people want socialism, if they want the federal government to pay for all of our health care needs, let’s just go ahead and become a socialist government.”
Some members of Congress are thinking of a different approach.
Sens. Ron Wyden, D- Ore., and Robert Bennett, R- Utah, are proposing a bill to phase out employer-provided insurance and replace with it with mandatory universal coverage, provided not by the federal government, but by private insurance companies.
“The model is the coverage that members of Congress get, a delivery system like members of Congress get, choices like members of Congress get and benefits like members of Congress have,” Wyden said.
Even if you are now working for a large firm and have a blue-chip health plan, “you’re going to have a better deal” under his plan, said Wyden. “We’ll put more cash in your pocket because we require at the outset the employer to take your salary, plus the value of your benefits, and give that to you in compensation and we adjust your tax brackets. You’ll have more choices for your health care. Right now even with good coverage, you get one plan.”
Coverage 'melting like a Popsicle'
And he said “you’ll have lifetime security with our proposal. Today, even at good companies, coverage is melting like a Popsicle on the summer sidewalk. Every year because premiums continue to go up, you have people getting less coverage at higher prices.”
The Wyden-Bennett bill also would subsidize low-income people so they could purchase insurance.
“I think we’re right on the cusp of being able to move forward in a bipartisan way,” Wyden said.
But a powerbroker in the House on health care, Rep. Pete Stark, D- Calif., chairman of the Ways and Means health subcommittee, called the Wyden-Bennett idea “a lousy plan.”
“Experienced legislators have learned that you don’t make wrenching changes to the habits that Americans are used to: 160 million people get their medical payment plan through their employer,” Stark said. “To suddenly tell all of them that that’s going to end would be politically unacceptable.”
Instead Stark envisions a build-out towards universal insurance.
Republican governors talk about mandates
“For the first time in our history we have two Republican governors who have used the word ‘mandate,’” as in mandatory coverage, said Stark, alluding to Romney and California Gov. Arnold Schwarzenegger.
Under a law signed in 2006 by Romney, Massachusetts requires firms to either provide health insurance for their workers or pay into a state fund for the uninsured. Massachusetts requires almost all adults in the state to purchase insurance and imposes financial penalties on those who do not.
California legislators are now considering proposals similar to the Massachusetts blueprint.
“You’ve got Republicans saying to individuals you must have insurance; you have Republicans telling business you must pay," Stark said. "That’s a major transition, but we have long way to go from there.”
He added, “If we get four or five more states with universal coverage plans, then it’s much easier for us (in Congress) to come together and set minimum benefit and set federal assistance to the states and build a package.”
In other words, while universal health insurance coverage may yet happen, it will be achieved by incremental means.